--- title: Understanding Credit Card Authorization Process | PayJunction description: Understanding credit card authorization isn’t easy; there’s more than meets the eye. Discover the players involved in accepting credit card payments. image: https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/understanding-credit-card-authorization.svg --- [tel:1-800-601-0230](tel:1-800-601-0230) 800-601-0230 - Features - Solutions - Developers - [Pricing](https://www.payjunction.com/payments/pricing.html) - Resources [See a Demo](https://www2.payjunction.com/tour-payjunction) Features - EXPLORE PRODUCTS [No-code Payments Integration®](https://www.payjunction.com/payments/no-code-payments-integration.html) [ZeroTouch Terminal](https://www.payjunction.com/payments/smart-terminal.html) [Portable Terminal](https://www.payjunction.com/payments/portable-credit-card-reader-terminal.html) - ACCEPT PAYMENTS [Invoices](https://www.payjunction.com/payments/electronic-invoices.html) [ACH Electronic Checks](https://www.payjunction.com/payments/ach-payments.html) [SmartSurcharge®](https://www.payjunction.com/payments/smart-surcharge.html) [Cards on File](https://www.payjunction.com/payments/store-credit-card-info.html) [Rapid Refunds](https://www.payjunction.com/payments/credit-card-refund.html) [Recurring Billing](https://www.payjunction.com/payments/recurring-payments.html) [Ecommerce](https://www.payjunction.com/payments/ecommerce-merchant-services.html) [Mobile App](https://itunes.apple.com/us/app/payjunction/id1324839420?ls=1&mt=8) - EXPLORE CAPABILITIES [Overview](https://www.payjunction.com/payments/payment-processing-solutions.html) [Integration Marketplace](https://integrations.payjunction.com/) [Remote Signature](https://www.payjunction.com/payments/signature-capture.html) [Multi-Location](https://www.payjunction.com/payments/enterprise-payments.html) [Sales Reports](https://www.payjunction.com/payments/sales-reports.html) [Search and Export](https://www.payjunction.com/payments/transaction-history-search.html) [Customization](https://www.payjunction.com/payments/custom-payment-software.html) Solutions - [Veterinary Streamline payment workflows and get paid faster with up-front deposits and payment schedules for high-cost procedures. 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Authorization requests start when cardholders key in, swipe or insert their debit or credit cards through traditional credit card readers or [Virtual Terminals](https://blog.payjunction.com/virtual-terminals-everything-to-know/). After waiting three to 22 seconds, depending on the business’s [card reader speed](https://blog.payjunction.com/card-reader-speeds-emv/), the transaction will either be approved or declined. To the untrained eye, this process seems simple. Yet, there are a number of steps that are executed behind the scenes before a credit card authorization is complete. ## The Financial Middlemen of Credit Card Authorization Being aware of the [financial middlemen](https://blog.payjunction.com/credit-card-processing-middlemen/) involved in the process is critical to understanding credit card authorization. - **Merchant Account Provider**: Work directly with businesses to process transactions. Providers facilitate communication between the Card Association’s network and businesses’ bank accounts. - **Payment Processor**: Maintain the technical network that facilitates communication between the provider and the network. Processors are chosen by the provider’s bank and do not work directly with businesses. - **Card Association’s Network**: Each card brand has its own association that sets rules and manages Interchange costs. This network of systems communicates with both the issuing and acquiring banks during the credit card authorization process. - **Issuing Bank**: Financial institutions that issue credit cards (e.g., Capital One) to cardholders and back the Card Associations. Some associations double as an issuing bank (e.g., American Express). - **Acquiring Bank**: Members of the Card Associations that have agreements with Merchant Account Providers to accept deposits via credit card transactions. ## Payment Processing Demo Schedule 15 minutes with a payments expert Get a customized PayJunction product walk-through Understand requirements and pricing Determine your SAVINGS! GET DEMO NOW ## 6 Steps of Credit Card Authorization Every transaction undergoes the following six-step process to procure authorization and approve or reject a credit card payment. 1. The cardholder initiates a credit card authorization request by keying in, swiping or inserting his debit or credit card into the Merchant Account Provider’s system. 2. The Merchant Account Provider communicates the transaction information to its Payment Processor. 3. The Payment Processor, acting as the technical glue, communicates the transaction to the Card Association’s network. 4. The acquiring bank checks with the issuing bank via the Card Association’s network to determine whether the funds or credit are available. This ultimately determines whether the provider will approve or decline the transaction. 5. The acquiring bank communicates the information back to the Merchant Account Provider via its Payment Processor. 6. An approval or decline code is issued. If declined, the transaction will fail and a decline code will return. If approved, the transaction will process and the Card Association network will facilitate the transfer of funds from the issuing bank to the depository bank account of the business running the transaction. After a successful credit card authorization, you have the option to [hold](https://blog.payjunction.com/authorize-and-capture-force/) or settle a transaction. If held, the transaction must be captured within a certain time frame, in accordance with the Card Association. This duration may vary per Merchant Account Provider, but held transactions typically must be settled within five to seven days. Otherwise, they will void. Settling a held transaction after the seventh day could result in a [bank-initiated chargeback](https://blog.payjunction.com/chargeback-definition-chargeback-fraud/). ## Pick the best merchant account for your business. [![ASK THESE 8 QUESTIONS](https://no-cache.hubspot.com/cta/default/635739/18e1c2c9-714d-4f22-bbae-9d4b4529734f.png)](https://cta-redirect.hubspot.com/cta/redirect/635739/18e1c2c9-714d-4f22-bbae-9d4b4529734f) Still not understanding the steps to accepting credit card payments? Don’t be shy! Ask your questions below and we’ll happily answer them. *Editor's Note: This post was originally published in October 2017 and has been updated for comprehensiveness and accuracy.