A: The process starts when the card or card number is entered into the terminal. This credit card transaction is either approved or declined. Once the funds approved, you must settle the transaction by batching. Batching should be done daily. After this settlement, the money/funds is transferred or sent using the process of ACH into your selected bank account.
To sum up the process:
1. The cardholder presents the card at checkout. The merchant collects the card number and other viable transaction information via the credit card terminal, computer, or website.
2. The credit card transaction info travels to the processor’s network. This network then communicates with the issuing bank’s network to get permission to transmit an “authorization request.”
3. The processor network communicates with the issuing bank to verify the credit card number and available fund money.
4. If credit card is accepted, a “hold” for the approved fund amount is placed on the cardholder’s funds. What this means is that the requested amount is promised to the merchant, even though it’s not yet been transferred.
5. The credit card approval is sent back to the processing network and then forwarded on to the merchant who finishes the transaction with the cardholder.
6. At the end of the business day, the merchant sends a request to the processor’s network that all authorized funds for the day’s transactions be transferred to the merchant’s business bank account.
7. The net settlement amount (all charges, minus any applicable fees) for the amount is deposited into the account.
