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Electronic or Real Time credit card processing
![*]() It's easy to understand how real-time, electronic
credit card processing works. It all begins with a customer
initiating transaction by placing an order using a credit
card. Then, Merchant securely sends the transaction details
to merchant account service provider over the Internet using
a secure, encrypted messaging protocol (SCMP).
The electronic credit card processing receives order information
and performs requested services. The service provider formats
the transaction details appropriately and securely routes
the transaction authorization request through its payment
gateway to the processor. The payment processor then routes
the transaction to the issuing bank (purchaser's bank) to
request transaction authorization.
The issuing bank on scrutinizing the information and on
checking the customer's account balance may authorize or
decline the transaction. The service provider sends the
message back to the merchant. Issuing bank approves transfer
of money to acquiring bank. The acquiring bank, in turn,
credits the merchant's account.
There are four different steps for getting through the stages
of your money initiating, authorizing, completing the transaction
and receiving your funds. The first step is to initiating
the transaction to verify that a card is active and within
the approved spending limit. Internet environment-Customer
provides your Web site with card identifiers (i.e., card
is not present).
The second step is Real-time authorizing, which reduces
chargebacks and catches card-entry errors. Credit card number
is entered. Terminal transmits the credit card number and
expiration date and sales total to your service provider
who transmits data to customer's credit card-issuing bank.
Customer's issuing bank approves or declines the transaction.
This leads us to the next stage of completing the transaction
as merchant's terminal or software transmits transaction
details to your service provider in a batch at close of
the business day which is forwarded to each credit card
company, which redirects the transactions to appropriate
banks. Bank debits credit cardholder's account and credits
the service provider. Thus, you are ready to receive your
funds as the service provider credits your merchant account.
All this happens within two business days.
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