The online credit card processing flow is triggered by an online shopper initiating a purchase attempt on a merchant’s website.
Authorization transaction
- Merchant – submits an Authorization request transaction for approval.
- Payment processor – passes the request through the associations to the issuing bank and awaits response to be presented to merchant.
- Issuing Bank:
- approves or declines the authorization request.
- puts a hold on cardholder funds – the “Authorization hold”.
- Merchant – receives the approved or declined authorization transaction via the associations and payment processor and decides on next steps (usually according to further fraud checks and stock availability).
Capture transaction
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Merchant – submits a Capture transaction. Capture transactions are usually batched after being stored on merchant’s computer or POS machine and sent for processing once a day in order to minimize costs.
- Payment Processor – process batch and send capture transactions to issuing banks via the credit card associations.
- Issuing Bank
- sends money to Acquiring Bank via the credit card associations.
- bills card holder for shopping online.
- Acquiring Bank – funds the Merchant Account with net proceeds of the transaction.
- Payment Processor – provides detailed reporting on each capture transaction, including all fees deducted by all parties involved.
Gidi Argov, Founder and CEO
www.CreditCardProcessing-r-us.com
