how does a credit card function?what's the process behind every transaction?what are the common risks?

Answer 1

A credit card is a system of payment named after the small plastic card issued to users of the system.

It is different from a debit card in that it does not remove money from the user's account after every transaction.

In the case of credit cards, the issuer lends money to the consumer (or the user).

It is also different from a charge card (though this name is sometimes used by the public to describe credit cards), which requires the balance to be paid in full each month.

In contrast, a credit card allows the consumer to 'revolve' their balance, at the cost of having interest charged.

Most credit cards are the same shape and size, as specified by the ISO 7810 standard.

The credit card process involves the following parties:

Cardholder: the owner of the card used to make a purchase

Merchant: the business accepting credit card payments for products or services sold to the cardholder

Acquirer: the financial institution or other organization that provides card processing services to the merchant

Card association: a network such as VISA® or MasterCard® (and others) that acts as a gateway between the acquirer and issuer for authorizing and funding transactions

Issuer: the financial institution or other organization that issued the credit card to the cardholder

The flow of information and money between these parties always through the card associations is known as the interchange, and it consists of a few steps:


Authorization ......... The cardholder pays for the purchase and the merchant submits the transaction to the acquirer. The acquirer verifies with the issuer—almost instantly—that the card number and transaction amount are both valid, and then processes the transaction for the cardholder.


Batching .......... After the transaction is authorized it is then stored in a batch, which the merchant sends to the acquirer later to receive payment (usually at the end of the day).


Clearing and settlement ........... The acquirer sends the transactions in the batch through the card association, which debits the issuers for payment and credits the acquirer. In effect, the issuers pay the acquirer for the transactions.


Funding ......... Once the acquirer has been paid, the merchant receives payment. The amount the merchant receives is equal to the transaction amount minus the discount rate, which is the fee the merchant pays the acquirer for processing the transaction.

The entire process, from authorization to funding, usually takes about 3 days. However, Merchant Card Processing from Clearpay Processing offers next-day deposits to customers subject to type of banking account, e.g. with Clearpay Processing business checking account this would be the case.

In the event of a chargeback (when there's an error in processing the transaction or the cardholder disputes the transaction), the issuer returns the transaction to the acquirer for resolution. The acquirer then forwards the chargeback to the merchant, who must either accept the chargeback or contest it.


Common Risks involved in credit cards

In reality it's just as safe to enter your credit card number on a secure web site as it is to give your credit card to a sales assistant or to purchase something over the telephone. Either way, when you give your card details to someone, you can't get them back. If the person who has them is dishonest, you're at risk.

Buying and selling online (ecommerce) using credit cards need not be dangerous. We'll talk about the risks from two different perspectives and discuss what steps you can take to minimise those risks.

Consumers

Most credit card fraud against consumers occurs well away from the internet and is usually caused by credit card details falling into the wrong hands. This can happen through providing your card details to anyone, or even theft from your letterbox. Providing your credit card details over the internet through a secure site is usually safer because you know that it is going to the organisation intended. However, to minimise any risks, remember the following:

When providing your credit card details online, ALWAYS use secure and reputable sites. You can tell if a site is secure by the small padlock icon at the bottom of your screen which indicates encryption technology is being used

Check your statements. Report any discrepancies to your bank immediately

The golden rule is to use as much common sense as you would with face to face or telephone transactions. Only deal with online companies that you know are reputable.

Businesses

Although most media reports focus on consumers being ripped off, it is actually businesses that stand to lose more through credit card fraud. Most consumers are typically only liable for the first $50 or so of any fraudulent use of their card, whereas businesses often have to face the possibility of purchased stock not being paid for because an invalid, stolen, or fake credit card was used.

If you're a business who accepts purchases online, here are some simple steps you can take to minimise the risk of fraudulent purchases.

Make it compulsory for the customer to provide all requested details before the sale is approved, such as full name, address and telephone number.

Be a little more careful when online customers give you a billing address that is different to the shipping address
Fraudulent orders are more likely to come from international orders, especially those with free email addresses (eg. Hotmail or Yahoo), because they are so much harder to trace and prosecute
If in doubt, telephone the client to confirm the order. You may want to make that a standard procedure for orders over a certain value.

As a business, it's always in your best interest to do everything you can to promote your site as being reputable and secure.



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Answer 2

Short answer...

When your credit card is "swiped," the card number (and a few other bits of information) is sent (via phone lines, usually) to a credit card processing center. The number is checked against a database of valid cards (or, conversely, cards that have been canceled, reported stolen, etc.).

If approved, the amount entered for the transaction is put into the database, along with the merchant and date. (This is sometimes delayed, such as the case with a restaurant that needs to add the tip).

The card holder, at the end of the billing cycle, gets a bill based on what's in the database.

That's the short (read: overly simplified) version.

Risks? That the card is stolen, but the information is not in the database. The phone lines are down. The computers are down. The merchant entered the wrong information. The card's magentic strip is damaged. Etc.

Answer 3

that's advisable to touch your economic employer, I labored at numerous lodges and up till final 3 hundred and sixty 5 days, we made/stored imprint (ink stamps) of travelers' credit enjoying cards. We additionally did the comparable component with funds paying travelers' identification/motive force License. We have been advised that's now unlawful to do and don't do it anymore. yet by way of fact you have been working with this type of extensive volume of funds, that's advisable to look into this greater along with your economic employer.

Answer 4

you get a card with a limit
you like something buy it
swipe the card sign your name show id
get a bill at end of month and pay over the min amount due
never be late and never go over the limit

loosing it and having them use it