In credit card payment processing it is first important to know the parties that are involved. There is the credit card holder or the buyer, the merchant or the store who is selling the item, and there is the bank or company which has issued the credit card. The credit card payment processing takes place in stages and the main two stages are the authorization of the sale transaction and the settlement of the amount by the bank to the merchant.
All stages in credit card payment processing is done through a secure server which is the actual payment processor. When the credit card holder buys anything at the store he presents his card to the cashier who swipes it in a machine and punches in the bill amount. This swiping actually initializes the authorization process, where you credit card details are sent to the bank for verification online. If your card is accepted and the amount you have to pay is within your credit limit then the system will start printing your receipt, which you will have to sign. This signed receipt is the proof of sale and the merchant can claim this amount from the bank. At the end of a day the store will make a summary of all such transaction and send it to the bank requesting a deposit into the merchant's account for that amount. The bank checks whether everything is in order and transfers funds to the merchant's account minus an inter charge fee of a certain percentage depending on the type of card.
When the sale is made online the credit card payment processing is slightly different. The virtual store will have a secure website and you will have to key-in all your credit card details. On the basis of the information you have filled in, there will be a verification process which will authenticate your card and accept your payment online. The rest of the process for settlement of the amount to the merchant will be the same as in the actual store. Many credit card companies will send you an email to verify whether you have actually made a purchase. It is important to answer to this mail correctly, otherwise you can be liable for fraud. If you do not respond to this verification e-mail within a certain time, you credit card can be suspended.
Due to the latest technology and software, credit card payment processing has become simple and secure.