The Credit Card Payment Flow: Parties Involved in Each Transaction

June 12, 2017 Antasha Durbin

 

If you're like the majority of restaurant owners, chances are you accept card payments in addition to cash. But, did you know there are seven parties involved every time you process a customer’s card?

 

Receiving and processing payments isn't as simple and straightforward as it appears. From the issuer, to the payment gateway, and everything in between — here are the parties that have their hand in the credit card processing pot.

 

 

Issuer

This is the financial institution or credit union that issues credit cards directly to consumers and services the accounts from card networks such as Visa, American Express, Discover and Mastercard.

 

 

Card Brand

This is the brand associated with the card being used — Visa, Mastercard, American Express and Discover are the main and most renowned card brands. These brands are issued to consumers from the banks affiliated with them. 

 

 

Cardholder

This is the consumer who owns the card being used to make payments.

 

 

Merchant

This is the business owner who is accepting the card payment.

 

 

Acquirer

This is the merchant’s bank, for example Chase or First Data. The acquirer is the institution that enables businesses like yours to process credit and debit card transactions. Once the card is swiped, the acquiring bank passes the information over to the issuing institution to receive payment.

 

 

Payment Processor

This is the processor utilized to handle the processing and batching of credit, debit and gift card payments. For example, Square, PayPal, Premier Payments, Moneris, Vantiv and Cayan are all payment processors. The processors negotiate processing rates, equipment costs, and offer set-up and support help for the merchant’s account. The payment processor works as a middleman between merchants and their banks.

 

 

Payment Gateway

This is technology that links a cardholder's financial institution to the merchant’s when processing a payment. All payments are made using a gateway and the payment gateways are generally bank neutral, allowing the merchant to plug it into essentially any acquiring bank in North America. 

 

 

So there you have it – the credit card transaction flow demystified!  By taking the time to understand this seemingly complex process, you’ll sleep better knowing the whereabouts of your restaurant’s revenue from the second you process a payment. 

 

 

For a deeper dive into all things credit card processing, check out our latest guide: 

Take me there!

 

 

 

About the Author

Antasha Durbin

Antasha is an Online Marketing Specialist at TouchBistro where she spends her days advising restaurateurs on their point of sale systems and her nights writing hospitality-related content. A veteran bartender and server, Antasha enjoys bringing her industry experiences to life through blogging. Her three-year-old son and BFF, Elijah, is her self-proclaimed muse for all things creative.

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