The Mechanics Of A Credit Card Purchase.

Most of us have more than one credit card in our wallets and use them on a daily basis, but have no idea how they work. We just swipe the card, sign the receipt and grab our bags and go. Credit cards do make out lives a bit easier and when used responsibly are the best source to build up credit scores. There is a lot that goes on behind the scenes after you swipe and I will try to explain. Hopefully you will have an understanding of how your money is distributed.

Merchant:

First you have the store, gas station, website, or anywhere you swipe or input your card number. We all know these places too well, so I won’t go into more details about them.

Acquirer:

Next you have what is called the acquirer or merchant credit card processing services, such as paypal.

Issuer:

The acquirer then send your information to the the issuing bank. This is the bank that you see printed on your card or the bank that you applied to for the card. The bank is the one lending you the money to buy your item.

The bank checks your account and make sure you have enough to cover your purchase. This information is the sent back to the credit card processing service and before they send it back to the merchant they take a small cut, which is split between them and Visa, Master card, Discover etc. The merchant get the green light and hands you a receipt and your item. The merchant takes there cut and use the rest to replace the item for the next customer.

All this takes place in a matter of seconds and is way more complicated then I make it sound, but these companies do there best to keep it as simple as possible for the cardholders. So, that is it, what happens after you swipe your credit card.

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1 Response for “The Mechanics Of A Credit Card Purchase.”

  1. Carmelo Cockerhan says:
    February 18, 2010 at 9:42 am

    Whilst I would’ve appreciated it further if you added in a relevant video or at the least photos to support the description, I still thought that your write-up quite beneficial. It’s often challenging to make a complicated matter look simple. I appreciate your weblog and will subscribe for your feed so I will not miss anything. Fantastic content

    Reply

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