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How Card Payment Processing Works

According to the latest results from the Bank of International Settlements, card payments are dominating the landscape, with more than 10 billion transactions being processed in the UK, for latest year of evaluation in 2011. The total value of the transactions by non-bank institutions was more than 800 billion dollars.

Given the backdrop, and in an ever evolving environment, it is essential for businesses of all sizes to now have the ability to process card payments. If you are a Valid cc new business owner, before adopting the payment process, you should have a basic idea how the process works in order to better appreciate the available options.

There are two phases involved in the card payment processing event. These are the authorization, which is obtaining approvals to complete payment for the transaction, and the settlement, which is the process that allows the transfer of funds from the merchant’s account to the issuing bank. The most important phase for the merchant, may be the authorization, as no authorization means that the payment process dies.

The process may appear to be obscure to the customer, but there are other parties and components involved that work behind the scenes to complete the card payment processing. When a purchase is made online, an authorization request is sent to the payment processor. The authorization request is then sent to the card issuer. The information contained in the request includes the number of the card, the expiration, the address associated with the card, the CVV number, and the total amount of the order.

The Card issuer will first validate the card number and expiration date. The billing address will also be verified, and the total order amount will be checked against available credit or funds. An additional level of verification can include the CVV in card-not-present transactions.

If the transaction is approved, the order amount is reserved from the credit available, or deducted from available funds.

The card issuer will send a response to the payment processor. The response will include an authorization and verification code, or a decline notification. The payment processor will include a response code, before the buyer is notified.

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