We all go to the store, and we either default to our charge card, or if we have no cash, we use the credit card. How does the money go from our hands to the store? Read below to understand the overall process of credit card processing.
THE PROCESS:
The first step is to acquire a debit or credit card. Both cards can be used at the store. The difference for the customer is whether the amount is deducted instantly (debit) or whether the credit card company sends you an invoice every month.
When you swipe your card, the magnetic strip captures all the relevant information (cardholder name, card number, expiration, security code) and sends it along to the credit card processor.
From there, they deposit the money directly into the store’s bank account (depending on the processor, but generally within 1-2 business days) and the store gets a monthly fee, based on the cards and amounts swiped that month.
SOME NOTES:
As a security feature, some machines require additional information (such as the last four digits on the card) to help avoid credit card fraud.
Sometimes, your credit card company will put a hold on your card. There are different levels of holds. Some will stop the card completely from working, while others will not let a specific merchant to go through. Technology items are hot items to buy with a stolen credit card, so many times technology related purchases and especially large tech orders will get stopped by the credit card company. To resolve this, a quick call to your card company should resolve this issue.
Different stores require different levels of information. The more information they have, the more secure the order will be (with regard to charge backs and fraud) and therefore the store may pay a lower fee for the service.
Ever wondered why stores ask for your signature (either on the receipt or electronically)?
This is crucial for the store in case of chargebacks. When someone claims they never made that purchase, it is up to the store to prove the customer really placed the order. If the signature on the card matches the credit card receipt, this will help the store prove the purchase was legitimately made by the customer.