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What are the steps of a credit card process?

When it comes to credit cards, there is a lot of information to take in. Understanding the different steps of the credit card process can help you make better decisions about your finances and using your credit card. In this blog post, we’ll walk you through each step so that you have a clear understanding of what happens when you apply for, use, and pay off a credit card. Let’s get started!

Though it may seem like a simple process, a lot goes on behind the scenes of a credit card purchase. In order for merchants to receive their funds, each transaction passes through multiple phases involving different parties. 

The merchant processor will then deposit the funds into the merchant’s account. In some cases, there may be additional fees involved in this process. Generally, however, the entire process happens quickly and smoothly, allowing you to complete your purchase without any delays.

Even after all of this, there is still the potential for merchants to forfeit their revenue through a return or chargeback. It is important for merchants to be aware of the process and what could happen even after the initial purchase is made. By understanding all that goes into a credit card purchase, merchants can be better prepared for any situation that may arise.

Learn more about the process of processing credit cards for merchants, in just eight steps.

1. Making the purchase

The buyer discovers a product he likes and makes the purchase. The buyer may use a credit card to purchase the product at the shop, via an online payment system through a phone call, or via mail.

2. Inputting the transaction

Credit card information is swiped or dipped with an encrypted credit card reader or the card’s details of the transaction are entered manually via the virtual terminal. For transactions made via eCommerce the cardholder inputs the details of payment in a form for payment hosted on the site.

3. Transmitting the information

The data on credit cards is encrypted and sent to the processing terminal for approval when a POS terminal which is a secure gateway, connects to the processor network. P2PE or point-to-point encryption (P2PE) will help safeguard the confidential information of payment starting the moment the credit chip is moved or swiped all up to the authorization and acceptance. This method of security can assist in ensuring compliance with PCI security standards.

4. Authorizing the transaction

After the data has been transmitted after the data is transmitted, the credit card issuer is able to approve or deny the transaction. The reason for this is the authenticity of the card as well as the value of the transaction and also the funds that the cardholder has available.

5. Responding to merchants and processors

When the purchase is accepted both the processor and merchant will receive an authorization response.

6. The transaction is completed

The merchant concludes the transaction by sending an invoice to the customer. In the case of eCommerce purchases, the retailer will then make arrangements to ship the products to the customer.

7. Submission of an order close

The merchant concludes the credit card transaction by closing the batch. The transaction is closed which was processed the day. The processor’s bank that acquiring the transaction receives the funds from creditors of the credit cards.

8. The funds are then deposited

The processor’s acquiring bank transfers the funds to the business account of the merchant. This can take anywhere from 48 hours.

Final Thoughts

If you are a business owner Accepting credit card payments allows clients to pay for products and services. This will increase your cash flow and increase profits. Today, businesses have more options than ever before to assist in making the payment process as easy as they can for their clients.


The process of a credit card is relatively simple and straightforward. After all, that’s one of the reasons they’re so popular. By understanding each step in the process, you can be sure to avoid any surprises and know what to expect when using your credit card. Have you ever had a question about your credit card? Share it with us in the comments!


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