• Cardholders obtain a credit or debit card from an issuing bank, using the card to pay for goods or services.
•  

• Acquiring banks or merchant banks are the banks, credit unions or other financial institutions that provide the merchant account and maintains the necessary relationships (card scheme memberships) with Visa, Mastercard, Amex, and the other card networks (card schemes). Merchant accounts allow merchants to accept deposits from credit and debit card payments. The merchant account is effectively a virtual bank account used to hold funds from the point they’re charged on the customer’s card to when they’re deposited into the merchant’s business bank account. Acquiring banks settle transactions for merchants into this account. The acquirer will also deal with any chargebacks and/or disputes or requests for information that might be received from card issuers on any of their merchant’s transactions. The acquiring bank therefore underwrites the merchant account, assuming the risk of card fraud and chargebacks, and effectively provides a line of credit to the merchant. Acquirer fees make up about 5% to 20% of the total cost of card processing.
•  

2. The merchant sends a request for payment authorisation to their payment processor using a payment gateway.

3. The payment processor submits transactions to the appropriate card association, for example VISA, MasterCard, American Express, and the transactions eventually reach the issuing bank.

4. Authorisation requests are made to the issuing bank, and include parameters such as CVV, AVS validation and expiration date.

5. The issuing bank approves or declines the transaction. Transactions can be declined for insufficient funds or available credit, if the cardholder’s account has been closed or expired, if a payment is past due or other factors such as suspected card fraud.

6. The issuing bank then sends the transaction approval or denial status back along the line to the card association, merchant bank and finally to the merchant.

2.The payment processor passes transaction details to the card associations that communicate the appropriate debits with the issuing banks in their network.

3. The issuing bank charges the cardholder’s account for the amount of the transactions.

4. The issuing bank then transfers appropriate funds for the transactions to the merchant bank, minus interchange fees.

5. The merchant bank deposits funds into the merchant account.

6. The card payments provider transfers funds from the merchant account into the merchant’s business bank account in a period ranging from less than a day to a week

That’s the simplified credit card payment process. Authorisation takes a matter of seconds. Settlement and funding that used to take days are now almost always handled overnight, helping you get your money quickly.