How Credit Card Processing Works

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Ever thought about what happens when you tap your card at the checkout? Here’s a simple breakdown:

1. Data Transmission: When you swipe, dip, or tap, your card information, including number, expiration date, and security code, is securely encrypted and sent to the merchant’s payment processor.

2. Network Inquiry: The processor forwards the information to the appropriate card network (Visa, Mastercard, etc.), acting as the communication hub.

3. Bank Authentication: The network then relays the data to your issuing bank, responsible for authorizing the transaction.

4. Credit and Security Checks: Your bank instantly verifies if you have sufficient credit available and confirms the transaction isn’t fraudulent.

5. Authorization Response: Based on these checks, the bank sends an approval or decline message back through the network, ultimately reaching the merchant’s processor.

6. Transaction Confirmation: If approved, the processor sends a confirmation message to the merchant’s terminal, allowing the purchase to proceed.

7. Fund Transfer: While you enjoy your purchase, the actual transfer of funds from your bank to the merchant’s account typically happens later, either daily or after a batch of transactions.

Additional Characters:

  • Acquiring Bank: This bank works with the merchant, ensuring they receive the authorized funds seamlessly.
  • Card Association: These organizations (Visa, Mastercard, etc.) establish the rules and standards for the entire process.


  • Safeguard your card information to prevent unauthorized use.
  • Track your spending to maintain financial control.
  • Appreciate the secure and efficient system facilitating your everyday purchases.

Now, the next time you swipe your card, you’ll have a clear understanding of the intricate steps happening behind the scenes!

If you have any questions, BikPays is happy to provide merchant services to businesses of all sizes. Just contact us: or (925)-350-9453 .

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