What Is Credit Card Processing

by : Peter Finch

It seems such a long time ago when possessing a credit card, the rectangular small piece of plastic that easily fits in your wallet was considered a luxury.

Only a few people who have huge sums of money stashed away in some banks have it, but now, with the popularization of cashless shopping, it has become a necessity and almost all stores have credit card processing machines.

Credit cards are now widely used to shop in almost any store and even online because any business establishment that does not accept this mode of payment stands to lose potential customers. This small bank card has taken the reins of the business world. Let us take a peek into what makes this small piece of plastic so powerful that it can either make one manage finances well, or bury one into depths of despair from uncontrolled debts because of it.

When you charge a purchase or order services from a store, the merchant will use credit/debit card processing software to verify your card at the checkout counters. If you are ordering stuff through the internet, you will have to key in personal information and these will be checked through devices or software that would verify or validate the card data.

There are also systems that would enable the safe transfer of information and data from your card to another point to transfer payments or complete transactions. Various service providers also play an active role in the whole system of card processing.

This includes the suppliers for card equipment and materials; the postal and courier services who sees to it that your credit card bills are delivered to your mailboxes on time each month; the company staff who answer calls and queries from customers and would-be customers, and even the sales representatives who help you in filling the card application forms.

Even credit bureaus play a major role when you apply for a charge card because they maintain a database of credit rating for individuals and businesses. This reflects the credit rating and history of each applicant. Credit bureaus can determine whether an application gets approved or rejected.

This stresses the importance of creating a good credit history. This is possible if you had been faithful in paying your bills on time. If you defaulted in your bill payments in the past, you will incur late fees and interest rates. The interest will be added to the principal amount stated in your bill and will keep on increasing until it becomes too big for you to pay. You will have a bad credit rating and may find it hard to apply for another credit card from other companies.

To sum it up, card processing involves joint effort and coordinated work from several individuals and service providers. It has also generated employment because people and services are needed to work right from the moment you apply until the actual card is delivered to you.