In this era of technology and communication, credit cards have become an integral part of shopping for people in developed countries. Then main function of credit cards is to provide a revolving credit line for consumers to shop with the retail businesses. The consumers might think that using the credit card is a simple procedure and can be done by simply sliding on the card reader; however, credit card processing is not as simple as it may seem. It is a complex process that involves multiple steps and takes place behind the scenes.
If you know how retail card processing works, you will know the reason for the popularity of credit cards. The first step involved in card processing is to read the consumer’s card using any one of the many methods available. Retail businesses usually integrate a card reader to their point of sale system, so that the cashiers will be able to seamlessly integrate card processing with each transaction. However, some of the retail business owners provide their employees with smart phone card readers for enabling them to read the cards on the go.
One of the major things that you need to know about credit cards and card processing is that the merchant needs to sign up with a card processing company for a merchant account. The data captured by the device of the retail shop will be sent to the merchant account provider along with the transaction details. The merchant account will now link the information with credit card network interchange, which connects all the credit card providers around the globe.
Now the data will be transferred to the credit card issuing company, which will then check for the details and make sure that all the details are fine. The card issuing institution will authorize or deny the payment depending on the credit limit of the consumer and transaction. The next step in credit card processing is to transfer the information back to the merchant account provider. The interesting fact is that all these processes take place in few seconds.
Once the transaction is authorized, the merchant account will notify the seller, who in turn will notify the consumer and then send the information along with the transaction details to the consumer’s bank and request for the fund transfer. However if the agency denies the transaction, then the customer will have to pay the amount as cash or leave without his products.