About credit card, despite being an excellent hand on the wheel, is a matter that we need to take very seriously. Therefore, knowing all the particulars is an important step to use it with the responsibility it requires.
About Credit Card: How Does It Work?
Credit card is nothing but a form of electronic payment. To better illustrate, it is like a loan that releases a value every month. The limit is predetermined by the bank and it is possible to use it even without having a background in the checking account.
To make use of it, just pass the credit card in the machine. Doing so will deduct the value from it.
At the end of the month, the issuer will collect all card spend and send an invoice for payment. If it is paid in full, no interest rate will be charged, however, when only a portion of the full amount is paid, the interest will apply. Remember that this is a very high rate.
To summarize better, credit is money borrowed by the financial institution that expects to receive the amount within the stipulated time.
Who is involved in a credit transaction?
Credit card transactions involve some companies. Each has its own function for the transaction to happen.
Companies that receive payment for a purchase. It is common for buyers to be banks where the seller has an open account.
Already the accrediting company is the company that has the task of leasing the terminals, in this case, the card machines. They also have the job of accrediting tenants and are responsible for liaising with the flag.
Banners are the companies that set the rules for each card. They also determine the acceptance network: national or international. Another function of the flag is to connect the bank, buyer and seller. Remember that the flags also play the role of processing the transaction.
Finally, issuers are the companies that offer credit cards and set their limits.
When offering the credit card to make a purchase, the merchant must insert the card into the machine. After that it will enter the value. If you would like to install the purchase, you will need to let him know how many installments you want to pay.
All information such as transaction type, card number, value is conducted through the accredited network.
The acquirer is responsible for communicating the issuer through the accrediting network. Following this, it is also the buyer’s job to communicate the issuer through the flag whether the purchase can be approved or not.
Regarding the transfer of the purchase price to the acquirer, the issuer is responsible for doing this work through the banner network. Once the invoice is paid at the end of the month, the seller will receive the money in the account.
Tenants and Fees
Tenants are responsible for paying a good portion of credit card costs. With each purchase made by the card, the merchant is required to pay a discounted rate. Because of this, the seller does not receive the full amount of the product on credit card purchases.
In addition to the fees, it is worth remembering that the merchant has other expenses, such as the rent of the machine.
Review and Approval
Credit card review and approval are important steps during your order. Knowing how the steps work is a great way to further increase the chances of approving your credit. You can know all the details by clicking here.