Credit Card Processing Overview

Transcription

1 Credit Card Processing Overview New Agent Development Training First Data Learning Organization Copyright 2009, First Data Corporation. All Rights Reserved. Developed by: 26 Rev: 01/23/09/1.0

2 Objectives At the end of this presentation you will be able to Describe the credit card transaction, authorization and settlement process. Identify the players involved in the transaction, authorization and settlement process. Describe each player s role in the transaction, authorization and settlement process. 2

3 Agenda Introduction Credit ditcard dtransaction Terms Authorization flow Clearing flow Settlement flow Review Questions 3

4 Introduction When a cardholder uses a credit card to purchase merchandise, thetransaction transaction moves through a process that involves authorization, clearing and settlement. Each step of the process involves an exchange of transaction data and money that must be settled and balanced. This process ends when the cardholder pays for the merchandise listed on his/her monthly statement. 4

5 Terms to Remember Cardholder An individual to whom a credit card companyhasauthorized authorized to useits card. Merchant Acquirer Visa / MasterCard Associations Issuer 5

6 Terms to Remember Cardholder Merchant A retailer (or any other person, firm or corporation) that (pursuant to a Merchant agreement) agrees to accept credit cards, debit cards, or both when properly presented. Acquirer Visa / MasterCard Associations Issuer 6

7 Terms to Remember Cardholder Merchant Acquirer A financial institution authorized and licensed by a regulatory organization (Visa/MasterCard Association) to accept credit cards or debit card transactions from the Merchants and submits those transactions ti into the interchange directly or indirectly and settles on the Merchant's behalf. Visa / MasterCard Associations Issuer 7

8 Terms to Remember Cardholder Merchant Acquirer Visa & MasterCard Associations Comprised of thousands of banks worldwide that set and maintain processing rules. Issuer 8

9 Terms to Remember Cardholder Merchant Acquirer Issuer A member of Visa/MasterCard Associations who contractually issues credit cards. Usually a financial institution, such as a Citi, Chase, etc. 9

10 Credit Card Process Step 1 Authorization Obtained from the Issuer at time of purchase Step 2 Clearing Transaction data sent processed through the acquirer to be sent to issuer for posting to the monthly credit card statement Step 3 Settlement Funds are paid and collected The Acquirer py pays the merchant, the Issuer pays the Acquirer, and the Issuer collects (bills) the cardholder 10

11 What is Authorization? Cardholder makes a purchase using a credit card. The merchant must obtain authorization ti for the purchase from the Issuer. How does it work? 11

12 Authorization Flow Cardholder 1makes a purchase using credit card 12

13 Authorization Flow Merchant 2 swipes card through a POS device 13

14 Authorization Flow POS device 3 sends authorization request along with card data to Acquirer 14

15 Authorization Flow 4 ( The Acquirer (First Data) routes the authorization request to the Associations 15

16 Authorization Flow 5 Transaction is routed to the issuer 16

17 Authorization Flow If transaction meets criteria, 6 Issuer authorizes transaction 17

18 Authorization Flow Associations forward the 7 authorization response to the Acquirer 18

19 Authorization Flow Acquirer sends 8 approval / decline code to merchant s POS device 19

20 Authorization Flow Merchant 9 completes transaction with ih Cardholder 20

21 Clearing How does the merchant get paid? 21

22 Clearing What is Clearing? The exchange of transaction data between members (Acquirer & Issuer) through Interchange Process of collecting a transaction from an Acquirer in the Merchant's currency and deliver it to the Issuer in the cardholder's currency 22

23 Settlement The merchant needs to be paid for the transaction The Acquirer needs to be paid The Issuer needs to be paid New Terms: Net Settlement = Sales Draft Amount Less Fees Acquiring Bank = The bank that facilitates transaction clearing and funds movement on the merchant s behalf How does it look? 23

24 Settlement Flow 1 Merchant closes POS POS1 device 24

25 Settlement Flow 2 First Data receives t transaction ti data 25

26 Settlement Flow 3 First Data pays Merchant 26

27 Settlement Flow 4 Data sent to Associations 27

28 Settlement Flow 5 Transaction data sent to Issuers 28

29 Settlement Flow 6 Cardholder is billed 29

30 Settlement Flow 7 30

31 Terms to Remember Cardholder Merchant Acquiring Processor Visa/MasterCard (Associations) Issuer or Issuing Bank 31

32 Knowledge Check What are the 3 steps to Credit Card Processing? 32

33 Knowledge Check What are the 3 steps to Credit Card Processing? 1. Authorization 2. Clearing 3. Settlement / Funding 33

34 Knowledge Check Which roles can First Data potentially play in the process? 34

35 Knowledge Check Which roles can First Data potentially play in the process? Issuing Processor Acquiring Processor 35

36 Knowledge Check What step transmits the transactions to First Data to begin thesettlement process? A. Credit card is swiped through POS device B. Terminal dials for authorization ation C. Merchant batches out (closes) POS device D. Cardholder pays their credit card bll bill 36

37 Knowledge Check What step transmits the transactions to First Data to begin thesettlement process? A. Credit card is swiped through POS device B. Terminal dials for authorization ation C. Merchant batches out (closes) POS device D. Cardholder pays their credit card bll bill 37

38 Credit Card Processing Overview Thank You! Copyright 2009, First Data Corporation. All Rights Reserved. Developed by: 26 Rev: 01/23/09/1.0