Credit Card Payment Process Flow

The participants in processing a transaction are:

• Gateway: The gateway is the secure connection your company's website or virtual terminal and the financial entities that handle the processing and settlement of credit card transactions.
• Merchant Bank Account: The merchant's depository account for receipt of settlement funds.
• Acquiring Bank: The bank where the merchant account is established.
• Processor: This is the entity that processes credit card transactions (e.g. TSYS, First Data, etc.).
• Credit Card Issuer: The financial institution that issued the customer's credit card.
• Credit Card Interchange System: Interchange is the system established by the credit card associations that allows acquiring banks to submit credit card transactions to the credit card issuing bank for settlement on behalf of their merchant clients.

Credit card processing steps

• A credit card transaction is submitted to the Gateway.
• Gateway automatically passes the transaction over a secure connection to the Processor.
• The Processor passes the transaction to the Credit Card Interchange System.
• The Credit Card Interchange System routes the transaction to the appropriate Credit Card Issuer.
• The Credit Card Issuer approves or declines the transaction based on available funds and passes both the transaction results and, if approved, the appropriate funds back through the Credit Card Interchange System.
• The Credit Card Interchange System relays the transaction results to the Processor.
• The Processor relays the transaction results to the Gateway/.
• The gateway stores the transaction results and sends them to the merchant.

Steps 1-8 take 1-3 seconds to complete.

Settlement Process

The batch of transactions is sent to the processor for settlement and final processing. The batch settlement flows as follows:

• Gateway.
• Acquiring bank's processor.
• Credit card interchange system.
• Credit card issuer (transaction verified and funds are released).
• Funds are sent to acquiring bank, then to the merchant's bank and process results are sent to the processor.
• Process results sent to processor.
• Processor sends results to sent to Gateway and can be viewed or downloaded by the merchant.