Electronic Credit Card System on Internet
Credit cards are the most popular E-Payment method. The Credit Card is plastic credit card with a magnetic strip issued by a bank or financial institution. Holders of a valid credit card have the authorization to purchase goods and services up to a predetermined amount, called a credit limit. There are the following 5 entities involved in Credit Card System as follows:
Entities Involved in Credit Card Payment System
1. Card Holders.
3. Card Issuer (Bank / financial institution for Card Holder)
4. Acquirer (Bank / financial institution for Merchant)
5. Card Brand (Company – Master, Visa card)
Process of using Credit Card
1. Issue a Credit card to potential card holder.
2. A person requests to an issuing bank for Credit Card. The bank approves or denies the application. If approved a plastic card is delivered to the customer by mail. The card holder calls the bank to activate the card.
3. Card holder shows card to merchant or enter information at website to buy something.
4. Merchant asks approval from Card Company. Transaction is paid by credit and Merchant keeps sales slip
5. Merchant sends sales slip to acquirer bank and pays fees for the service. This is called “capturing process”
6. Acquiring bank requests the card company to clear credit amount and gets paid
7. Then Card Company asks for clearance to issuing bank.
8. The amount is transferred from issuer to brand company. The same amount is deducted from card holder’s account in issuing bank.
Basics of eCommerce
Ecommerce Payment Systems/ ePayment