How does Credit Card Works?

We use credit cards quite often to take advantage of the benefits associated with it. Even though we have not deposited any money in the credit card account, we can make purchases without worries. 

How does this become possible?

There is a 6 step process that enables every credit card transaction to be completed smoothly, and it involves 4 different parties apart from the customer who makes the purchase.

The Six-Step Process of Credit Card Payment is as Follows:

1. Firstly, we - ‘the customers’, pay through our credit card on a merchant website or a retail outlet through the card swipe machine.

2. Secondly, as the swipe or transaction request is made, payment authorization details are sent to the payment processor through the payment gateway.

3. The payment processor then sends the details to the credit card network.

4. Credit Card Network authorizes or declines the payment request based upon the credit available. If the request is authorized, then the amount is debited from our credit card account. After this, payment approval confirmation is sent back to the payment processor from the CC network.

5. Transaction details are processed and sent by processor to merchant website or the merchant swipe machine Id.

6. As the payment is approved, the purchased items are handed to us or delivered. The merchant receives the funds within 2-4 working days in its account.   

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