Credit Card Transactions— From start to finish
The payment process is like a well-choreographed dance, with multiple stages that work together to ensure a smooth transaction.
The first stage is submission, where the cardholder makes the payment by tapping, swiping, inserting or entering their card details. But this isn’t just a simple tap and beep — there are security checks in place to make sure everything is legitimate.
Next comes authorization, where the data from the payment goes to three separate parties, including the bank that issued the customer’s credit card. It’s up to the bank to decide whether to approve or decline the transaction.
But before a payment can be authorized, it must also be authenticated. This involves the merchant and the customer’s banks verifying that the card and purchase details match what’s expected and don’t trigger any fraud warnings. The bank then checks for available funds, and if everything looks good, an approval is sent back across the network. The funds are put on hold, and the merchant gets the OK to release the goods or services.
After authentication and authorization, the payment moves on to the clearing stage. During this stage, merchants send their recent transactions to their processor or bank in one big batch. The processor then sends the batched transactions to the card network, which…
