HOW PAYMENT TAKES PLACE USING CREDIT CARD?

Today we easily do payment with our credit cards.But have you ever thought how this process takes place?? How the merchant gets payment??

In this process mainly six entities are involved:

  • Customer using credit carf
  • Merchant
  • Bank in which credit card is issued
  • Merchant’s bank
  • Payment gateway (external service providers)
  • Processors ( they are connected to merchant’s website through payment gateway )

Authorization process

First customer provide its information with its transaction details which is transferred to the payment gateway. Further it is transfered to processers which contact the bank of the customer; which issued  credit card. Information is verified. After verification it is again passed to merchants website through the processor and payment gateway. Hence money is transfered from customers account to merchants account.

Settlement Process

Transaction details is passed to the bank which has issued the credit card through payment gateway and processers. This bank sends details to the merchants bank and hence payment is transferred to merchants account.After including all charges the bank (customer) sends bill to the customer.


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