Credit Card Processing – How It Works
Transaction Request & Response
- Cardholder initiates payment from merchant web store and submits credit card details.
- Merchant submits data from the sale to FACs gateway over a secure connection.
- FAC formats the data and passes it to the merchant banks processor via a secure connection.
- The merchant banks processor submits details to the credit card network (Visa & MasterCard interchange), which routes the transaction to the bank that issued the customers credit card (Issuing bank).
- Issuing bank approves or declines the transaction and passes the transaction results back to credit card Interchange.
- Interchange then sends transaction results to merchant banks processor and processor relays results to FAC.
- FAC updates its systems with results and sends them to the merchant showing approval or decline of the transaction.
- The merchant provides a real-time response to the customer.
The issuing bank then sends the funds to the credit card network, which passes those funds to the merchants bank (acquiring bank). The bank deposits or settles the funds into the merchants bank account.