Reviewing the Best Merchant Account Providers

Though more and more people are using their credit cards, very few truly understand exactly what happens when they swipe their card through a machine in a store, or key in their information when shopping online.

Indeed, the speed at which the process happens belies a great deal of activity that insures all parties are protected while business is getting done.

When a card is used in a store, it is swiped through a terminal that reads the magnetic strip on the back. The terminal then connects the acquiring processor to obtain authentication. The processor then sends the transaction to the card association, which submits the information for the authorization from the bank issuing the card.

At this point that bank either accepts or declines the transaction, sending the response back to the card association. Assuming there is an acceptance, the association contacts the credit card processor with the authorization and a request to deliver goods and/or services is sent to the merchant via a POS terminal.

The merchant then sends the card processing company what is called a fulfillment notification to permit settlement – which means the goods/services are delivered.

Then the credit card authorization information is sent to the issuing bank and the customer’s card is charged. This entire process takes less than 10 seconds.

Usually at the end of the business day the merchant settle their batch, at which time the acquiring processor finalizes transactions with the issuing bank(s), and funds are transferred to the merchant’s bank account.

When the transaction is over the internet, there are minor differences. After the consumer picks out what they want and bundle into a virtual shopping cart they navigate to the checkout page, where they enter their shipping and billing information. Their card information (number and expiration date) are entered on to a secure form transmitted over the Web using real-time processing software, which then encrypts the transaction to the acquiring processor for authorization.

The acquiring processor will then pass the transaction to the card association, which requests final acceptance from the issuing bank. The bank accepts or declines the transaction and notifies the card association. The association contacts the card processor with the authorization and the request to deliver goods/services is sent to the merchant.

As before, the merchant sends the card processing company the fulfillment-to-permit- settlement notice – meaning the goods are ready for shipping. The capture takes place as authorization is given to the issuing bank and the customer’s card is charged. Again, this all takes place in less than 10 seconds.

And again the merchant settles their batches at the end of the day and the funds are deposited into the merchant’s bank account.