Credit Cards — How do they work?
Credit Cards, how do they work?
The simple act of swiping a small card into a terminal to effect a payment transaction would bewilder most shoppers in 1940. Even now in 2009 there are possibly some shoppers who don’t understand how credit cards work.
*How do credit cards work?
*What happens?
*How is the payment finally processed?
These are just some of the questions that even some card holders don’t bother to ask, either to themselves or anyone else. It may be possible that some store workers don’t fully understand it as well. If you have some questions of your own, here are some answers.
Every time a credit card is used to purchase something, several industry players – offering different services – come forward to complete the transaction.
Once the card is swiped across a PoS, (point of sale), terminal, the terminal electronically reads the card holder’s information. Then through a phone line, it asks for an authorization to complete the transaction from the processing network which is responsible for translating the information given at the PoS sale point.
The data is then sent to the issuing bank to check whether the account is valid and that the transaction is within the allowed credit limits. The network is next triggered to send an approval code to the PoS terminal. The details are then saved at the PoS which are then sent to the processing bank at the end of the day which then pays funds into the merchant’s account.
That takes care of the sale transaction, but, you still have to receive the billing and pay the bill.
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