The way businesses conduct business transactions. In the wake of a shift away from cash-based transactions, the payment processing industry has changed adapt to the changing demands of the marketplace. Consumers can understand the history of the payment industry and the impact it has had in the past.
The first step to understanding the functions a processing firm accomplishes is to understand the various parties involved. The term “cardholder” refers to the individual who has the credit card. They use it for purchase. The merchant is the business which provides a service or item to the cardholder. The financial institution which processes the transaction on behalf of the merchant is called the acquirer. Transactions are processed through the credit card network or brands. Finally, issuing bank is the financial institution that issued the credit card to the customer.
Knowing the whole transaction is the next step. The customer will use their card in the merchant’s POS terminal. The terminal transmits information to the acquirer. With the help of the credit card network, the acquirer will transmit details to the bank that issued the card.
The attached video provides additional information on the payment processing industry.