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![*]()
The electronic credit card and bank card processing flow
![*]() The following steps will give a broad overview
of how a credit card or a bankcard transaction flows.
Lets take a scenario of transaction happening at a retail
merchant's end.
- It all begins with a customer initiating transaction
by placing an order using a credit card.
- The merchant sends the transaction details to the
merchant's payment gateway. The details include customer's
name, address, identification info and the amount
of purchase.
- The payment gateway on receiving the information
checks its database to identify the acquiring bank.
- The payment gateway sends transaction information
to the acquiring banks payment processor.
- The payment processor identifies the issuing bank
on examining customer's credit card number and other
info.
- The payment processor sends the customer information
and transaction amount to the issuing bank.
- The issuing bank examines the information and also
runs the check on customers account balance to check
if there are enough funds to cover the transaction
order. At the same time, it verifies that the billing
address on the order matches the billing address on
file for the credit card (Address Verification Service).
- If there are enough funds to honor the transaction,
the issuing bank will send an authorization code back
to the payment processor and will block the amount
equivalent to transaction order amount in the customer's
account.
- In case of fraudulent account or insufficient funds
or invalid billing address, the issuing bank will
deny the transaction and send transaction declined
message back to the payment processor.
- The payment processor in turn sends the authorization
code or declined message to payment gateway.
- The payment gateway then sends the status to the
merchant, where the transaction was initiated and
merchant closes the transaction accordingly.
The entire flow mentioned above happens in a matter of
few minutes allowing a merchant to service his customer
faster.
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