The credit card processing system has many steps. Outlined below is a brief description of how a typical credit processing system works.
- The e-commerce transaction is submitted to a gateway such as Paid. The transaction can usually be either only authorized or authorized and captured at once.
- If the transaction was only authorized, the merchant must capture the transaction (i.e. flag it for settlement).
- The gateway (i.e. Paid.) will settle all captured transactions, refunds, and voice authorizations at the end of the day by securely routing them to a payment processor.
- The payment processor continues to route the transaction to the issuing bank (purchaser's bank) to request the funds.
- The issuing bank approves the transfer of money to the acquiring bank which in turn credits the merchant's bank account.