Understanding basic ProtoBase transactions
There are two processes that take place in credit card processing
1. Authorization
• Verifies that the card is valid
• Verifies that the customer has enough credit
• Provides the merchant with good-faith that the transaction is funded if settlement is completed
• Puts a hold on the cardholders open-to-buy for the amount of the transaction
2. Settlement
• Begins the funding process for the merchant
• If settlement is never initiated, the merchant does not get funded and the hold on the open-to-buy goes away within 14-30 days
• Transactions are assessed a fee for processing services
Authorization process of credit card transactions – Flow of credit the card authorization
1. Salespoint
2. Third-party-processor
• Host
• Network
• Switch
• Sometimes thought of as the bank
3. Card Association
• Visa and MasterCard - Separate entities, set rules and regulations for the processing of credit cards. These rules apply to the consumer, the merchant and the issuing banks.
• Made up of member banks
4. Issuing Bank
• Are members of card associations
• Issue credit cards to consumers with the card association logo/brand