As a modern merchant with real business goals, we highly recommend you familiarize yourself with the ins-and-outs of transaction processing. Below are links that offer a brief but comprehensive overview of everything you need to know.

 

Steps To Acquiring Authorization

Whether done through a point-of-sale terminal or by phone with the credit card, the below credit card verification process is initiated every time a card is swiped in a matter of seconds.

  1. To make a purchase, your customer presents a credit card to you in person, on the phone, or by entering information on your ecommerce website.
  2. After you swipe the card or enter the card information, that information is then transmitted to Century Payments.
  3. We forward your request to the credit card brand such as Visa®, MasterCard® or American Express®.
  4. The credit card brand forwards your request to the financial institution (called the “issuer”) that issued the card to the customer.
  5. The issuer approves or declines the transaction, and this response is sent to the credit card brand.
  6. The credit card brand then sends that response to Century Payments.
  7. Century Payments then forwards the response to you by way of your point-of-sale device, ecommerce website or by phone, enabling you to complete the transaction.
  8. If the card transaction is approved, you’ll receive an authorization number. If it’s declined, the card may be referred, a process explained below.

Note: If you prefer, you can send multiple authorization requests, grouped as a batch, rather than individually.

 

Approvals, Declines, & Referrals

When your customer’s transaction is approved, the amount of purchase is reserved from the customer’s available credit line for future settlement with you.

When your customer receives a declined transaction you cannot complete the purchase. The customer may ask you why the card was declined. In most instances, reasons for decline are an exceeded credit limit, unusually high spending activity, or the card being reported as lost or stolen. However, you won’t be provided the reason for decline. Simply recommend to your customer to call the customer service phone number on the card.

A referral occurs when additional information is requested before authorization can occur. This information may be requested of you or your customer and may simply serve as a security measure. For example, if your customer is using the card more frequently than usual, the issuer may want to make certain the card is in possession of the right person. This is typically cleared up between the user and credit card issuer. In a case where we, Century Payments, receive a referral, we will contact the credit card issuer directly on your behalf. The issuer will then likely want to communicate with you, your customer or both of you before issuing authorization. Although typically seen as a momentary hiccup, this process protects everyone.

 

Settlement

After your customer completes a transaction with you, it needs to be settled. The settlement process begins when you present approved card transactions to Century Payments after which we submit them to the credit card brands for clearing.

  1. You submit your transaction information to Century Payments.
  2. We then forward your settlement request to the appropriate credit card brand, such as Visa® or MasterCard® for confirmation with the customer’s issuing financial institution.
  3. The issuing financial institution receives the request and either (1) issues a credit to Century Payments that enables us to reimburse you for the transaction amount and the card issuer than pays us for the transaction or (2) issues a debit to the credit card issuer to charge them for the settled transaction.
  4. The financial institution that issued the card to your customer then posts this transaction to the cardholder’s account.
  5. The cardholder receives a statement, usually every month, that details transactions and amount the cardholder now owes.
 

Funding

The funding process is when Century Payments deposits money into your bank account for the transaction amount you processed. This occurs after your customer presents a credit card, the transaction is authorized and settled, and the payment brand (Visa®, MasterCard® or other card brand) reimburses Century Payments for your customer transaction. When the payment brand funds us, we can then send the funds to you. Funding typically takes about two business days.

To be funded as soon as possible, be aware of deadlines and holidays that may affect when you will see funding in your bank account. Bank holidays in the United States are as follows:

  • January: New Year’s Day, Dr. Martin Luther King, Jr. Day
  • February: Presidents Day
  • May: Memorial Day
  • July: Independence Day
  • September: Labor Day
  • October: Columbus Day
  • November: Veterans Day, Thanksgiving Day
  • December: Christmas Day
 

Interchange & Assessment Fees

Interchange refers to the “hand off” of a card payment transaction between you and Century Payments, between us and the credit card brand (such as Visa® or MasterCard®), and between the credit card brand and financial institution that issued the card to the customer. Each transaction you process, and each step of the interchange process for that transaction, incurs a fee. The fee covers the cost of making the transaction happen, and to issuing banks for offering lines of credit and fraud mitigation.

Interchange fees are determined by the credit card brands. The fee is determined by these factors:

  • type of card (debit, credit, gift card, etc.)
  • type of transaction (card present at point of sale, phone order, ecommerce website order)
  • average transaction volume.

Also, fees for lower risk transactions, such as a customer using a card in person, are less than the fees for high-risk transactions such as those that occur over the Internet on an ecommerce website.

Assessment fees are charged by card brands to cover operating costs of their networks.

 

Chargebacks

If your customer refuses to accept responsibility for a charge on his or her credit card, such as contesting or canceling a transaction, we now enter a process called a chargeback. Chargebacks may also occur if the cardholder’s issuing bank experiences a technical problem.

Some of the causes of chargebacks include buyer didn’t receive a product or service; buyer received a product that was damaged or defective; buyer felt product or service received wasn’t what was promised; buyer sees a transaction on his/her statement and doesn’t recognize it; and buyer is a victim of fraud or identity theft.

If the customer refuses to accept responsibility for a transaction charge, here’s what happens:


  1. The customer contacts the card issuer and requests the charge be removed from the account.
  2. The card issuer assesses the claim and, if deemed unreasonable, the customer is determined to be responsible for payment. The merchant will then be paid via normal settlement process.
  3. If the issuer determines the claim is reasonable, the issuer makes a temporary credit payment to the customer and initiates the chargeback process.
  4. During the chargeback process, the card issuer will obtain funds from the card brand (such as Visa® and MasterCard®), and the brand will then debit the funds from Century Payments. After this occurs, we then debit the funds from your settlement account.
  5. Century Payments will follow up with documentation to you regarding the chargeback.
  6. You will need to fill out the documentation and submit it to us, after which, it will be reviewed and a decision will be made whether to return the chargeback funds.

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