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HDFC Bank Platinum Times Credit Card Review 2023

How do payments on a credit card work

how do payments on a credit card work

How credit card payments work 

Paying with a credit card has many benefits including convenience easy tracking and security and when merchants use any authorized website they can accept all major credit card brands on their website mobile device or retail store paying with a credit card has three basic steps authorization capture and settlement. 

If you've purchased something using a credit card then you've seen authorization at work when your card is swiped at the checkout counter or when you click Submit on the checkout form online that authorized website manages the process of checking to make sure you have sufficient funds available for the purchase this is an authorization. 

After verifying that funds are available a hold is placed on the money this is capture, once the funds are captured the merchant can hand over or ship the goods and be confident that they'll be paid however the merchant doesn't have their money yet the process of transferring money from the customer's credit card or bank account to the merchant's bank account is called settlement. 

Settlement usually occurs once each business day during settlement the banks connect to each other authorized website begins the settlement process by aggregating the daily transaction details and sending them to the merchant's Bank 

The payment network then handles the settlement once a settlement is complete the buyer's money is transferred to the merchant's bank account 

Meanwhile, the customer's bank posts a charge on the customers account the transaction is now complete and the purchase will show up on the customer's credit card statement.

Also read: What is credit card processing 

Also read: What is credit cards how do credit cards work in India



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