An authorized transaction refers to a debit or credit card purchase that has received approval from the customer’s bank, making it a crucial component of the electronic payment process. To complete an electronic transaction, various entities collaborate, including financial institutions, merchants, and payment processors.
The process begins with the cardholder initiating the payment using a payment card and authorizing the transaction with the merchant, who may request identification for verification. Whether the card is swiped through a card reader or the card details are entered online, the payment system sends the information to the merchant’s bank, also known as the acquiring bank.
The merchant bank plays a central role as the lead facilitator in the electronic transaction. It acts on behalf of the merchant to secure payment and deposit it into the merchant’s account. Upon receiving the payment information, the merchant bank leverages its payment network to transmit the payment communication through the appropriate channel, ensuring a seamless and secure transaction.
Written by Andrii Vovk