Credit Card Transaction Processing: Step-by-Step

Step-by-Step

There are two main types of credit card payment processing systems. They are
merchant account processing and third party credit card transaction processing.
The credit card transaction process is different in both systems. Credit card
transaction fees are also differ. We’re going to follow credit card transaction
processing step-by-step for both types of credit card transaction processing
systems.

Merchant account credit card transaction processing is a type of credit card
transaction processing where the money is directly processed by the merchant
account providing bank.

• Your client enters the necessary information using a secure form
  on your web site
• This information is encrypted using SSL-encrypted technology
• The encrypted data is passed to the credit card transaction processing
  gateway
• The data is decrypted using an SSL certificate by the gateway
• The credit card transaction processing gateway verifies the correctness
  of the information provided
• The information is re-encrypted using SSL technology and passed
  on to the credit card transaction processing bank
• The bank transfers the money from the clients credit card to your
  merchant account

Third party credit card transaction processing is another type of credit card
transaction processing. Here the money is transferred through a third party
credit card transaction processing company to the bank. This is used when it
is difficult to acquire a merchant account due to the banks’ hard guidelines
and credit card transaction processing policies.

• Your client enters the necessary information using a secure form
  on your web site
• This information is encrypted using SSL-encryption technology
• The encrypted data is passed to the third party credit card transaction
  processing company
• The third party credit card transaction processing transfers the
  data to the banks’ gateway
• The credit card transaction processing gateway verifies the information
  and passed it to the bank
• The bank transfers the money from the clients credit card to the
  third merchant credit card transaction processing company
• The third party credit card transaction processing company transfers
  the money to your third party merchant account
• Payouts are then made by bank transfer, checks, PayPal, etc.

Both credit card transaction processing systems have different charging systems
too. Third party credit card transaction processing does not have any monthly
(or membership) fees, but a higher credit card transaction fee is usually taken.

It’s up to you which type of credit card transaction processing you chose,
which type of processing is available to you, or suitable for your business.