Many businesses are setting up digital shops to accept payments online and capture more sales. To be successful, businesses need to incorporate streamlined online payment processing.

Have you ever wondered what happens when a customer swipes or dips their credit card to pay for a purchase? The entire payment transaction process occurs seamlessly in just a few seconds, but a lot is happening behind the scenes.

A credit card transaction is initiated when a cardholder swipes or dips their card for payment at a merchant location. Once the card is swiped or dipped, the merchant’s POS system sends the transaction request to the merchant’s payment processor. The processor sends the transaction request to the corresponding credit card network. The card network then sends the request to the card issuer, which either approves or declines the transaction based on availability of funds.

This process of verifying the validity of a credit card and the balance allowable on the purchaser’s credit line is called authorization. If an authorization is approved, the transaction goes through; it if is declined, the transaction does not go through, and the customer must present a different form of payment.