A Simple Guide to Credit Card Processing

August 14, 2020

As the use of cash continues to decline in Canada, credit cards have become one of the most commonly used methods of payment for daily transactions. From the rewards associated with particular consumer credit cards to the ease with which small businesses can keep checkout lines moving efficiently, everyone benefits from paying by credit card. 

A Simple Guide to Credit Card Processing

Canadians are using credit cards in record numbers, with 75.8 million Mastercard and Visa cards in circulation in Canada alone. While credit cards are common around the world, not everyone is familiar with everyone and everything involved in the processing and completing a credit card transaction. 

With the expansion of ecommerce and the advantages of digital wallet payments, there are rising concerns over security and the need for secure payment methods. Understanding how credit card processing works - when much of it is unseen - can help instill confidence in your customers that payments are authorized quickly and securely.

To get a better idea of what goes into processing a purchase with a credit card, it helps to define the role each party plays at various stages of the transaction.

The basics: the customer and the merchant

The main parties involved in a purchase are the customer and the merchant. A customer uses their credit card to purchase goods or services, while the merchant providing those goods or services accepts payment - through a point-of-sale terminal, mobile or online payments.

After a customer has decided to purchase goods or services from a merchant with their credit card, the payment needs to be authenticated before the transaction is fully complete. When the customer uses a credit card terminal to pay for a purchase, the merchant’s POS system captures the account information and the transaction amount and transmits it securely to the acquirer.

Who is the acquirer?

The acquirer, sometimes known as the payment processor, is responsible for facilitating the merchant’s ability to accept the credit card payment. Moneris is an example of an acquirer.

The acquirer asks the customer’s credit card company, Mastercard, for example, to submit and receive authorization from the customer’s issuer that the customer has the required funds available to make the purchase.

What does an issuer do?

The issuer is the financial institution that issued the card to the customer. The issuer either authorizes or declines the transaction and sends confirmation of its decision back to the merchant electronically via the acquirer.

Once the transaction is complete, the financial institution routes payment for the goods or services to the merchant’s acquirer. The acquirer is responsible for depositing the payment into the merchant’s account - also referred to as the settlement process.

Digging deeper into credit card processing

The benefit of processing payments with credit cards is that the settlement process is quick and painless. It enables transactions to be consolidated effortlessly to the merchant’s account. While it may sound complicated, these parties all work together to ensure the customer experience goes smoothly, and the payments get to the merchant in a seamless and organized way.

Find more details on credit card processing in the Moneris’ eBook, No Money, No Problem. Payment Processing 101

Learn how credit cards are improving and modernizing the purchase experience for both customers and merchants on why all businesses should accept credit cards.


The information in this article is provided solely for informational purposes and is not intended to be legal, business or other professional advice or an endorsement of any of the websites or services listed. 

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