More and more consumers are turning to credit cards for their purchasing than using cold cash. According to the American Bankers Association, in 2009 alone, credit cards in the United States accounted for over $2.5 trillion worth of transactions. Add to this the more than $1.63 trillion worth of prepaid and debit Mastercard and Visa transactions, and you will realize that cards have taken the mainstream option for different businesses. In fact, cards have become a solid presence in the world today, next to the legal tenders of the different countries.
But the fact remains that there are a big number of small business which do not recognize the cards up to now. these card transactions involve the operation in high tech computer networking and are not merely going through the motions of sliding the card and entering a set of identification numbers.
The Credit Card Process
The computer network processes the merchant identification, the credit card number and purchase amount when a merchant enters a sale and slides the customer's credit card. Usually, dedicated banks or company service providers take the specific role of being processors for credit. These entities do nothing else but give credit card processing services.
Transactions of cards go to the computer network from the card processor's dedicated network. In case the customer uses a Visa card, then the transaction gets sent to the Visa computer network. This then goes to the originating bank where the card was issued. The bank then checks and verifies if these card still has enough credit line to address the purchase transaction.
Once verified, the bank then gives authorization to the merchant through the computer network. The sale is then completed, with the transaction pending as no money has been transferred yet. Once the money is transferred from the bank to the account of the merchant, the transaction is then deemed completed.
The credit network receives the transactions in batches from the daily receipts being sent electronically by the merchant at the end of each business day. The transactions from credit cards are sent through these card processor of each merchant or business establishment.
The different transactions are then sorted and classified and then sent back to the respective cardholder's creditor banks. The debit processing is then handled by the respective banks and then they course the appropriate payments to the respective merchants' credit card processors and make their way through the Federal Reserve Bank's Automated Clearing House in the case of the United States.
The merchant's bank account is then credited with the transaction amount by the card processor less all the required fees. These fees are taken by the originating bank and the compare cards network.
About this Author
A merchant account with the bank is necessary before you can accept the different credit cards. There are some card processing companies that have shun small businesses due to the volatility of its financial capabilities, and the processing of cards have become more stringent in order to properly screen the merchants of their respective profiles.
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