Credit Card Processing Midway, Its Working Process with Merchant and Card Holder

There is no need to possess deep-rooted knowledge of the bankcard system and its inner-workings to find the credit card processor. In fact, it is good to have a general understanding of the works of the credit card processing as the fees are bone at different stages.

Knowing this lay helps in isolating the areas offering savings. The networks of a bankcard normally ferry transactions in billion between processors, merchants, and banks. They are modern marvels. The terminal passes in a few seconds the transaction to a processor and for approval to the issuing bank through the card network. The issuing bank sends authorization to your processor through card network before it ends finally at your terminal or software.

The system is involved in getting the transaction authorization, and this is the foremost step in credit card processing midway. There is a need for the authorizations to be settled prior to sales deposit being done into the bank account of the business. The transaction of credit card is a process of two-stage, and it consists of settlement and authorization. It is important as it includes different fees at each stage and the failure in any of the step results in credit card sales or increased costs that does not get deposited.

Working of Credit Card Processing

There are key players in the authorizing, payment processing midway and credit card transaction settling such that each process is examined in more detail. The key players are into the settlement and authorization of the cardholder, the cardholder’s bank (the issuing bank), the merchant’s bank (the acquiring bank), the business (merchant), and Master Card and Visa (the card associations).


In case there is a debit or credit card that you have, you must be aware of the actions you have to take as the owner of the card. A cardholder is a person obtaining a debit or credit bankcard from an issuing bank. The present to merchants a card against services or goods payment.


A merchant technically refers to all types of business selling services or goods. But the merchants alone accept cards in the payment form as it is pertinent. A merchant in any business maintains a merchant account enabling them to accept as payment the credit or debit cards from the cardholders who are the customers for services or goods provided.

Merchants Bank (Acquiring Bank)

A merchant’s bank is an acquiring bank that is the Visa and MasterCard that are card associations registered members. The acquiring bank is referred as a merchant bank as they are in contract to maintain and create the merchant’s accounts such that these allow the businesses to accept the cards, debit or credit. The acquiring banks give the merchants software so that it accepts cards and handles essential aspects in accepting the card.

Cardholder Bank (Issuing bank)

Issuing bank gives to consumers the credit cards. The issuing banks pay the cardholders made payment against the purchases to the acquiring banks. This becomes the responsibility of the cardholder to repay the issuing bank as per the agreement of the credit card.