A Better Way to Manage Your Everyday Money - Book - Page 92
Credit card purchases
Here’s what happens behind the scenes when you use your credit
card to make a purchase. Let’s say you have a Costco Anywhere
Visa Card by Citi. When you use the card at Costco, there are four
players involved in the payment process: you, Costco (merchant and
acquirer), Visa (network) and Citi (issuer).
1. You swipe, insert, or tap your card at checkout.
2. Costco (through its acquirer function) sends the transaction
to Visa.
3. Visa identifies the issuer and sends the transaction to Citi.
4. Citi reviews the transaction, approves or denies the transaction, and sends the decision
back to Visa.
5. Visa passes the decision to Costco (via its acquirer function).
6. You find out whether your transaction has been approved or denied.
This digital communication happens almost instantaneously. After approved transactions are
completed, they are kept on file by the acquirer bank so that the transactions remain available to
the merchant for making changes, such as adding a tip.
Processing
Normally after business hours, all stored credit card transactions for the day are processed by the
merchant’s acquirer with the networks and issuers for the credit cards the merchant took that day.
The merchant’s account is credited by the acquirer with the net amount of the day’s transactions.
The acquirer, networks, and issuers settle money accounts, including assessing processing fees.
Credit card transactions are added to consumer accounts by the issuers.
Billing periods
Each credit card has a monthly
billing period, which is set when
the credit card is issued to you.
1. The monthly closing day
on which statements are
normally generated.
Statements may be
generated on an earlier day
at the convenience of the
credit card company.
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