Have you ever wondered what happens after you swipe your card at the store? How Credit Card Processing Works is not magic, below are the steps that happen when processing your card.

  1. The merchant slides the customer’s card through the credit card terminal and enters the amount. The terminal dials a toll-free number to the Processing Bank for authorization. Once connect, the terminal passes the transaction information for that purchase.
  2. The processing bank will then pass the transaction information to the bank that issued the credit card. The issuing bank will then verify the card information and account balance. Then set aside the amount of the transaction for the merchant.
  3. The issuing bank sends bank an approval number or a decline message to the processing bank.
  4. The information will be sent back from the processing bank to the credit card terminal. Then credit card terminal will print a receipt for the customer to sign if the transaction was approved. It will take about 15 seconds to complete step 1- 4.
  5. At the end of day, the credit card terminal is settles out which will begin the final process of the transaction. The processing bank will receive the funds from the issuing bank and then deposit the amount into the merchant’s checking account. It typically takes two business days for this process to be finalized.
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