PayStars
  • Accept card payments – lowest rates from 0.27%
  • Keep your card processing fees to a minimum
  • Direct access to the UK’s leading card processing banks
  • We ensure your rates always remain competitive
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Credit Card Processing

Credit card processing enables businesses to accept payments from customers quickly and securely. Behind every swipe, dip, or tap is a sophisticated financial ecosystem that authorizes, verifies, and settles transactions in seconds. For merchants, understanding this process helps optimize checkout experiences, reduce fees, and minimize fraud risks.

How Credit Card Processing Works

  1. Payment Initiation

    • The customer presents their card (via swipe, chip insert, contactless tap, or online entry).

    • The payment terminal, e-commerce gateway, or mobile app encrypts the card details and sends them to the acquiring bank (merchant’s payment processor).

  2. Authorization Request

    • The acquiring bank forwards the transaction to the card network (Visa, Mastercard, etc.).

    • The card network routes the request to the issuing bank (customer’s bank) for approval.

    • The issuer checks for sufficient funds, fraud flags, and SCA (Strong Customer Authentication) compliance.

  3. Approval or Decline

    • If approved, the issuer reserves the funds and sends an authorization code back through the network.

    • If declined, the customer must use another payment method.

  4. Batching & Settlement

    • At the end of the day, the merchant batches all authorized transactions.

    • The acquiring bank requests fund transfers from each card issuer via the network.

    • Funds are deposited into the merchant’s account (usually within 1-3 business days).

Key Players in Credit Card Processing

  • Merchant (Business) – Accepts payments via POS, online, or mobile.

  • Acquiring Bank (Processor) – Handles transactions for the merchant (e.g., Stripe, Worldpay).

  • Card Networks – Visa, Mastercard, Amex route transactions between banks.

  • Issuing Bank – Provides the customer’s credit/debit card and approves transactions.

Fees & Costs

Credit card processing fees typically include:

  • Interchange fees (paid to the issuing bank, varies by card type)

  • Assessment fees (charged by card networks)

  • Processor markup (acquirer’s profit margin)

Rates differ for:
✔ In-person (card-present) transactions – Lower risk, lower fees (~1.5%)
✔ Online/card-not-present transactions – Higher risk, higher fees (~2.9% + $0.30)

Optimizing Credit Card Processing for Your Business

  • Choose the right pricing model (Interchange-plus vs. flat-rate)

  • Prevent declines with updated SCA compliance and clear billing descriptors.

  • Reduce fraud with tokenization, AVS checks, and 3D Secure.

  • Speed up payouts with next-day settlement options.

The Future of Credit Card Processing

  • More contactless & mobile wallet adoption (Apple Pay, Google Pay)

  • Embedded payments (checkout within apps/social media)

  • Real-time payments (faster settlements via Open Banking)

By streamlining credit card processing, businesses can improve cash flow, enhance security, and provide a frictionless checkout experience—key to boosting sales and customer satisfaction.