Introduction
Ever wondered what happens when a customer swipes their card at your business? Credit card processing might seem like magic, but it's actually a well-coordinated process involving multiple players, all working together in the background. Let’s break down this journey, so you can understand how money goes from your customer’s card to your account.
Meet the Key Players
- The Cardholder: That’s your customer, the person making the purchase.
- The Issuing Bank: This is the bank that provided your customer with their credit card.
- The Merchant (That’s You!): The business accepting the card payment.
- The Merchant Bank: Where the funds are deposited after the sale.
- The Payment Processor: They make sure the transaction flows smoothly, handling the technical side of things.
- The Card Network: Think of these as the highways (Visa, Mastercard) that the transaction travels along.
Step-by-Step: From Swipe to Settlement
- Authorization: Your customer swipes their card, and in seconds, their bank confirms they have enough funds and authorizes the transaction.
- Settlement: At the end of the day, you batch and send all those approved transactions to your bank. In a day or two, the funds show up in your account, minus fees.
Why This Matters
Knowing how credit card processing works can help you spot any hiccups and make smarter decisions about fees and providers. So, the next time a customer swipes, you’ll know exactly what’s going on behind the scenes.
