How Credit Card Transactions Work

An experienced payment solutions company, ElitePay Global works with merchants to arrange payment processing in a convenient manner for both vendor and customer. ElitePay Global also offers merchant education to help clients understand the payment process.

A credit card purchase begins when the customer hands a card to the merchant or enters his or her information online. At that point, the selling organization requests authorization from the card issuer, then sends the transaction to its payment processor. The processor next takes control of the transaction and confers the information to the card network, such as Visa or Mastercard. The processor then sends the transaction to the issuer, which in turn transmits an authorization code.

Subsequently, the card network officially debits the issuer and credits the selling organization’s processor. The issuer is responsible for posting the transaction to the customer’s bill, and the payment processor for crediting the transaction to the seller. The processor charges the merchant for costs incurred in this process, which primarily consist of interchange fees due the issuer and assessment costs required by the card networks.