The Validation Process For Credit Cards: How Does It Work?

What is a credit card?
A credit card is a type of bank card issued by a card-issuing bank to individuals who want to make their transactions and purchases easier and faster. A credit card provides convenience to cardholders when shopping and making a purchase in a physical store or online. A credit card has a corresponding unique set of numbers called credit card numbers that work. A credit card number that works should be valid which is usually determined by a credit card machine or special software.

Who were the people involved in the validation process of a credit card?
There are important people who play a necessary role in the whole credit card validation process. The absence of any of these factors can disrupt the entire credit card validation process. Here are the factors involved in the credit card validation process.

  • Cardholder. This is the individual who has any kind of bank card, either a credit card or a debit card. A bank card is issued to a cardholder by the issuing bank.
  • Merchant. A merchant is an individual or group of people selling products or different kinds of services.
  • Issuing bank. This is the bank which issued a bank card to the cardholder.
  • Merchant’s bank. The bank of the merchant which usually receives and process the transaction needed for the payment done to the merchant.

How does the entire credit card validation work?
First of all, before making a purchase, a cardholder hands out his or her credit card number to the merchant. The merchant inserts the credit card to a machine to relay its details to the merchant’s bank. The merchant’s bank receives the credit card information of the cardholder. Through a bank network, the merchant’s bank relays the purchase made by the cardholder to the issuing bank. The issuing bank receives the transaction made and checks its validity. The issuing bank either accepts or declines the transaction. If the transaction is accepted, the purchase is complete. The cardholder now settles the necessary bill to the issuing bank.