How do credit card processing machines work?

It is important to have some knowledge about the operations of a bankcard system if you are transacting through credit card processors or accepting credit cards for your business transactions. The significance of knowing the consecutive steps is much since fess are charged at different stages of the process.

Knowing the whole system by heart will help you have separate areas of savings. However by being aware of the key elements or players in the whole system you can get an idea of the steps related. The credit card processing machines have created revolution in the fast and modern way of transaction. In just a few seconds, the information of the transaction is passed from your card terminal or processor then via the network of the card it gives to the bank that issues the approval of payment. That same bank then transfers a kind of authorization via your card network to the processor prior to it getting back to the same software or terminal. 

The stages of processing a credit card

As you can figure out the first step to this process is taking an authorization for the sake of doing the transaction. This authorization has to be settled prior to the depositing of sales into your merchant bank account.

There are primarily two stages of processing credit cards the first is authorization while second is settlement. It is important to keep these steps in mind as there is fees related in every stage and if any of the steps fail it can lead to influx of cost or the credit card payment never getting deposited.

The main components in processing a credit card

Below are the main components of role players in the process of transacting through a credit card terminal.

Cardholder

The card holder initiates the process by paying to the merchant through his credit card.

Merchant

The merchant in a credit card transaction process is the one who has a merchant account in a bank for accepting credit card payments.

Merchant or Acquiring Bank

This kind of a bank is a member registered to the card associations (MasterCard and Visa). The acquired bank is also called a merchant bank since they collaborate with merchants to develope and maintain accounts which make it possible for them to accept debit and credit cards. These banks give the merchants software and devices to accept credit cards. It also accumulates funds from the sale of the card into the merchant account.

Issuing or Cardholder’s Bank

They are also members of the card corporation; these banks pay the cardholders payment to the merchant’s bank which that person needs to pay back to the bank.

Now, many transactions fail in the middle due to faulty terminals thus using reliable ones is a necessity. With AllianceBankcard- credit card processing machines these occurrences can be avoided.

If you are taking payments through credit cards make sure the transaction is done with utter care and discretion so that there is no breach of security for the two accounts.