If you want your gateway to ensure safe and hassle-free online credit card transactions, make sure you choose one of the best providers of payment gateway in India.
If you are planning to sell products or services through your website, you need to understand how credit card transactions work on the internet. Online transactions with credit cards involve four steps of processing- authorization, batching, clearing and funding. There are different payment systems, one for each brand of payment card your website will be accepting. But on a broad scale, they all function in the same manner.
Let’s first get started with the process of credit card authorization
The online credit card transaction procedure starts with the card holder feeding in card number and other details on the merchant’s website during checkout. The payment gateway used by the website then transmits the information of the cardholder and transaction details to the bank’s processor or acquiring bank. The transaction information is then captured by the acquiring bank and routed through the appropriate card network to the card issuing bank for denial or approval.
If the customer has used a VISA credit card for transaction, the transaction information will be routed between issuing and acquiring banks through the VISA’s VisaNet network. The acquiring bank will send the transaction information to the card issuer through this network and an adequate response will be sent (approval or denial).
This response is sent after checking the card details and the validity of the transaction information. It is also checked whether or not the card holder has sufficient balance in his/her card to make the purchase.
The acquiring bank or its processor gets a response code from the card issuer through the network. This code then reaches the merchant’s gateway and gets stored in a batch file, waiting for settlement.
Clearing and Settlement Procedure
Once the authorization of credit card is done, the clearing and settlement procedure starts. The settlement starts when the merchant sends the batch of approved authorizations to their acquiring bank. These authorization batches are sent at the closing of each business day. The acquiring bank then starts the reconciliation and transmission of the batch of authorizations through interchange via the correct card association network such as VisaNet.
The card issuing bank’s account is debited by the card association and the money gets credited to the acquiring bank’s account. The credit is done for the net amount of the authorizations which is gross receipts, less interchange and network fees. The bank that issues the credit card pays the acquiring bank for the purchases made by its cardholder. The cardholder is then responsible for repaying his/her issuing bank for the purchases made by the merchant website along with the accrued fee and interest charges associated with the credit card agreement.
If you want your gateway to ensure safe and hassle-free credit card transactions, make sure you choose one of the best providers of payment gateway in India. A reputed provider’s gateway might be expensive for your business but it will surely eliminate your worries related to the safety of confidential credit card information being given by your customers.
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