The following diagram shows the standard credit card processing flowchart in detail. Note that it is not essential to know every detail in steps shown in a red background color. These parts are executed on behalf of us by the payment system which we will use, so it is isolated both from the store and customer. For example, PayPal is such a system, which we will learn about now in detail.
Let's explain the flowchart step by step to clearly understand the whole process:
- A customer successfully enters into the checkout page after filling the shopping cart with the products. Then, he/she enters the credit card information and clicks on the Pay button.
- Now, the store checkout page sends these details along with the total amount to the payment gateway securely.
- The payment gateway starts a series of processes. First of all, the information is passed to the merchant's bank processor where the merchant account was opened before.
- The information is then sent to the credit card network by this processor. Visa and MasterCard are two of the most popular credit card networks.
- The credit card network processes the validity of the credit card and sends the information to the customer's credit card issuer bank.
- As a result, the bank rejects or approves the transaction and sends the information back to the credit card network. Through the same routing in reverse, the payment information is finally submitted back to the online store with a special code. All this is done in a few seconds and the information flow starting from the payment gateway is isolated from both the customer and merchant. It means that we don't have to deal with what's going on after sending information to the payment gateway. As a merchant, we only need the result of the transaction.
After the information is processed by credit card network during Step 6; the transaction funds are transferred to the merchant account by the credit card network as shown in Step a. Then, the merchant can transfer the funds from the merchant account to the usual checking bank account automatically or manually, as shown in Step b.