Credit Card Transactions

Credit card processing over the Internet requires putting a number of separate pieces together. Participating parties:

1. Merchant Bank: the bank where your account is located.

2.Acquiring Bank: a bank that specializes in managing credit card transactions for merchants.

3.Credit Card Network: the communications network that connects issuing and acquiring banks; built by MasterCard and Visa.

4.Issuing Bank: the company that issues the credit card to the customer

Transaction Processing Clearinghouse
When you finally get set up with a bank you'll find that they probably contract out processing the credit card transactions to a transaction clearinghouse. When you get ready to process the purchase made on your online (or physical) store, they're the people at the end of the modem who tell you the credit card number is valid and doesn't have its credit limit maxed out.

Hardware/Software Gateway to the Clearinghouse
The final piece is a gateway that connects you to this transaction clearinghouse. There are three common gateways:

1. Cardswipe machines

2.Desktop Software.

3.Real-time Website Gateways.

Steps involved in a normal credit card transaction:
1. Merchant calculates the amount of purchase and asks buyer for payment .Buyer presents merchant with a credit card.
2. Merchant runs credit card through the point of sale unit. The amount of the sale is either hand-entered or transmitted by the cash register. Merchant transmits the credit card data and sales amount with a request for authorization of the sale to their acquiring bank.
3. The acquiring bank that processes the transaction, routes the authorization request to the card-issuing bank. The credit card number identifies type of card, issuing bank, and the cardholder's account.
4. The acquiring bank processing the transaction, and then sends the approval or denial code to the merchant's point of sale unit. Each point of sale device has a separate terminal ID for credit card processors to be able to route data back to that particular unit.
5. A sale draft, or slip, is printed out by the point of sale unit or cash register. The merchant asks the buyer to sign the sale draft, which obligates them to reimburse the card-issuing bank for the amount of the sale.

For more, visit Credit Card Processing and Merchant Services Provider

For more, visit Credit Card Processing and Merchant Services Provider