The process a transaction goes through is actually quite complicated, however it only takes a few seconds. Here’s an inside look at how credit card transactions are processed using a Real-Time credit card processing solution:
1. The customer elects to move to the check out with the items they placed into their shopping cart or selected from the order form on a merchant’s Website.
2. The customer then selects “credit card” as their method of payment.
3. Their browser connects to the Website host’s secure server, and brings up the secure payment form.
4. The customer enters in his or her credit card information on the secure payment form, and authorizes the transaction by clicking a “Complete Order” type button.
5. The transaction information flows to the Website host’s secure server using SSL encryption.
6. The secure server connects to the merchant’s processing bank either via a Secure Payment Gateway (a third party who provides the connection to the processing bank via land line), or directly (some processors have their own proprietary Secure Payment Gateway and therefore do not require a third party to provide this service).
7. The processor polls the card network, such as Visa or MasterCard, directly, and the validity of the card, and availability of funds is confirmed.
8. If the transaction’s approved, an authorization code is returned to the processor, or to the Secure Payment Gateway from the processor.
9. The authorization is encrypted by the Payment Gateway or processor and transmitted in encrypted form to the Web server of the merchant, which triggers fulfillment of the order.
10. The merchant’s Web server then sends the customer’s browser a confirmation receipt.
11. The amount due is moved from the card holder’s bank to the merchant’s processing bank. The merchant’s processing bank will then move the money to the merchant’s local bank within 2 to 3 business days.
Here is a diagram of how Real-Time Credit Card Processing works:
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