How Does Debit Card Processing Work?

When a customer swipes their debit card for payment, it seemingly instantaneously draws money out of their bank account to pay for whatever it is they’ve purchased. And though this is true, that debit card payment processing time is fast and efficient, there are many steps taking place just out of sight. Those steps look something like this:

• The customer uses their debit card to make a payment.
• The point-of-sale system used by the merchant takes the debit card information and sends it to one of the debit card processing companies (Visa, Mastercard, etc.) the merchant is using.
• The processing company ensures all of the debit card information is valid and eliminates any possibility of fraud.
• The processing company then takes the validated data and sends it along to the bank that issued the customer’s credit card.
• The customer’s bank checks to make sure that the customer has enough money to actually make whatever payment they’re attempting to make, and then makes a decision to accept or reject the payment.

If approved, the merchant will finish their transaction with the customer and then whichever one of the debit card processing companies being used will then be responsible for the authorization, clearance and settlement of the transaction. Meaning, the debit card company will have to verify the amount of funds owed and then deposit that money into the merchant account. Source