Who Is Involved In Making Credit Card Processing Possible?

The customer

The person or business making a payment using a credit card is the kick-off point for any sort of credit card processing.

The merchant

The other half of the purchasing process, a merchant has the desire goods or service that a customer uses a credit card to pay for.

Payment gateway

When a payment is made, it goes through a payment gateway that connects the merchant to the credit card processing company. A payment gateway deals with all of the customer and the merchants financial information, the present or not-present state of the credit card, (i.e. is the payment virtual or in person), and sends them to whatever credit card payment system for small business the merchant is using. Payment gateways will then inform the merchant if the card has been approved or declined. There are many credit card payment systems for small business.

Payment processor

This is the virtual liaison between the merchant’s preferred credit card and the customer (or cardholder’s) financial institution of choice. When you make a credit card payment for business, the payment processor helps the two institutions communicate.

Card network

The customer makes a credit card payment using a specific credit card brand–Visa, Mastercard, Discover, etc. This brand of credit card is commonly referred to as the “card network.” Customers choose their card networks based on a variety of factors: rewards, APR, interest rates, initial signing bonuses, etc.

Issuing bank

You can think of this as the “customer’s bank”. When a credit payment for business is made the payment processor works with the issuing bank to provide payment to the merchant. They also will ensure that the customer has the available funds to make the purchase, and if so, they’ll approve the release of those funds.

Acquiring bank

This is the merchant’s bank. When a payment is made–via credit card or otherwise–this is where it ends up and where it’s stored for future use. Many banks also act as credit card processors, providing their own credit cards and/or the equipment used to allow businesses to accept credit cards. Nowadays, many of these credit card payment systems for small business (or big business) exist as strictly online entities.

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