The credit card transaction process can be separated into two steps: first step to pay the authorization process, business requirements are recognized by the issuing bank or negative answer to pay the corresponding amount;
The transaction process of credit card The credit card transaction process can be separated into two steps: first step to pay the authorization process, business requirements are recognized by the issuing bank or negative answer to pay the corresponding amount; The second online payment solution step is the clearing and settlement process, which involves the payment of financial information exchange and the actual exchange of funds. The following were described in these two processes, as shown in a as shown: 1. pay the authorization process This process is initiated by the merchant point of sale credit card machine. When you purchase an item, the credit card machine to read out information recorded on the magnetic stripe of the card behind, including credit card number and the sales amount and other information will be sent to the merchant's business line requirements of the pay authorized. Businesses connected line information system receives information to the Bank Card Association (CUP, Visa or Master Card) Card Alliance, immediately transferred to the credit card's issuing bank. The issuing bank under the credit card number, bring up the account information to which they belong, and then decide whether to give authorization. The issuing bank's authorization decision based primarily on the cardholder account the following aspects: (1) pay state (with or without arrears, arrears of how long, etc.); (2) credit status (good, bad records, etc.); (3) Available funds (credit total by subtracting the amount); (4) credit card is valid. If the issuing bank considers that the above areas are no problem, but you shopping this total amount not exceeding the available amount, the issuing bank will be issued to pay the bill authorized. The signal along the same route back to the merchant credit card machine. Credit card machines are authorized signal, it will immediately print out a receipt. Since then, the closing of the transaction. If the payment gateway authorization is rejected, it may be your purchase amount exceeds the available amount of the account, this transaction can not be approved; and may be registered because of this card was reported missing. In this case, the issuing bank may ask for the business "confiscation" of this credit card. Visa and MasterCard Alliance for paying authorized system are called: BASE the I and INAS. Typically, the banker for the authorization system need only 2 to 3 seconds. 2. the clearing and settlement process This is the process of exchange of information and receivables within the trading system. Visa and MasterCard Alliance for clearing and settlement systems, also have their own specific names, respectively called: BASE II and the INET. (1) liquidation: The liquidation process involves only the exchange of transaction information. The business is open every day after the closing of the point of sale system will automatically put the total settlement of receivables on the same day, informed the merchant bank, and accounted for in a merchant account. However, accounted for the actual amount is less than the sales amount of this difference is called the "merchant discount". Then, the merchant bank to the day of the balance sheet total reported to the Bank Card Association Card Alliance then sent to the issuing bank. When the cardholder account the payment of accumulated month, Card OK Bianxiang to cardholder to bill. Which corresponds to the Check Clearing for the process in the traditional banking business, involve only the exchange of information. (2) Settlement: The settlement is related to the actual transaction payment amount is the process of money changing hands. In addition to the settlement of the cardholder and card issuer month cycle, clearing and settlement is generally the same time. In the settlement process, business, business line, and the issuing bank must be a certain amount of fixed costs. Credited when the merchant processing bank merchant accounts, business line to the merchant to charge a fixed fee (ie, the merchant discount). For example, the store sells items of $ 100, but the store in the business bank account corresponding to the actual income was only $ 97. Which the difference of $ 3 is the merchant discount (this is assumed to be 3%). This amount businesses paid to the merchant bank. In $ 3, is used to pay the credit card services provided by the merchants line the other part by the business line Card Alliance paid to the issuing bank. Furthermore, Visa or MasterCard Alliance would merchant bank reported to the sub-report their day's total sales to the issuing bank. For example, corresponding to the settlement amount of $ 100, business line only from the issuing bank received $ 98.5. The difference of $ 1.5 of which is called "interchange fees". Of the total purchase 1.5% of the amount of interchange fees paid to the issuing bank. Why business line paid to the issuing bank this cost? This is because the issuing bank is the main bearer of financial risk in the credit card system. Issuing bank is exposed to financial risks: (1) per month until the send time to the cardholder billing, billing general there are more than 20 days grace period, the issuing bank is actually to provide cardholders with an average of one and a half short-term loans . If the cardholder is unable to timely pay the bill, the card-issuing banks have to bear the credit risk. (2) market risk in order to provide the above short-term loans, the issuing bank to the financial markets up borrowing, and interest on this borrowing to the issuing bank to bring to market risk due to fluctuations in market interest rates. (3) pseudo-credit card risks. Thus, in the transaction process: the interchange fee is the issuing bank as risk compensation, as well as the proceeds of the transaction expenses. The proportion of the interchange fee is set by the Card Alliance unified. The merchant discount is the compensation of the business line by business line and business agreements. Union bank card revenue from the fee of the bank card member (the issuing bank and the business line) and approved by the fixed costs. Union of the bank card credit card payment transaction process, a role similar to the exchange center, avoiding the direct contact of every one merchant bank with 10 million card-issuing bank. Exploit economies of scale, standardization, and standardization of the licensing of clearing and settlement system, greatly reducing the transaction costs.
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