sequence diagram for point of sale terminal

How Credit Card Processing Works: Key Players This is important because different fees are incurred at each stage, and a failure (or partial failure) in either step can result in increased costs and/or credit card sales not being deposited. Credit card transactions happen in a two-stage process consisting of authorization and settlement. Authorizations must be settled before sales can be deposited into you business’s bank account. The issuing bank then sends an authorization back through the card network to your processor before it finally ends up back at your terminal or software.Īs involved as the system sounds, obtaining an authorization for a transaction is just the first step. In just a matter of seconds, your terminal passes transaction information to a processor, and then through the card network to the issuing bank for approval. The bankcard networks that ferry billions of transactions between merchants, processors and banks are truly modern marvels. Card Associations (Visa and MasterCard).For now, let’s dive in to how credit card processing works. Once you’re done reading this article, check out our more detailed breakdown of where credit card processing fees come from. Knowing the lay of the land will help you better identify how to get the best processing solution.

But, it’s a good idea to have a general understanding of how credit card processing works because fees are incurred at various stages of the system. It isn’t necessary to have intimate knowledge of the inner-workings of the bankcard system in order to find the best credit card processor.

Sequence diagram for point of sale terminal