Card transactions

a card transaction occurs when a cardholder uses their card to access stored value, deposited funds, or a line of credit the general characteristics of transactions, such as the entities in volved in them and the main steps in the transaction lifecycle are described below key players cardholder the person using the card they present a card (physical or virtual), and their issuing bank checks if they have sufficient funds or credit to complete the transaction merchant the entity accepting the card payment for goods or services they work with an acquiring bank for participation in the card network ecosystem card networks companies like visa and mastercard that route transaction data between banks they set rules and security standards for card transactions issuing bank the bank that issued the card to the cardholder it verifies funds or credit and processes the transaction and ensures card program compliance to relevant network and regulatory rules acquiring bank the merchant's bank that receives the transaction funds and deposits them into the merchant's account main steps a card transaction involves several steps to ensure the payment is processed securely and efficiently understanding these steps helps both businesses and customers ensure smooth and secure transactions here are the main steps authorization the cardholder initiates the transaction by presenting their card or providing their card credentials the merchant sends these details to the payment processor, which checks with the issuing bank to verify if the cardholder has sufficient funds or credit available if approved, a hold is placed on the funds or on the credit line clearing tthe transaction details are sent to the card network, which routes them to the issuing bank the issuing bank confirms the transaction and prepares to transfer the funds settlement the issuing bank transfers the funds to the acquiring bank via the card network (the merchant's bank) the acquiring bank then deposits the funds into the merchant's account record keeping both the cardholder and the merchant receive records of the transaction the cardholder sees the charge on their statement, and the merchant updates their sales records