How Card Payment Processing Works

Card payment processing is the secure and seamless electronic handling of financial transactions. It allows customers to make purchases using credit or debit cards with the assurance of swift authorisation and settlement. Credit card machines are hardware used to initiate these transactions. 

Understanding how card processing works can empower business owners to make the best choice when selecting a merchant services provid


What is Card Payment Processing?

Essentially, card payment processing allows merchants to accept non-cash payments at a POS (point-of-sale). The process facilitates electronic payment from a customer to the merchant through their respective banks.

For merchants, card payment processing is a necessary part of doing business, especially in Ireland, where domestic card payments are responsible for around €6 billion each month.

How Card Payment Processing Works

The whole process takes just a few seconds, but there are a few steps that must be completed in this time. 

Step 1: Initiation

Firstly, payment must be initiated by the customer. This is basically when they decide to make a purchase by using their card either in-store, online, or with a virtual terminal. The customer’s card details, including the card number, expiration date, and CVV, are securely transmitted to the merchant. This starting point begins the card payment process.

Step 2: Authorisation

Once the merchant receives the payment details, they initiate an authorisation request. This is done automatically through the payment terminal when it receives the card information. The authorisation request is sent to the acquiring bank (the merchant’s bank), which then contacts the cardholder’s issuing bank. At this point, the issuing bank (the customer’s bank) performs a series of checks to make sure there are enough funds, that the card has not been reported as lost or stolen, and that the transaction aligns with the cardholder’s usual spending patterns. 

If any of those checks signal a problem, the payment likely won’t be authorised. 

Step 3: Authentication 

In order to provide an extra layer of security, many transactions involve special authentication measures. This may prompt the cardholder to enter a one-time password or verification code. They may also use biometric authentication in some cases, which further ensures that the cardholder is truly the owner of the card. These authentication measures are common with online payments. 

Step 4: Approval

As long as all the authorisation and authentication checks are successful, the issuing bank gives the go-ahead by approving the transaction. This approval is then transmitted back through the acquiring bank to the merchant, signalling that the payment can proceed. 

Step 5: Settlement

After the transaction is approved`, it’s time for the actual transfer of funds. This is called settlement. It occurs when the acquiring bank (the merchant’s bank) transfers the funds to the merchant, while the issuing bank deducts the purchase amount from the cardholder’s account. 

Card Payment Processing Security

Security plays a crucial role in card payment processing. For example, PCI compliance stands as a sort of benchmark for organisations across the industry. Robust safety measures, such as data encryption and secure network protocols, are employed to fortify the protection of sensitive information. 

It is important to note that the commitment to security extends beyond technical measures. Fostering a security-conscious culture within organisations is vital. Training programs that educate staff on the latest security 

The Role of Merchant Service Providers in Card Payment Processing

Merchant service providers play an important role in electronic transactions. They act as intermediaries between businesses and financial institutions. By the same token, they facilitate smooth and secure card payment processing for merchants, ensuring that transactions are conducted seamlessly. Here are the key roles of merchant service providers: 

1. Transaction Processing

Service providers handle the technical aspects of processing card transactions. In particular, they ensure that the flow of funds between customers, merchants, and banks is efficient and secure. 

2. Payment Gateway Integration

They provide and integrate payment gateways, which serve as the virtual bridge between a merchant’s point-of-sale system or website and the financial networks. In turn, this allows for real-time transaction processing for swift payments. 

3. Risk Management

Knowing all of the ins and outs of card payment processing security can be tricky. A merchant service provider takes that on for you, implementing risk management tools and strategies, to identify and mitigate potential issues. These may include fraud, chargebacks, and other risks. 

4. Compliance

Another task a merchant service provider takes out of your hands is managing compliance with industry standards. In particular, PCI DSS (Payment Card Industry Data Security Standard) sets out requirements for card payment processing security. The merchant service provider ensures that these standards are upheld so business owners can focus on their business. 

5. Customer Support

A reliable service provider is able to offer customer support to assist merchants with any issues related to payment processing, technical glitches, or general inquiries. Many of the best merchant service providers in Ireland will offer 24/7 support. 

6. Technology Integration

Payment technology evolves quickly. Merchant service providers will stay abreast of updates, changes, and additions to card payment processing. For instance, when WeChat Pay and Alipay became available, New Payment Innovation became the first merchant service provider in Ireland to offer these digital wallet payment methods.

