Card transaction flow

a card transaction flows through multiple systems to authorize and settle a payment in the standard four party model, such as that of the visa or mastercard networks, the participants include cardholder – the individual or business using the card merchant – the entity accepting the card issuer – the bank that issued the card (cross river, via its bin sponsorship) acquirer – the merchant’s bank or payment provider the process typically involves an issuer processor and an acquirer processor, which route the transaction through the card network (visa, mastercard) to complete the payment securely authorization flow the authorization phase determines whether a card transaction is approved or declined this typically happens in milliseconds here are the steps the cardholder taps, swipes, or enters card info at the merchant’s terminal or app the merchant sends transaction data to its acquirer processor the acquirer processor formats the request and sends it to the appropriate card network (visa, mastercard) the card network forwards the request to the issuer processor associated with the bin on the card for real time authorization the card issuer or issuing processor responds with an approval or decline decision to the card network the card network routes the decision back to the acquirer processor the merchant receives the response — and the transaction is approved or declined at the point of sale transaction lifecycle after a transaction is authorized, it may go through several additional phases depending on the program, network behavior, and any disputes authorization the transaction is approved and a hold is placed on funds first presentment the merchant submits the transaction for clearing and settlement clearing the acquirer sends the presentment file to the card network, which routes it to the issuer settlement the issuer transfers funds to the network for any posted transactions while the network transfers funds to the acquirer chargeback if the cardholder disputes the transaction, the issuer initiates a chargeback through the card network representment the merchant can respond with evidence, re presenting the transaction arbitration (optional) if the chargeback is unresolved, the network may arbitrate adjustment (optional) a final correction is made by the issuer or acquirer to resolve an error or reverse a prior action