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What is Credit Card Processing?


Credit card processing simply helps you easily checkout when paying for a product and begins as soon as you provide payment details, whether that’s using a countertop card machine in-store, online or over the phone, via email, or post. Your credit card information is securely captured by the so-called payment processor before being encrypted and sent to be authorised. This blog helps you understand what is going on behind the scenes and who is involved at every stage.

What is involved in processing a credit card transaction?

Credit card transactions are speedy and happen in a matter of seconds, however it is a detailed process with a number of people involved:

1. You (consumer/cardholder) 
2. Merchant (business) 
3. Acquiring bank (merchant’s bank) or processor
4. Card networks
5. Issuing banks
6. Merchant 

Essentially your (the cardholders) information is transferred to the merchant and sent to their acquiring bank which is passed through to the card network and onto the issuing bank (your bank). Once the information is approved (or even denied) it goes back via the cycle to the merchant with the result.

The main job of the credit card processing circuit is to check if you (the cardholder) have sufficient funds for the payment to be completed.

For some consumers using a credit card to pay for a product or service whether that’s online or in-store can be a worry. Although a transaction can be super quick it is worth noting that the whole credit card transaction process is in place to help protect you the consumer. Each step is there to ensure that the transaction is secure and to help protect against fraud. Extra security measures such as tokenisation (protecting sensitive data by replacing it with an algorithmically generated number called a token)  and strong customer authentication (SCAs) are also in place to help consumers have an added peace of mind when paying for a product or service using a credit card, particularly online. 

What does a typical payment processing timeline look like?

As we’ve mentioned above a typical credit card payment process is complex, transferring information and authorisation from one party to another. We’ve broken it down in six steps for you here: 

1. You (the (consumer/ cardholder) presents your credit card for payment of goods or services. This is either in-store (contactless, entering your card and entering a pin number, swiping a card, or using a smartphone) online (via an online payment system) or over the phone (via virtual terminals).

2. The merchant’s (business) credit card machine, software or gateway is then used to send the payment details and card information to their acquiring bank (merchant’s bank) or processor. 

3. The acquiring bank or processor takes the payment information, who communicates with the issuing bank (your bank) via the appropriate card networks (such as Visa or Mastercard) for approval. 

4. Once the card networks receive the payment information they pass it to your bank.

5. The issuing bank will then approve (or decline) the transaction depending on the funds available and if it’s legitimate.

6. Once approved, the information (and a response code) is then sent via the card network back to the acquiring bank (merchants bank) and then onto the merchant’s terminal or credit card reader. Transactions which are approved are batched together to be settled at the end of each business day. 


It’s important to remember that all of the above happens in a matter of seconds. As a customer, the ability to pay with a debit or credit card for a product or service in a quick and fuss-free way is becoming the norm. It also means you are more likely to return to a particular merchant if there are no delays or problems. Even short delays to a transaction can mean you may not return as a customer, however, that can be a positive, especially if it’s potentially keeping you safe from fraud. 

Whether you require a portable credit card machine for your cafe business, a virtual terminal for your e-commerce store, or want to find out more about Opayo's merchant account services, contact our UK based support team today.