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Monday, 7 March 2022

Credit Card Processing Software: All You Need to Know

When you buy an item or pay for a service using a credit card the process takes a few seconds. 

This is because credit card processing involves validating the billing information submitted.

credit card processing software

This way, merchants and financial institutions can avoid financial scams. 

The software can also process credit card payments through the internet or a point of sale system. 

Many companies use a credit management system to process payments in an efficient way. 

This is because a high population of people uses credit cards. For example, in the U.S. 70% of the population has credit cards.

Such systems help to make timely payments and avoid accounting errors. A credit card processing software performs many activities immediately after someone inserts, taps, or swipes their credit card. 

When the process is complete, the system shows the transaction as approved or rejected. Here are the stages of credit card processing software activities.

1. Payment Authorization

Authorization begins when a cardholder swipes, taps, or dips their credit cards. They can use platforms like a phone or a website to collect their details. 

A credit card processing software sends these details, including payment amount, expatriation date, credit card number, and the security code, to an acquiring bank. 

The acquiring bank processor forwards the details to the relevant credit card network. 

2. Payment Authentication

The authentication stage is where an issuing bank receives requests for payment. It verifies if the cardholder has enough available balance to buy goods or services. 

The bank will also perform security checks to ensure the card holder’s details are correct. If all the information is genuine, the bank will authorize payment. 

In cases where there is any sign of fraudulent activity, the payment will be declined. Reasons that can make a credit card to be declined include

  • The credit card limit is reached
  • Expired credit cards
  • Pending transaction
  • Late payments

Some of these reasons can affect your credit score. For example, late payments can lower your credit score and cause problems with your credit card. 

This may require you to fix your credit card standing. Getting top-rated credit card repair services can help fix this and ultimately reach a perfect credit score. 

They will educate you on how to ensure you always have a good credit score.

3. Clearing

The clearing stage is where the merchant and the cardholder receive statements. These statements are transaction details. 

This stage also involves the merchant sending approved transactions to the acquiring bank. 

The acquiring bank forwards this transaction to the credit card company.

Players Involved In Credit Card Processing 

A credit card management solution is fast and efficient. This involves participants that work seamlessly together. 

credit card processing device

Here are more details about customers, merchants, processors, acquiring banks, credit card companies, and issuing banks.

1. Customers

When processing payments using credit card processing software, customers are the cardholders. They provide card details when paying for goods or services. 

Credit cardholders can be transactors or revolvers. A customer pays the credit card balance on time and in full each month. 

This means they do not pay late fees. Timely payments help them to have great credit scores. 

Customers can also be revolvers. They repay part of their credit balance, and the remainder accrues interest.


2. Business or Merchants

Merchants are businesses that sell goods and services. They allow their customers to pay using credit cards. 

After collecting a customer’s information, they send the data to the customer’s issuing bank and request payment authorization. 

3. Acquiring Bank

An acquiring account is like a middle man between the merchant and the customer’s bank. The merchant account processes credit card payments. A merchant needs to have an account with an acquiring bank.

4. Processors 

Processors provide the tools merchants need to accept payments through credit cards. They provide a credit management platform that collects and sends credit card information to networks. They also send approval requests.

5. Credit Card Companies

Credit card companies receive payment and forward the authorization request to the issuing bank. Some of the main credit card companies are Mastercard, Amex, Visa, and Discovery. 

6. Issuing Bank

An issuing bank gives a customer a credit card. This is the card the customer uses to pay for goods and services. 

A credit card processing software uses the card details to request and receives authorization. It can also approve or deny a transaction depending on a customer’s available balance. 

Benefits of Credit Card Processing Software

There are many reasons why merchants offer credit card payment methods. Customers also prefer to use credit cards for various reasons. 

mobile ecommerce store

Here are the benefits that credit card processing software provides.

1. Convenience

Credit card processing software offers convenience that helps businesses stay ahead of their competitors. 

A credit card management service provides fast and reliable services to both merchants and customers. 

Customers need to make sure they have enough credit card balance and make their credit card payments on time. 

This will make them enjoy the convenience of using their credit cards.


A credit card professional can also help provide affordable credit repair if a credit card has a problem. 

2. Increases Accuracy

Credit card management systems help businesses perform accurate transactions. This eliminates errors that can occur due to manual work. 

A processing software increases speed and shortens ques. Shorter ques means businesses can serve more customers faster. 

This reduces the waiting time and improves the customer experience which in turn increases revenue. 

3. Improved Security

Credit card data is sensitive information. A reliable credit card software ensures there are no data breaches or compromises. 

Such data breaches can ruin the reputation of a company quickly. A secure credit card management platform protects your business. 

It ensures compliance with data standards. It also offers protection against credit and debit card fraud and provides a secure environment for customers to use their credit cards.

Key Takeaway

A credit card service helps to reduce manual work and errors. It increases productivity and streamlines processes. 

A credit card processing software can perform many functions in the shortest time possible. It offers convenience, accuracy, and security to customers and merchants. 

Customers can buy goods and services knowing that their personal information is safe. This builds trust and customer loyalty to businesses. 

It also leads to an increase in profits. Accepting credit cards as a payment method gives you a competitive advantage.

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