Credit Processing Outline

Want a simple outline of how a credit card is processed from the time the card is swiped or the details are entered into an electronic point-of-sale machine? Look no further:

  1. Details and information concerning both the credit card and transaction are sent to the sponsoring or acquiring bank of the vendor/merchant.
  2. The bank then contacts the bank that issued the credit card and forwards the information referred to above onwards.
  3. The credit card issuing bank will verify the information that has been provided and either approve or decline the transaction by sending a response code to the acquiring bank.
  4. If the transaction is approved then funds for the transaction amount will be deposited into the account of the vendor/merchant.
  5. Funds will also then flow from the credit card issuing bank to the acquiring bank.
  6. Funds should finally flow from the consumer to the credit card issuing bank (if they pay their credit card bill!).