How do Credit Card Payments work?
Find Out More
Credit and debit card payments are the backbone of modern commerce. Whether you run a retail shop, e-commerce store, service business, or restaurant, understanding how payments move from your customer’s card to your bank account helps you reduce fees, prevent fraud, and maximize your cash flow.
Redeemed Payments & Services is committed to helping business owners accept payments with simplicity, security, and transparency. Here’s how the process works from start to finish.
What Happens When a Customer Pays? (Step-by-Step)
1. Transaction Begins: Tap, Insert, Swipe, or Online Entry
Your POS terminal, card reader, or online checkout collects the payment amount and securely transmits card details. This applies to in-person transactions, online orders, invoices, and mobile payments.
2. Authorization: “Can This Transaction Go Through?”
Your payment processor sends the transaction data to the card network and issuing bank. The bank checks:
• Is the card active?
• Are there enough funds or credit?
• Is the transaction potentially fraudulent?
If approved, the issuing bank sends an authorization code back through the network.
3. Authentication & Fraud Prevention
Security layers activate instantly, including:
• EMV chip verification• Data encryption
• Tokenization
• 3-D Secure for online transactions
These significantly reduce fraud for businesses and customers.
4. Clearing & Settlement
At day’s end, approved transactions are grouped into a batch and transmitted to the acquiring bank. The issuing bank sends funds—minus interchange fees—through the card network for settlement.
5. Funding Your Business Account
Within 1–2 business days, the funds appear in your merchant account. Deposit times vary slightly depending on industry type and processing setup.
The Key Players in Every Credit Card Transaction:
• Merchant: Your business accepting the payment
• Cardholder: The customer making the purchase
• Payment Processor: Redeemed Payments & Services, connecting you to the payment networks
• Card Networks: Visa, Mastercard, Discover, American Express
• Issuing Bank: The customer’s bank
• Acquiring Bank: The bank that holds your merchant account
Types of Card Transactions:
• In-Person (Card-Present)
• Includes swiped, dipped, or tapped payments using EMV devices. These typically have the lowest processing fees and highest security.
• Online & Mobile (Card-Not-Present)
• Used for e-commerce websites, online invoices, and virtual terminals. These transactions require enhanced security due to higher fraud risk.
• Contactless Digital Wallets
• Includes Apple Pay, Google Pay, and tap-to-pay cards using NFC technology.
What Determines Your Processing Fees?
Processing costs are influenced by:
• Card type (debit, credit, rewards, commercial)• Industry type (retail, restaurant, service, nonprofit)
• Method of transaction (swiped, dipped, tapped, keyed, or online)
• Risk level
Redeemed Payments & Services helps businesses secure competitive, transparent rates with no hidden fees.
Why Understanding Credit Card Payments Matters
Knowing how payment processing works empowers business owners to:
• Reduce unnecessary processing fees• Improve cash flow
• Prevent chargebacks
• Choose the right POS and payment tools
• Offer a smoother customer experience
How Redeemed Payments & Services Supports Your Business
Your business deserves a trustworthy payment partner. Redeemed Payments & Services provides:
• Fast, secure payment technology
• Merchant accounts and credit card processing
• POS systems for retail, restaurants, and service businesses
• Online payment gateways and virtual terminals
• Consumer financing and payroll services
• Dedicated, faith-driven support with integrity
We make accepting payments simple so you can focus on serving customers and growing your business.
Conclusion
Every transaction involves complex communication between banks, card networks, and processors—but with the right partner, your payment experience becomes seamless.
Redeemed Payments & Services delivers the technology, transparency, and support your business needs to thrive.
Redeemed Payments & Services is committed to helping business owners accept payments with simplicity, security, and transparency. Here’s how the process works from start to finish.
What Happens When a Customer Pays? (Step-by-Step)
1. Transaction Begins: Tap, Insert, Swipe, or Online Entry
Your POS terminal, card reader, or online checkout collects the payment amount and securely transmits card details. This applies to in-person transactions, online orders, invoices, and mobile payments.
2. Authorization: “Can This Transaction Go Through?”
Your payment processor sends the transaction data to the card network and issuing bank. The bank checks:
• Is the card active?
• Are there enough funds or credit?
• Is the transaction potentially fraudulent?
If approved, the issuing bank sends an authorization code back through the network.
3. Authentication & Fraud Prevention
Security layers activate instantly, including:
• EMV chip verification• Data encryption
• Tokenization
• 3-D Secure for online transactions
These significantly reduce fraud for businesses and customers.
4. Clearing & Settlement
At day’s end, approved transactions are grouped into a batch and transmitted to the acquiring bank. The issuing bank sends funds—minus interchange fees—through the card network for settlement.
5. Funding Your Business Account
Within 1–2 business days, the funds appear in your merchant account. Deposit times vary slightly depending on industry type and processing setup.
The Key Players in Every Credit Card Transaction:
• Merchant: Your business accepting the payment
• Cardholder: The customer making the purchase
• Payment Processor: Redeemed Payments & Services, connecting you to the payment networks
• Card Networks: Visa, Mastercard, Discover, American Express
• Issuing Bank: The customer’s bank
• Acquiring Bank: The bank that holds your merchant account
Types of Card Transactions:
• In-Person (Card-Present)
• Includes swiped, dipped, or tapped payments using EMV devices. These typically have the lowest processing fees and highest security.
• Online & Mobile (Card-Not-Present)
• Used for e-commerce websites, online invoices, and virtual terminals. These transactions require enhanced security due to higher fraud risk.
• Contactless Digital Wallets
• Includes Apple Pay, Google Pay, and tap-to-pay cards using NFC technology.
What Determines Your Processing Fees?
Processing costs are influenced by:
• Card type (debit, credit, rewards, commercial)• Industry type (retail, restaurant, service, nonprofit)
• Method of transaction (swiped, dipped, tapped, keyed, or online)
• Risk level
Redeemed Payments & Services helps businesses secure competitive, transparent rates with no hidden fees.
Why Understanding Credit Card Payments Matters
Knowing how payment processing works empowers business owners to:
• Reduce unnecessary processing fees• Improve cash flow
• Prevent chargebacks
• Choose the right POS and payment tools
• Offer a smoother customer experience
How Redeemed Payments & Services Supports Your Business
Your business deserves a trustworthy payment partner. Redeemed Payments & Services provides:
• Fast, secure payment technology
• Merchant accounts and credit card processing
• POS systems for retail, restaurants, and service businesses
• Online payment gateways and virtual terminals
• Consumer financing and payroll services
• Dedicated, faith-driven support with integrity
We make accepting payments simple so you can focus on serving customers and growing your business.
Conclusion
Every transaction involves complex communication between banks, card networks, and processors—but with the right partner, your payment experience becomes seamless.
Redeemed Payments & Services delivers the technology, transparency, and support your business needs to thrive.
We believe in conducting business with the highest moral and ethical standards. Our commitment to Christian values influences every aspect of our company, from our interactions with clients to the services we provide.
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