7. Hardware and Software

Merchant service providers also provide the necessary hardware for card payment processing. Card machines, cash drawers, EPOS software, and more are generally offered to merchants for versatility in taking payments. 

New Payment Innovation’s Approach to Merchant Services

NPI’s commitment to innovation and customer-centricity means we’re not just another payment provider – we’re the best merchant service provider in Ireland. Whether you’re a business looking for diverse payment methods, integration with your existing systems, or real-time insights, we’ve got you covered. Here’s how we do merchant services:

Face to Face

For businesses that rely on the stability and familiarity of traditional card transactions, NPI offers seamless card reader options, including wired, wireless, and mobile. These methods ensure that you can accept payments securely through trusted and established channels.

In an era where speed and convenience are paramount, NPI embraces advanced technology for your face-to-face transactions. Our solutions, including contactless payments, enable quick and secure transactions. Customers can simply tap their cards or mobile devices for swift and hassle-free payments, whether they’re shopping in a store or at a vendor’s stall.

Recognising the growing importance of mobile payments, NPI empowers businesses to tap into the mobile-centric world. With our card machines for business, you can offer customers the flexibility to pay with smartphones, digital wallets, and cards, making the payment process both efficient and user-friendly.


NPI understands the importance of streamlining safe online payments for businesses and ensuring a secure and convenient experience for customers.

Our integrated solutions are designed to seamlessly connect with a wide range of e-commerce platforms and payment gateways. This means that whether you’re a business looking to accept online payment or a customer making a purchase, the process is straightforward and secure.

For businesses, NPI’s integration with e-commerce platforms allows for a hassle-free setup, enabling you to accept payments on your website or digital storefront. Our system effortlessly manages the flow of transactions, ensuring a smooth experience for your customers.

Over the Phone

Our virtual payment terminals are at the heart of over-the-phone payments. Notably, they provide a secure platform where businesses can process transactions remotely. This is especially useful for businesses that offer services or sell products over the phone, through catalogues, or via email. By using virtual terminals, you can efficiently handle card transactions from anywhere, thereby enhancing convenience and accessibility for your customers.

Furthermore, security is paramount in over-the-phone transactions, and NPI takes this responsibility seriously. Our systems are designed to ensure the utmost security for both businesses and customers. Card data is handled with care, and our virtual payment terminals adhere to industry standards for secure payments.

You can learn how to take card payments over the phone here.

Contact NPI Today

Explore the NPI difference by getting in touch with our expert team. We’re here to provide guidance, valuable insights, and tailored solutions that align with your unique needs and goals. Reach out to us at 014475299, fill out the contact form and one of our payment gurus will get back to you.

Want to see our card machines for yourself? Come down to our Citywest HQ and have a look around the Experience Suite.

Card Payment Processing: FAQs

What is card payment processing?

Card payment processing is the secure and seamless electronic handling of financial transactions, allowing customers to make purchases using credit or debit cards.

It involves initiating a payment, authorizing the transaction with the cardholder’s bank, authenticating the user, gaining approval, and settling the funds between the merchant and the issuing bank.

PCI compliance refers to adhering to the Payment Card Industry Data Security Standard, a set of security standards to ensure the protection of cardholder data during processing, transmission, and storage.

Merchant service providers act as intermediaries, facilitating transaction processing, providing payment gateways, managing risk, ensuring compliance, and offering support and account management for merchants.

Data encryption, secure network protocols, access controls, and authentication mechanisms are implemented to safeguard cardholder information from unauthorized access or breaches.

Advancements include contactless payments, mobile wallets, tokenization, and other innovations that enhance the speed, security, and convenience of electronic transactions.

Implementing risk management tools, staying PCI compliant, educating staff, and partnering with reliable MSPs are effective strategies to mitigate risks like fraud and chargebacks.

Yes, reputable MSPs offer scalable solutions that can accommodate the needs of businesses ranging from small startups to established enterprises.

Transparent pricing ensures that merchants have a clear understanding of all associated fees, promoting informed decision-making and preventing unexpected costs.

Considerations include transparent pricing, security measures, customer support quality, integration capabilities, industry experience, and the provider’s reputation and reviews.

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