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Understanding The Technology Behind The Credit Card Processing

Understanding The Technology Behind The Credit Card Processing

About 3 billion people in the world have credit cards, and we use these units every single day to shop, pay for things, and even just store our funds. We are used to just taking the card out and paying for the goods we’ve purchased, but have you ever wondered what is the technology behind the process? If you want to learn more about how these things work, and if you want to gain some interesting information that you can share with your friends, or utilize for your job, you’ve come to the right place. Here, we are going to help you understand the technology behind credit card processing, how it works, and how it improves our lives and even shopping habits.


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Before we delve into the process of credit card processing, let’s start with a little bit of history. The concept of these units was first utilized in the late 20s, but it was mostly used for large corporations and trading.

The first universal unit that was available for everyone was invented in 1950. The provider that stood behind this platform was Diner’s Club, and right from the start people could notice the ease of use and the perks that come with a provider like this.

Less than a decade later, another provider that appeared with a similar platform that allowed people to travel and use their funds with ease was American Express Company. This provider set the basis of what we know for the platforms today, and they started charging a yearly fee so that the users can have and use the units.

About a decade later, in the late 60s, the bases of the traditional platforms and providers we know and use today were set, and with the future development, that we still experience to this day, credit cards became what we have now.

Biggest providers

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Now let’s talk about some of the biggest providers available on the market, and why people choose to go with them. It is said that depending on your location, you can choose the provider depending on what they offer, the yearly or monthly fee, and the overall conditions that could benefit you.

There are many different platforms and services that you can choose from, and American Express is still one of the leading ones. The reason why people choose to go with it is that you can choose from different types of the card, and you can easily transfer your funds without paying excessive fees. The annual fee depends on your location, but it is usually between the 200 and 300 dollars per year mark. You need to have a good credit score to get it, and the negative side is that there are no lounge benefits.

On websites like, you can see that the Citi Cash Back along with the YES Premia cards are also extremely popular among users, and you can even use them without paying an annual fee.

Other platforms that users choose to go with include the extremely popular Visa and MasterCard, and they provide cards for millions of companies and providers all around the world. You could also opt for United Club, The World of Hyatt, or the Bank of America card.

If you are still trying to find the best provider for your specific case, then the best thing you can do is start by checking the annual fees, along with the benefits, perks, if you need to have a specific credit score to be able to apply, and you should check the APR and the bonus points that you could be able to get.

How does the processing work?

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The whole process is complex and difficult to understand if you are not closely related to the right industry. Here, we are going to help you understand which steps are involved, and the basics when it comes to payment processing.

The first thing that you need to do is get your own card that you can use to make your payments. In addition to this, the other parties that need to be involved for this process to work include the seller, or the merchant, the card association that is the platform that provides the main payment unit, the banks of both parties – you, as the customer, and the merchant, as the seller, along with the payment processor.

When it comes to specific steps, once you use the unit to make your payment, you can either swipe it, or with the contactless cards that we have today, you can just touch it to the terminal that is going to process the transaction.

The next thing that is done is that the terminal is going to check and authorize the unit. If you don’t have sufficient funds on it, or if you don’t put the right pin in, your card is going to get declined. This whole process takes only a few seconds to be done, but it does require an internet connection. If the terminal is not connected to the system, it won’t be able to recognize the unit, and you won’t be able to make your payment.

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Note that if your unit gets approved and recognized by the terminal, then funds from your account will be locked and then transferred to the seller’s bank account. The funds get locked right away, and the process of transferring the funds from one bank to another can take up to three business days. This depends on the provider, the type of card you are using, along with the plan, terms, and conditions that you’ve signed.

These are some of the main things that you need to know about these platforms, how they work, and what you can get out of them. The contactless payment methods that we have right now allow us bigger freedom, and at the same time, we can always know what we paid for, how much it cost, where our money went, and we can easily keep track of our spending habits. If you need to choose a good provider for you, make sure you consider all of your options, why you need the unit, and how the different plans will affect you. Talk to different providers, ask them about their features, and choose one that will benefit you the most.

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