When a customer pays with a credit or debit card at your bar, restaurant, or brick and mortar or online store, it feels instant. But behind the scenes, their money takes a complex journey through banks, networks, and your point-of-sale (POS) system before it lands in your merchant account. Understanding this process helps you appreciate the value of a secure, compliant payment solution — and why Elevated Payment Solutions makes it simpler.
Stage 1: The Transaction Begins — Authorization
- Customer action: The customer swipes, dips, or taps their card at your POS terminal.
- POS system role: Your POS captures the card details and transaction amount, encrypting the data immediately. Elevated Payment Solutions uses P2PE (Point-to-Point Encryption), which means sensitive card data is encrypted at the moment of entry and stays protected until it reaches the processor.
- Issuer bank: The customer’s bank (called the issuer) receives the request. The issuer checks if the card is valid, if funds or credit are available, and whether the transaction looks legitimate.
- Response: The issuer sends back an approval or decline code.
All of this typically happens in less than 10 seconds.
Think of this stage as the “green light” moment — your POS system asks the customer’s bank, “Can we go ahead?” and waits for the signal.
Stage 2: Authentication and Fraud Checks
- Card networks: Visa, Mastercard, Discover, and American Express act as the “highways” that carry transaction data between the issuer (customer’s bank) and the acquirer (the merchant’s bank).
- Fraud screening: Networks and issuers run checks to spot unusual activity (like duplicate charges or suspicious locations).
- Merchant role: With Elevated Payment Solutions, our processing system’s are configured to comply with PCI standards, ensuring that fraud checks are supported by secure data handling.
This stage is all about trust — making sure the transaction is genuine and safe.
Stage 3: Clearing — Routing the Transaction
- Acquirer bank: the merchant’s bank (called the acquirer) receives the transaction details. The acquirer is responsible for working with the card networks to ensure funds are moved correctly.
- Interchange fees: At this point, interchange fees are calculated. These are fees paid by the merchant’s bank to the cardholder’s bank for the privilege of accepting card payments.
- Processor role: Elevated Payment Solutions processors, ensure that data flows seamlessly between issuer, acquirer, and networks.
This is the “paperwork” stage — the transaction is logged, fees are calculated, and everything is prepared for settlement.
Stage 4: Settlement — Moving the Money
- Funds transfer: The issuer (customer’s bank) sends the money to the acquirer (the merchant’s bank).
- Merchant account: The acquirer deposits the funds into your merchant account. Depending on your setup, this can take 1–3 business days. Elevated Payment Solutions works with you to try to make receiving your money as fast and easy as possible.
- POS reconciliation: Your POS system reconciles the transaction, ensuring your daily batch matches what was deposited.
This is the moment merchants care about most — when the money actually arrives. Elevated Payment Solutions ensures settlement is fast, accurate, and transparent.
Why Elevated Payment Solutions Makes It Easier
- P2PE compliance: By encrypting card data from the moment it enters your POS, we eliminate exposure risks and simplify PCI compliance.
- Streamlined reporting: Our systems provide clear reconciliation reports so you can track every transaction from swipe to settlement.
- Hospitality focus: We understand the unique needs of bars, restaurants, and eCommerce businesses and retail shops— from seasonal staffing challenges to high-volume nights — and design solutions that keep payments smooth and secure.
Final Thoughts
Card transactions may look simple on the surface, but they involve a sophisticated dance between issuers, acquirers, networks, and processors. By partnering with Elevated Payment Solutions, you don’t have to worry about the complexity. We handle the encryption, compliance, and reconciliation so you can focus on serving your customers and growing your business.
