Step 5 : The business’ bank deposits the payment into the connected merchant bank account.
Step 4 : The credit card processing company sends the payment to the business’s bank through a certified merchant services provider such as Stax. The terminal then contacts the credit card processing company for authorization. Step 2 : The credit card is swiped, dipped, or tapped at a POS system or a credit card reader, where the card gets recognized for charging. Step 1 : The customer purchases an item with a credit card. Here’s a brief guide on the payment process and where each entity plays a role. Whenever your customers use a credit card to make a payment, each of the parties mentioned above gets involved. They typically assist with technology needs and customer service as well, acting as an intermediary to the card associations and banks. Payment Processor : The credit card processing company handles the processing and batching of purchases made with credit, debit, or gift card payments. The cardholder is responsible for paying back that amount in accordance with their credit card agreement. Issuing banks pay acquiring banks for the purchases their cardholders make. They issue cards to consumers and are a part of card associations. In this context, they accept the funds from the sale once a card is authorized and deposit them into the business’ bank account. They hold the merchant’s funds and acquire the money from a sale. They are also responsible for maintaining and improving their respective card networks.Īcquiring Bank : The business’ (i.e. These are not banks, but rather governing bodies that set interchange rates, and arbitrate between acquiring and issuing banks. Merchant : The individual business accepting the payment and in need of credit card processing.Ĭardholder : The customer who owns the credit card being used for purchase.Ĭard Association : Visa, Mastercard, American Express, and Discover.
The information below helps to summarize the essential roles involved in payment processing. There are several parties involved when your customers swipe their cards. Credit Card Processing: The Parties Involved Here are the inside details about what defines a payment solutions provider, how processing works, the credit card processing fees, risks, and more. This article on the best credit card processing companies providing payment processing services will help you reach a better understanding of credit card processing.
The first step to creating a more positive payment processing experience is to gain a better understanding of exactly what you’re being charged for and what options are at your disposal. Credit card processing can be overwhelming, expensive, and confusing.
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