The knowledge of credit card processing Ireland helps better in identifying how to get the best processing solution. So, let’s see how credit card processing works.
The bankcard networks r modern technology that does billions of transactions between merchants, processors, and banks. In just a few seconds, your terminal passes transaction information to a processor, and then through the credit card to the issuing bank for approval. The issuing bank will send authorization back through the network to the processor.
Getting an authorization for transactions is just the first step and it should be settled before sales can be deposited into your bank account. Credit card transactions are done in a two-stage process that is authorization and settlement. Also, different fees are incurred at each stage, and a failure in either step can result in increased costs and/or sales not being deposited.
How Credit Card Processing Works
For authorization and settlement; cardholder, merchant, acquiring bank, issuing bank, and card associations are involved.
· Cardholder: A cardholder is someone who obtains a bank card from a card issuing bank. By presenting that card at a business you can pay for goods or services.
· Merchant: Any business that sells goods or services is a merchant. Merchants that accept cards as a form of payment are any business that maintains a merchant account that enables them to accept credit or debit cards.
· Acquiring Bank: A registered member of the card associations; a merchant bank as they contract with merchants and create and maintain accounts.
· Issuing Bank: Issuing bank issues credit cards to consumers; it is also a member of the card associations. They pay acquiring banks for purchases that their cardholders make. It is then the cardholder’s responsibility to repay their issuing bank.
· Card Associations: Visa and MasterCard don’t issue credit cards or merchant accounts. They act as a custodian and clearinghouse for card brand and function as the governing body of a community of financial institutions.
Credit Card Clearing and Settlement: How credit card transactions and credit card processing Ireland work is clearing and settlement; this happens after the authorization process takes place. For settlement, the merchant sends authorizations to the processor. The processor reconciles the authorizations and submits over the card association networks. The processor deposits the funds into the business’s bank account and deducts processing fees.
The issuing and acquiring banks communicate and move money and the cardholder then pays the issuing bank.
· Merchant: Merchant begins the settlement process by asking for approved authorizations to their acquiring bank. Multiple individual credit card transactions make up a batch.
· Acquirer: Acquiring bank reconciles and transmits the batch of authorizations through interchange. It also deposits funds from sales into the merchant’s bank account and debits the merchant’s account for processing fees.
· Card Network: The card association debits the issuing bank’s account and credits the acquiring bank’s account.
· Issuer: The card issuing bank pays the acquiring bank for its cardholder’s purchases.
· Cardholder: He/she is responsible for repaying to issuing bank for the purchase and any accrued interest and fees associate with it.
Funding and Fees
There are some variations on how fees are deducted, and when funds are deposited.
Credit Card Deposits: Nowadays, most processors offer next-day funding, which means that you will receive money for today’s credit card transactions from the credit card machine tomorrow. And if you miss the cutoff, you won’t receive funds until the next business day.
Credit Card Fee Deductions: Daily discounting, it involves the processor deducting processing fees each day. This means that you receive the net sale amount or the fees. With the monthly discount, the processor deducts processing fees for the month’s transactions per month but deposits funds daily.