how a creditcard is processed
TRANSCRIPT
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8/10/2019 How a Creditcard is Processed
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How a credit card is processed
The cardholder requests a
purchase from the merchant.
The merchant submits the
request to the acquirer.
Cardholder
Merchant
Acquirer
Issuer
Card network
1.
2.
Step 1, Authorization
The acquirer sends a request
to the issuer to authorize the
transaction.
3.
The cardholder receives the
product.
The acquirer authorizes the
transaction.
6.
5.
An authorization code is sent
to the acquirer if there is
valid credit available.
4.
$
?
?
123CapitalOne
MasterCard VISA
Copyright 2013 CreditCards.com
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8/10/2019 How a Creditcard is Processed
2/5
How a credit card is processed
The merchant stores all the
days authorized sales in a
batch.
The merchant sends the
batch to the acquirer at the
end of the day to receive
payment.
Cardholder
Merchant
Acquirer
Issuer
Card network
1.
2.
Step 2, Batching
CapitalOne
MasterCard VISA
$$$
$$$
Copyright 2013 CreditCards.com
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8/10/2019 How a Creditcard is Processed
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How a credit card is processed
The batch is sent through
the card network to request
payment from the issuer.
The card network
distributes each transaction
to the appropriate issuer.
The issuer subtracts its
interchange fees, which are
shared with the card network,
and transfers the amount.
The card network routes the
amount to the acquirer.
Cardholder
Merchant
Acquirer
Issuer
Card network
2.
1. 4.
3.
Step 3, Clearing
CapitalOne
MasterCard VISA
$$$
$$$
$100-1.70
$98.30
Copyright 2013 CreditCards.com
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8/10/2019 How a Creditcard is Processed
4/5
How a credit card is processed
The acquirer subtracts its
discount rateand pays the
merchant the remainder.
The cardholder is billed.
Cardholder
Merchant
Acquirer
Issuer
Card network
2.
1.
Step 4, Funding
CapitalOne
MasterCard VISA
-$100
$98.30 -0.50
$97.80
Copyright 2013 CreditCards.com
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8/10/2019 How a Creditcard is Processed
5/5