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Credit Card Processing 101: How does it work?

Credit card processing is so commonplace, it’s easy to take for granted. We daily swipe, tap, or insert our cards in various credit card terminals or POS systems, rarely giving it a second thought. Behind every swipe, however, there is much more than meets the eye, and being an everyday occurrence is exactly why it matters to understand. Inserting the card and signing the receipt are only the first and final steps of an intricate procedure. And the whole process, though it happens in the blink of an eye, involves multiple stages and entities working together behind the scenes.

So, who are the key players working during those few seconds?

The cardholder: anyone who has a debit or credit card (customer). 

The merchant: a business owner who accepts debit or credit card transactions as a form of payment for their goods and services. 

The processor: An institution that oversees credit card transactions and payment processing.

The issuer: A bank that issues the credit card to a cardholder.

Card association: Cards like Discover, Mastercard, American Express, and Visa. All of which require merchants to use a payment processor in order to accept debit/credit card payments.

Now that we're all gurus in processing terminology, let's look at how it all goes down. 

Step 1: Cardholder pays with a debit or credit card.

Step 2: Merchant processes card through one of the following:

  • Terminal or POS (point-of-sale) system 
  • Online gateway
  • Mobile app

Step 3:  The transaction goes through the issuing bank for approval. 

Step 4: The payment processor (VizyPay) transfers over data to the credit card issuer. 

Step 5: The issuer will send approval to the payment processor.

Step 6: The processor receives the funds from the issuer.

Step 7: The merchant receives the funds (payment) typically within 24-48 hours.

If you're looking for a processor who takes pride in supporting locally owned businesses through the integrity and transparency of their services, look no further. VizyPay offers simplistic payment solutions starting as low as $25 a month. Be sure to check out our website for additional information, and as always, remember to look local first!

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