A transaction begins when a customer (a cardholder) chooses to make the payment for goods or services with his/her credit card. The customer (the cardholder) swipes his/her credit card through the credit machine (a terminal) magnetic stripe reader. This action initiates the first of two transactions. This first transaction in the card processing industry is called, “authorization request”. The credit card number and other information read by the terminal is sent to Challas Group’s network and in turn, it goes to the credit card issued bank (an issuing bank) for the authorization. Thus an “Authorization Request” transaction is generated. The issuing bank then checks to see if the credit card number is valid and see if the requested amount is available on the cardholder’s account.

The issuing bank either sends back a 6-alphanumeric approval number (an authorization code) or a decline message to Bankcard Services processor. If approved, the approval response is passed back to the terminal which prints a receipt for the cardholder to sign, and then you (the merchant) check the validity of the signature both on the back of the card and the receipt, and keep the signed receipt as a proof of the issuing bank authorization.

This completes the first transaction, but the process is not completed yet, the merchant will not be paid by completing this first transaction. The merchant must at the end of the business day or at anytime the merchant chooses, even more than once a day, must send the day’s processed total to Bankcard Services processor again. This second and final step is called, “settle” or “batch out” in the credit card processing industry. Once this total transaction information reaches the processing network, individual transactions are fed back to each cardholder’s card issuing banks. Once the issuing bank successfully debits the funds from each cardholder’s account, then the funds reach your bank account. This second step can be done automatically at a convenient time each day for you at no extra cost by Bankcard Services customer service or technicians. For more information on how retail credit card processing works call us at the number above or request a merchant account online.