Describe the major steps involved in an online credit card transaction.
Answers
Answer:
1. Making the purchase
The customer finds a product that he or she likes and decides to make the purchase. The customer can use a credit card to pay for the item in the store, through an online payment gateway, by phone, or by mail.
2. Entering the transaction
The credit card is swiped or dipped using a secure credit card reader, or the card and transaction information is manually entered using a virtual terminal. For eCommerce transactions, the cardholder keys in the payment details on a hosted payment form on the website.
3. Transmitting the data
The credit card data is encrypted and transmitted for approval as the terminal, POS system, or secure payment gateway is connected to the processing network.
4. Authorizing the transaction
Once the data is transmitted, the credit card issuer can approve or decline the transaction. This is based on the validity of the card, the amount of the transaction, as well as the cardholder’s available funds.
5. Responding to processor and merchant
If the transaction is approved, the processor and the merchant receive an authorization response.
6. Completing the transaction
The merchant completes the transaction by issuing a receipt to the customer. For eCommerce orders, the merchant then prepares to ship the items to the customer.
7. Submitting a batch closure
The merchant completes the credit card payment process with a batch closure. This closes out the transactions that have been processed on that day. The processor’s acquiring bank then collects the funds from the credit card issuers.
8. Depositing the funds
The processor’s acquiring bank then deposits the funds into the merchant’s business account. This typically takes up to 48 hours. In addition to the steps outlined above