This diagram shows the different stages in the process of making a purchase with a credit card. We can see that it is a complex transaction with no fewer than five different parties involved and there are seven different steps until the merchant receives payment.
The first step is that the customer offers to pay for the goods by credit card. At that point, the merchant has to request for the payment to be authorised by the credit card organisation, which must also request authorisation in turn from the consumer’s bank. Once that authorisation has been received, the merchant can then release the goods to the customer.
The merchant, however, does not receive the money for the transaction until it has paid a fee to the credit card organisation. After that has been paid, the consumer’s issuing bank will transfer the money for the transaction to the merchant’s own bank, which will then credit the merchant’s bank account with the amount of the purchase less the credit card fee.(169)
