Learn With Card Network

A Step-By-Step Look at How Credit Card Processing Works

March 23, 2023

Card Network prides itself on educating our merchants and partners about the ins and outs of credit card processing. From swiping a card to reading your merchant statement, there are intricacies that we want to shed light on. As we have said before, a well-educated customer is an empowered customer, and empowered customer makes the right choices for themselves – which is always Card Network!

We have been asked a few times to explain to merchants and partners just how credit card processing for online purchases works. You may, for example, wonder why you see a third-party processor’s name on a receipt instead of Card Network. Here is a quick review on the steps that it takes for a payment to go from the customer’s card to your business account for a good or service.

First, a customer decides to make a purchase from your business. The customer logs on, walks up to your check-out counter, or uses an app on their phone. The card numbers are entered in and the process begins.

  • The payment gateway takes the data from the transaction to the merchant’s bank.
  • The same gateway determines which credit card provider the customer’s card was issued by.
  • At the same time, the payment switch receives the transaction data.
  • The switch requests the issuing bank to release these funds.
  • The issuing bank authorizes the authenticity of the request and makes sure that funds or credit lines are available.
  • Once this is successful, the same issuing bank then approves or declines the transaction. That is instantly read by the payment gateway and the merchant’s bank.
    The transaction is completed, and the services or goods are purchased.

Funds are then made available to the merchant after settling the payments at the end of the business day, only after the credit card processor receives this information and deposits the money into the business account. That is where Card Network comes in – we work to make sure your account is funded in a timely manner, guaranteed.

Sound off – what are your questions about credit card processing?