At this stage, payment is guaranteed.īut not so fast: the payment still has to be cleared and settled. Once the consumer’s account details are verified, the payment network is given the okay to route approval to the merchant’s bank. For credit cards, different rules will apply based on the consumer’s available credit or predetermined spending limits. If the consumer is using a debit card, the network will have to verify that enough funds are available to complete the transaction. Once the payment network confirms the authorization message, it sends a request for payment to the issuing bank (the consumer’s bank). The card company then runs payment details through a variety of fraud-protection tools to validate the information. When a consumer swipes their card, the merchant’s bank will send out a request for authorization via the payment network. Merchants and processors are also involved in transactions, but consumers are often unaware of the extent of their roles. You encounter the key players involved in payment transactions daily, whether it’s your credit card company or bank. Where credit card purchases begin and who is involved
Transaction processing system cost how to#
No one is safe, but understanding what happens when you make a purchase with a credit card - and how to ensure the process is as safe as possible - is the first step in becoming a more educated consumer. To make matters worse, explains Herb Stapleton, section chief for the FBI’s cyber division, in a CNBC interview, “It’s nearly impossible for a consumer to detect that this has happened to them before the actual occurrence.” Cybercriminals are breaking into accounts and shopping websites to steal credit card information, which becomes their gateway to the payment transaction process. The technological powerhouse behind modern payment systems is not always safe. However, greater efficiency comes at a cost.
For example, payment systems have evolved to offer tools such as mobile wallets and peer-to-peer apps like Venmo that users rely on to settle the instant transfer of funds. Within this web are new and existing opportunities to build trust among consumers, merchants, and banks.
Behind every digital transaction is an intricate web of processes that enables nearly $2 trillion in payment volume.
We can easily swipe our credit card or touch to pay, and there’s an instant exchange of value. Payment transactions occur in a matter of seconds.
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