Your customer swipes a credit card to make a purchase at your business. That’s how the process starts—but there are more than just the two of you involved in the transaction.
Other Parties in the Credit Card Process
Knowing the other parties and what their roles are gives you more control over your payment processes, fees, and vendor choices. We’ve outlined the payment process—and the players—in three simple steps.
- The cardholder begins the payment process by requesting a purchase from your business. The cardholder does this by swiping, dipping, or tapping his or her credit card at your processing terminal.
- Next, the payment processing vendor and issuing bank 1 enter the scene. The payment processor (also called the acquiring bank 2) is the bank you’ve selected to handle your credit card processing. The credit card issuer is the company that the cardholder received his or her card from.
The cardholder’s action sends an authorization request to your processing vendor, which then sends a request to the issuer.
- If the acquiring bank and issuer authorize the transaction, the amount is transferred to your business for payment of the purchase.
1 The issuing bank issues the credit card to the consumer on behalf of the credit card network. The issuing bank also may be referred to as the credit card company.
2 The acquiring bank, or processing vendor, accepts the merchant’s transactions and passes them to the issuing bank.