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.