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How Credit Card Transactions Work

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Introduction to Credit Card Transactions
Woman handing over credit card to shop assistant
Betsie Van Der Meer/ Taxi/ Getty Images

A lot of things happen between the time you swipe your credit card and sign the credit card slip. Everything that happens behind the scenes makes it possible for you to make purchases with your credit card instead of having to go to the bank every time you want to spend money from your credit limit.

A few people/entities are involved in each credit card transaction:

  • The customer (you) who presents the credit card for payment.
  • The merchant sells you goods or services.
  • The merchant's bank sends credit card transactions for approval.
  • The credit card payment network is a liaison between the merchant bank and the credit card issuer.
  • The credit card issuer approves and pays transactions.

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