The diagram illustrates the process of making a payment by credit card, involving several parties including the consumer, the merchant, the issuing bank, the merchant’s bank, and the credit card organization.
Overall, the process consists of multiple stages, beginning with the consumer making a purchase and ending with the merchant receiving payment. It involves authorization, fund transfer, and the deduction of transaction fees.
Initially, the consumer makes a payment using a credit card to the merchant. Following this, the merchant sends an authorization request to the credit card organization. This request is then forwarded to the consumer’s issuing bank, which checks the validity of the transaction. Once approved, authorization is sent back through the credit card organization to the merchant, allowing the transaction to proceed.
After authorization, the merchant provides the product or service to the consumer. Subsequently, the credit card organization processes the payment and deducts transaction fees. The issuing bank then transfers the funds, minus these fees, to the merchant’s bank. Finally, the merchant’s bank completes the process by transferring the payment to the merchant.
In summary, the system ensures secure and verified transactions through a series of coordinated steps between financial institutions and service providers.