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Credit cards are becoming one of the most essential ways of shopping and life style. So now it is important for you to know the working procedure(s) of the credit cards. Structure of a credit card:
An account number is assigned to the credit card and its user. From that account number you could identify the name of credit card service provider and the credit card scheme, the preferred currency, the bank number, and the check digit.
You could find a magnetic strip on the credit card too, which stores some important information about the credit card holder like his name and contact details, credit balance, the date of expiration, and some other information used in the case of the account validation. The Credit System Operators:
Here we are mentioning some of the organizations attached with credit card validation and operation.
• Acquiring Bank: Through your acquiring bank, the purchases through credit cards will be transformed to cash and dumped to your account.
• Association: The issuers and the acquiring banks combine to form and association for branded credit cards like Visa or MasterCard.
• Card Holder: It will be you, who holds the credit card.
• Independent Sales Organization: These ISO provides the basic services.
• Issuing Bank: The banks that issue the credit cards to the cardholders.
• Mercantile: The merchants are the authorized organizations who accept the credit cards for the purchasing issues.
• Payment Gateway: The companies that provide the facilities of credit processing terminals and the merchant network.
• Payment Processor: The companies, which move the funds from a financial account to another financial account.
Sanction:
Here are lots of sanction procedures associated with the working procedures of credit cards. Lets mention some of them.
1. You should initiate a purchase through the merchant.
2. The mercantile accesses the ‘Payment Gateway’ and conveys the purchase details through the credit cards of the customer.
3. The ‘Payment Gateway’ observes the acquiring bank and the ISO details of the merchant and transact to the proper ‘Payment Processor’.
4. The Issuing Bank ID is determined and the transaction details are sent through the ‘Payment Processor’.
5. The issuing bank verifies the details about the cardholder and sends the ‘authorization code’ to the ‘payment processor’ if every thing tested okay.
6. The ‘payment processor’ sends the validation code (approval or decline) to the ‘payment gateway’.
7. Now ‘Payment Gateway’ resends the validation code to the ‘payment processor’.
8. The ‘payment gateway’ shows the transaction statues.
The Final Step: During the end of each and every day, the mercantile performs a special procedure called “capture routine” that sends particulars on all the finished dealings to the ‘Payment Gateway’. The ‘Payment Gateway’ sends all the data to the ‘Payment Processor’ that determines the transaction details regarding the issuing banks. The ‘issuing bank’ transmits the money electronically to the ‘acquiring bank’. Now the ‘acquiring bank’ transmits the money to the own bank account of the mercantile. This is the whole working procedure of a credit card. A little complex! But useful too!!!
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