Credit Card Purchase Flow Diagram

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The Credit Card Purchase For Business Inventors

Visa Credit Card Purchase Flow Diagram

Diagram 1: Credit Card Transaction Process (Visa)


Steps:
1. The buyer makes the purchase and provides her card information
2. The merchants needs to get the authorization about the credit card information from the acquirer of the Merchant

Because nowadays, the shop can accept different types of electronic payment; hence, the Merchants could need a PSP.
A payment service provider (PSP* in the diagram above) offers merchants online services for accepting electronic payments by a variety of payment methods including credit card, credit debit, bank transfer, and real-time bank transfer based on online banking – as the intermediate between the merchant and the payment system.
In other words, the PSP will forward the message between the Merchant and the Acquirer as seen in the process diagram.
Although the PSP has certain role in the payment system, it doesn’t have a large impact on the success of the electronic payment system because the Merchant can have different choices for a PSP or even doesn’t need use one at all.

3. The acquirer in its turn sends the requests to the particular credit card company
4. The credit card company then forwards the request to the Issuer
5. The issuer sends his response back to the credit card company.
6. The credit card company then forwards the response back to the acquirer.
7. The acquirer indicates to the merchant if the transaction is authorized correctly.
8. Once the authorization is successfully obtained, the transaction is completed

Even after an authorization the merchant has yet to receive his money. This is done subsequently by a clearing and settlement process. 

9. To start this process, the merchant sends a request to acquirer bank for payment
10. The acquirer, in its turn, transmits the transaction amount through the card companies.
11. At this time, the credit card company will debit the issuer bank and credit the acquirer bank
12. The acquirer bank credits the merchant bank account
13. The issuer bank will bill the transaction amount to the buyer

One Key Points to Observe
Because of the time lapse between purchase, funds clearance and goods delivery, the above processes is prone to repudiation of commitments of the transaction by either the buyer or the merchant.
Either can refute they were never parties to the transaction, hence the need of rigorous data capture and records keeping in this kinds of transactions.

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