Card processing
Credit Card Processing: Authorization, Capture, Settlement, and Funding
Credit card processing is the sequence that lets a business accept a card payment, receive approval, submit the transaction, and reconcile funded deposits.
The card-processing sequence
| Step | What Happens |
| Authorization | The terminal or checkout asks the issuer whether the card can be approved. |
| Capture | The approved transaction is marked for settlement. |
| Batch | Transactions are grouped and submitted to the processor. |
| Settlement | Funds move through the card network and banking system. |
| Funding | The business receives deposits, less applicable fees, reserves, or adjustments. |
Processing questions to ask
| Question | Why It Matters |
| How are transactions keyed, dipped, tapped, or swiped? | Entry method can affect cost and fraud risk. |
| When does batching occur? | Batch timing affects settlement and reconciliation. |
| How are refunds handled? | Refund rules affect customer service and reporting. |
| What reports match deposits? | Reconciliation depends on clear transaction and funding reports. |
Frequently asked questions
What is authorization?
Authorization is the approval request for a card transaction.
What is settlement?
Settlement is the process that moves funds after transactions are submitted.
Why do deposits differ from sales?
Fees, refunds, chargebacks, reserves, tips, batching, and timing can create differences.