401k403(b)457 Plan529 PanBankruptcyBudgetBusiness PlanCash FlowCentral BankCredit CardCredit UnionDay TradingDebit CardDebt ConsolidationDeposit AccountDividendEconomyEmployee BenefitsEmployee Stock OptionEntrepreneurFinancial AdvisorFinancial PlannerHard Money LenderHealth InsuranceHedgeIRAInsuranceInterestInvestmentLife InsuranceLoanMicrocreditMoneyMortgageMortgage LoanPawnbrokerPensionPortfolioRetirement PlanReturnsRiskSalarySocial SecuritySpeculationStock BrokerStock ExchangeStock MarketWageWarrant
Credit Card
How credit cards workInterest chargesBenefitsGrace periodThe merchants sideParties involvedTransaction stepsSecured credit cardsPrepaid credit cardsFeaturesSecurityProblemsProfits and lossesCanadaHistoryCharga PlateCollectible credit cardsControversyHidden costsRedliningCredit card numberingCredit cards in ATMs
How credit cards workInterest chargesBenefitsGrace periodThe merchants sideParties involvedTransaction stepsSecured credit cardsPrepaid credit cardsFeaturesSecurityProblemsProfits and lossesCanadaHistoryCharga PlateCollectible credit cardsControversyHidden costsRedliningCredit card numberingCredit cards in ATMs
Transaction steps
* '''Authorization''': The cardholder pays for the purchase and the merchant submits the transaction to the acquirer (acquiring bank). The acquirer verifies the credit card number, the transaction type and the amount with the issuer (Card-issuing bank).* '''Batching''': Authorized transactions are stored in "batches", which are sent to the acquirer. Batches are typically submitted once per day at the end of the business day.
* '''Clearing and Settlement''': The acquirer sends the batch transactions through the credit card association, which debits the issuers for payment and credits the acquirer. Essentially, the issuer pays the acquirer for the transaction.
* '''Funding''': Once the acquirer has been paid, the acquirer pays the merchant. The merchant receives the amount totaling the funds in the batch minus the "discount rate," which is the fee the merchant pays the acquirer for processing the transactions.
* '''Chargebacks''': A chargeback is an event in which money in a merchant account is held due to a dispute relating to the transaction. Chargebacks are typically initiated by the cardholder. In the event of a chargeback, 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.