The Card Payment Cycle

by | Fintech & Crypto

Card Payments – The Full Cycle


When purchasing products many of us utilise a credit or debit card as a means of payment as a quicker, safer alternative to cash. But all we typically see is the card machine lighting up, we either wave our card over the top or enter our pin and the transaction is approved within seconds. But what actually happens during these few seconds between our card being presented, and the transaction going through?

The Transaction

Here will we discuss the parties involved at each stage of the transaction and what communication these parties have.

  1. The cardholder and the merchant
              The card holder enters their card and pin number into the machine
  2. The merchant and the acquirer
              From here the card details, such as CVV and expiry date, are automatically entered into the merchant terminal, these details are sent to the acquirer.
  3. The Acquirer and the card scheme
              The acquirer processes the transaction, sending it on to the card scheme for authorisation and settlement.


  4. The card scheme to card issuer
              The card schemes passed the card transaction details from the acquirer to the card issuer to approve or decline, releasing the funds to the merchant


  5. The issuer to the card scheme
              An authorisation response; accepted/declined


  6. Card scheme to acquirer & merchant
              A routed response; accepted/declined


  7. Merchant to the card holder
              A physical or electronic receipt

Exceptions to the rule

This process isn’t the same for every card and issuer. Some card providers cover numerous sections in this chain themselves, for example Amex and Diners Club work as the card scheme, issuer and acquirer at the same time. Additionally some cards have additional costs to account for and are not included as standard by the acquirer, and therefore these require an extra charge for the merchant to accept these cards.


Despite us as consumers seeing only a couple of these steps, and the whole process taking mere seconds, there are a lot of behind the scenes actions going on. These must not be overlooked when venturing into the world of payments, and with advancements in virtual cards and SCA deadlines, the landscape could become muddled with too many stages for payments to go through.