Credit Card Processing:Step by Step Processing

Article source: http://www.paynetsystems.com/. Used with author's permission.

This includes general information with a shipping address usually. This follows with the consumer entering payment information either into a form secured by a protocol or into an application, such as Internet Explorer or Netscape Navigator. With the secured form, the payment information is protected by Secure Sockets Layer as it is sent to the merchant. Using the payment software incorporated in the Web server, the merchant sends the encrypted transaction to the acquiring processor for authorization. The authorization is a request to hold funds for purchase. The acquiring processor either authorizes a certain amount of money or declines the transaction. An authorization reduces the available credit limit but does not actually put a charge on the customer's bill or move money to the merchant. If the transaction is authorized, a "capture" is the next step. The capture takes the information from the successful authorization and charges the authorized amount of money to the consumer's credit card merchant service. In line with bank card association rules, the merchant is not allowed to capture transactions until the ordered goods can be shipped, so there may be a time lag between the authorization and the capture .If the consumer cancels the order before it is captured, a "void" is generated; if the consumer returns goods after the transaction has been captured, a "credit" is generated.

The final step is to "settle" the transaction between the merchant and the acquiring processor. Captures and credits usually accumulate into a "batch" and are settled as a group. When a batch is submitted, the merchant's payment-enabled Web server connects with the acquiring processor to finalize the transactions and transfe the cash to merchant bank account

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