Credit card transactions processing is the process where retailers authorize retail payments made with Credit Cards. The Credit Card could be either Debit or Credit Card. Credit card payments are always authorized against the payment instrument at the time of purchase. This implies that Credit Card Transaction Processing is not possible for subscription based billing payments, wherein future payments by the client are expected for the service received.
Credit Card Transaction Processing is most suitable for one time transactions or subscriptions with a fixed duration. Credit card transaction processing requires high data security standards to ensure that the client’s private information is kept safe at all times. Credit Card Transaction Processing can be done either On-line or Off-line depending on the type of merchant service provider selected by the retailer.
On-line Credit Card Transaction Processing: In this type of Credit Card Transaction Processing, the Credit Card data is sent to the Credit Card Processor’s server for authorization. The Credit Card Processor then sends back an approval or denial message to the retailer’s server. If approved, then the retailer’s server will send an instruction to the Credit Card Processor to debit the funds from the Credit Card and credit it to the retailer’s account.
Off-line Credit Card Transaction Processing: In this type of Credit Card Transaction Processing, the Credit Card data is not sent to the Credit Card Processor’s server for authorization. The Credit Card Processor will authorize or deny the Credit Card Transaction at the Credit Card Terminal. Credit Card Terminals are basically electronic devices that accept Credit Cards and Credit Card Transaction Processing is done by swiping the Credit Cards through these terminals.
Credit Card Terminals then send an approval or denial message to the retailer’s Credit Card Processor, who then authorizes or denies the transaction on its server. If approved, then the Credit Card Processor will send an instruction to the Credit Card Terminal to debit the funds from the Credit Card and credit it to the retailer’s account.
The diagram below gives a more detailed description of how Credit Card Transaction Processing works:
The Credit Card Transaction Processing cycle usually takes about few seconds for an authorization to be completed. The Credit Card Transaction Processing time may be increased if there is a high load on the Credit Card Processor’s server.
The Credit Card Transaction Processing fees are usually paid by the retailer and vary depending on the Credit Card Processor used. Credit Card Processors also offer different pricing models for their services, which can be a bit confusing for retailers. It is important for the retailer to select a Credit Card Processor that offers a pricing model that is affordable and easy to understand.
Credit Card Transaction Processing is a very important process for retailers as it allows them to accept Credit Card payments from their customers. Credit Card Transaction Processing provides a high level of data security and helps to ensure that the Credit Card details are not compromised during Credit Card processing. Credit Card Transaction Processing also helps to ensure that customer’s Credit Card data is kept safe and Credit card fraud can be avoided at all times.