The flow of money and information between these parties - forever via the card relations - is known as the substitution, and it consists of a few steps.
TRANSACTION STEPS
- Authorization: The cardholder pays for the obtain and the merchant submits the deal to the acquirer (acquiring bank). The acquirer verify the credit card number, the transaction sort and the quantity with the issuer (Card-issuing bank) and reserves that amount of the cardholder's credit boundary for the merchant. An agreement will make an agreement code, which the merchant stores with the transaction.
- Batching: certified transactions are stored in "batches", which are sent to the acquirer. Batches are usually submitted one time per day at the ending of the business day. If a deal is not submitted in the batch, the agreement will stay suitable for a time determined by the issuer, after which the detained amount will be returned back to the cardholder's obtainable credit (see authorization hold). several transactions may be submitted in the batch with no prior authorizations; these are either transactions declining under the merchant's floor boundary or ones where the approval was unsuccessful but the merchant still attempts to oblige the transaction from side to side. (Such may be the case when the cardholder is not present but owes the merchant extra money, such as extending a hotel reside or car rental.)
- Clearing and Settlement: The acquirer sends the batch transactions throughout the credit card union, which debits the issuers for payment and credits the acquirer. fundamentally, the issuer pays the acquirer for the transaction.
- Funding: just the once the acquirer has been rewarded, the acquirer pays the merchant. The merchant receives the sum totaling the funds in the batch minus the "discount rate," which is the charge the merchant pays the acquirer for handing out the transactions.
- Chargeback: A chargeback is a happening in which money in a merchant account is held suitable to an argument linking to the transaction. Chargeback are usually initiate by the cardholder. In the occasion of a chargeback, the issuer takings the transaction to the acquirer for declaration. The acquirer then ahead the chargeback to the merchant, who must either admit the chargeback or contest it.