The Credit Card Transaction Sequence

Here is the sequence of steps in a typical credit card transaction:

1. Consumer -> Merchant
2. Merchant -> Acquirer
3. Acquirer -> Credit Associations
4. Credit Associations -> Issuer
5. Issuer -> Credit Associations
6. Credit Associations -> Acquirer
7. Acquirer -> Merchant

Step 1:

Consumer purchases goods from merchant

Step 2:

Card gets swiped through terminal with magnetic stripe

Step 3:

The acquirer bank routes the transaction to the bank for approval such as Mastercard or Visa

Step 4:

Association System routes transaction to the issuing bank

Step 5:

Issuing bank responds

Step 6:

The association sends the authorization code

Step 7:

Acquiring bank sends either the approval code or denial code

Step 8:

Issuer bills the consumer

Step 9:

Customer pays bill

Settlement: the transfer of funds to the appropriate parties




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