Are you having trouble understanding merchant account and the process happening in the back end? this post is for you, in a couple of minutes you can easily find out how a transaction cycle starts from the credit card swipe machine and money will credited to the merchant account.

Lets have a look in to transaction cycle, first a customer purchase a product or service from the merchant and presented his card at the point of sale system (POS Machine).


After Card is Swiped , the Credit Card Swipe Machine will send Card details to the Merchant acquirer/Processor ,then processor will send a request for authorization of transaction to the issuing bank via Card Schemes or payment processing network.

Issuing bank approve or decline the transaction depending upon the availability of fund,  after the approval authorization code will be transferred to the point of sale (POS Machine) Credit Card Machine through card schemes and processor/merchant acquirer.

Then issuing bank will transfer money to the Merchant acquirer this all process complete in a matter of seconds.

At the end of the day Merchant will send all his transaction details as a batch from credit card swipe machine itself, after processor/Merchant acquirer transfer money to the merchant bank account after deducting agreed transaction charges.

the process of settlement usually takes 24 hours.

finally issuing bank will send a bill of purchase to the card holder.

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Sudheep C C

Author Sudheep C C

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