Credit Card Processing

Credit card processing can seem like a confusing process, and there’s no doubt it’s a bit complex. There are four main steps to process credit card payments:

• Authorization
• Batching
• Clearing
• Funding

1. Authorization
The first step occurs when the cardholder requests a purchase from the merchant, who sends an authorization code to the card issuer. The issuer then confirms there is credit available and authorizes the transaction.

2. Batching
The merchant stores the day’s transactions in a batch, which are sent to the credit card processing company to receive payment each day.

3. Clearing
Next, the batch is sent through the card network to request payment from the card issuer, which subtracts its interchange fees and routes the payment back to the payment processor.

Interchange fees are charged when the transaction passes between the merchant and the processor, between the processor and the payment brands like Visa and Mastercard, and between payment brands and the card issuer. Interchange fees depend on the type of card, the type of transaction (whether the card is present or it is a phone or online order), average transaction volume, and risk associated with the transaction.

4. Funding
The process concludes when the processing company subtracts its discount fee and credits the merchant for the total.

NOVA Bancard facilitates this process by providing merchant accounts, which allow merchants to process debit and credit cards with user-friendly payment processing services.