Credit Card Transaction - Overview

While there are some unique steps involved based on the type of credit card transaction explained in the next two articles, all transactions follow these basic steps:

• The Cardholder purchases goods and/or services from the Merchant.
• The Merchant, in effect, sells the transaction to the Acquirer (Processor) and is reimbursed the amount of the sale ticket less a "Discount Fee".
• The Acquirer then submits the transaction to the Issuing Bank for payment via the Visa / MasterCard "Interchange & Settlement" System.
• The Issuing Bank pays the Merchant Acquirer, less an "Interchange Fee," which partially reimburses the Issuer for its expense, through the Visa / MasterCard settlement system.
• The Cardholder repays the Issuer for goods and/or services originally purchased from the Merchant.