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![*]()
Understanding the electronic credit card and bank card processing
flow
![*]() Lets understand how does
a credit card authorization process flow. Lets take a scenario
of transaction happening at a retail merchant's end. The following
steps will give a broad overview of how a credit card or a
bankcard transaction flows.
It all begins with a customer expressing their desire to pay
by card for the order placed. The merchant sends the transaction
details including customers name, address, identification
number and details of order to a
payment gateway. The gateway
on receiving the information identifies the acquiring bank
and sends this information to the acquiring banks payment
processor.
The payment processor identifies the issuing bank based on
customer's information sent by the payment processor and accordingly
sends the information to issuing bank.
The issuing bank scrutinizes the information and also runs
the check on customers account balance to check if there are
enough funds to honor the transaction order.
If there are enough funds to honor the transaction, the issuing
bank will send an authorization code to the payment processor
and will block the amount equivalent to transaction order
amount in the customers account.
In case of fraudulent account or insufficient funds, the issuing
bank will deny the transaction and send transaction denied
code to payment processor.
The payment processor in turn sends the code to payment gateway.
The payment gateway then sends the status to the merchant,
where the transaction was initiated and merchant closes the
transaction accordingly.
The entire flow mentioned above happens in a matter of few
minutes allowing a merchant to service his customer faster.
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