Imagine what would happen if you swipe your card and the payment doesn’t go through? Many of us do not take the time to think about the behind the scene operations that are necessary for us to be able to pay using a credit or a debit card. The Card Association’s Network offers timely payments and the assurance of secure transactions to all merchants, cardholders and financial institutions.
Keep reading to get a general overview of the process that takes place during the lifecycle of the payment card processing transactions.
- Key Players: Multiple parties are involved in each payment transaction.
- Card holder: An authorized payment card user
- Merchant: An authorized acceptor of the payment in exchange for goods and products.
ISO/MSP: This includes services like IpPay and Wells Fargo merchant services that solicit merchants on behalf of a bank and enables card payments from customers.
- Terminal/Payment Gateway: This is the physical or virtual device used by the merchant to communicate to the acquirer’s front-end network.
- Front-End Network: The credit card gateway communicates with this platform when approving a transaction.
- Back-End Network: This platform is responsible for taking the information from the front-end network and then settles them through the interchange system.
- Acquiring Bank: The merchant’s payment processing contract is held by the acquiring bank.
- Association: These are the members who issue the payment cards and they also sign merchants to accept payment cards.
- Issuer: This is the financial institution that issues out the payment cards and then maintains contact with the cardholders for repayment.
Two part process: Processing a payment card has two parts:
- Authorisation: This is the process where an electronic request is sent out to various parties to either approve or decline the card payment.
- Merchant settlement and funding: Then the process of clearing and settlement happens where all parties are paid and the account is settled.
This is the process every time you buy something in a store and swipe your card.