Credit Card Processing - What is it & How Does it Work?

 Credit card processing is the process of authorising and settlements for credit card transactions. The process involves four main participants:

the acquirer (the bank or financial institution that provides merchant accounts to businesses), the issuer (the bank or financial institution that issues credit cards to consumers), the cardholder (the consumer who uses a credit card to make purchases) and the merchant (the business that accepts credit cards as a form of payment).


The first step in the process is called authorization. This is when the cardholder presents their credit card to the merchant in order to make a purchase. The merchant then contacts the acquirer (via a processor or gateway) to obtain an authorization code for the transaction. If the authorization is approved, the transaction is then sent to the card issuer for settlement.


Settlement is the process of transferring funds from the cardholder’s account to the merchant’s account. This usually takes a few days to complete. Once the funds have been transferred, the transaction is considered “settled.”


There are several different types of credit card processing systems that businesses can use, including point-of-sale (POS) terminals, online processors and mobile processors. Each type has its own advantages and disadvantages, so it’s important to choose the right one for your business.


POS terminals are the most common type of credit card processing system. They are typically used in brick-and-mortar businesses, such as retail stores and restaurants. POS terminals are easy to use and allow customers to make purchases quickly and easily.


Online processors are becoming increasingly popular as more businesses move online. Online processors allow businesses to accept credit card payments without the need for a physical POS terminal. Mobile processors are the newest type of credit card processing system. They allow businesses to accept credit card payments via a mobile device, such as a smartphone or tablet.


Mobile processors are becoming more popular because they offer a number of advantages over other types of credit card processing systems. They are convenient for customers and merchants alike, and they can be used anywhere that a mobile device has an Internet connection.


If you’re thinking about accepting credit card payments, it’s important to choose the right type of credit card processing system for your business. Each type has its own benefits and drawbacks, so it’s important to weigh all of your options before making a decision.

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