* [Merchant Account](https://blog.payjunction.com/topic/merchant-account) [Credit Card Processing](https://blog.payjunction.com/topic/credit-card-processing) --- ##### [![4 Tactics to Increase Your E-Commerce Conversion Rate](https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/e-commerce-conversion-rates.svg) 4 Tactics to Increase Your E-Commerce Conversion Rate](https://blog.payjunction.com/e-commerce-conversion-rates) ##### [![How Retailers Can Reduce Risk and Ease PCI DSS Compliance](https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/retail-pci-dss.svg) How Retailers Can Reduce Risk and Ease PCI DSS Compliance](https://blog.payjunction.com/retail-pci-dss) ###### About Author ![Picture of Ursula Librizzi](https://blog.payjunction.com/hs-fs/hubfs/Ursula_Librizzi.jpg?width=200&height=200&name=Ursula_Librizzi.jpg) ### Ursula Librizzi Ursula is the sales and marketing operations manager for PayJunction. She oversees daily marketing tasks and liaises between the sales and marketing departments. ###### Related Posts ## [![Understanding Credit Card Authorization vs. Credit Card Pre-Authorization](https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/credit-card-authorization.svg) Understanding Credit Card Authorization vs. Credit Card Pre-Authorization In the payment processing industry there is a lot of payment jargon used interchangeably, and sometimes done so incorrectly. As a business owner processing credit cards, it is important you know what these terms mean so you use them correctly if a customer asks.](https://blog.payjunction.com/credit-card-authorization) ## [![Why You Shouldn’t Charge an Authorization Hold After 7 Days](https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/authorization-hold-credit-card.svg) Why You Shouldn’t Charge an Authorization Hold After 7 Days Not all businesses are the same. While some fulfill a transaction exchange at the moment of purchase, others may take days to provide the product or service purchased. In this case, a credit card authorization would ensure that the customer has the funds before you provide your end of the transaction.](https://blog.payjunction.com/authorization-hold-credit-card) ## [![Mastercard Cards Without Signature Panels Starting April 2019](https://blog.payjunction.com/hubfs/BLOG/FEATURED%20IMAGES/mastercard-signature-panel.svg) Mastercard Cards Without Signature Panels Starting April 2019 If you haven’t noticed, a major trend has emerged in the last year around signatures and credit cards. In late 2017 and early 2018, card brands announced major changes to their signature requirements. Mastercard is now taking yet another step away from signatures.](https://blog.payjunction.com/mastercard-signature-panel) ## Meet a Payment System You’ll Love - ###### FEATURES [No-code Payments Integration®](https://www.payjunction.com/payments/no-code-payments-integration.html) [ZeroTouch Terminal](https://www.payjunction.com/payments/smart-terminal.html) [Portable Terminal](https://www.payjunction.com/payments/portable-credit-card-reader-terminal.html) [Invoices](https://www.payjunction.com/payments/electronic-invoices.html) [ACH](https://www.payjunction.com/payments/ach-payments.html) [SmartSurcharge®](https://www.payjunction.com/payments/smart-surcharge.html) [Cards on File](https://www.payjunction.com/payments/store-credit-card-info.html) [Recurring Billing](https://www.payjunction.com/payments/recurring-payments.html) - [Ecommerce](https://www.payjunction.com/payments/ecommerce-merchant-services.html) [Customization](https://www.payjunction.com/payments/custom-payment-software.html) [Remote Signatures](https://www.payjunction.com/payments/signature-capture.html) [Rapid Refunds](https://www.payjunction.com/payments/credit-card-refund.html) [Multi-Location](https://www.payjunction.com/payments/enterprise-payments.html) [Sales Reports](https://www.payjunction.com/payments/sales-reports.html) [Search and Export](https://www.payjunction.com/payments/transaction-history-search.html) [Mobile App](https://itunes.apple.com/us/app/payjunction/id1324839420?ls=1&mt=8) - ###### BUSINESS SOLUTIONS [Auto Dealers](https://www2.payjunction.com/automotive-merchant-services) [Veterinary](https://www2.payjunction.com/payment-processing-veterinarians) [Dentistry](https://www2.payjunction.com/payment-processing-dentists) - ###### RESOURCES [Product Overview](https://www.payjunction.com/payments/payment-processing-solutions.html) [Integrations](https://integrations.payjunction.com/) [Blog](https://blog.payjunction.com/) [Guides](https://guides.payjunction.com/) [Support](https://support.payjunction.com/) [Service Status](https://status.payjunction.com/) [Tutorials](https://blog.payjunction.com/tag/pj-university/) [API](https://www.payjunction.com/payments/payment-api.html) - [Trust Center](https://trust.payjunction.com/) [Request a Demo](https://www2.payjunction.com/payjunction-demo) [Pricing](https://www.payjunction.com/payments/pricing.html) [About Us](https://www.payjunction.com/payments/about.html) [Careers *HIRING*](https://www2.payjunction.com/careers) [Press](https://media.payjunction.com/) - ###### RESOURCES [Integrations](https://integrations.payjunction.com/) [Guides](https://guides.payjunction.com/) [Tutorials](https://blog.payjunction.com/tag/pj-university/) [API](https://www.payjunction.com/payments/payment-api.html) [Request a Demo](https://www2.payjunction.com/payjunction-demo) [About Us](https://www.payjunction.com/payments/about.html) [Careers *HIRING*](https://www2.payjunction.com/careers) [Press](https://media.payjunction.com/) [Trust Center](https://trust.payjunction.com/) [Service Status](https://status.payjunction.com/) - ###### BUSINESS SOLUTIONS [Auto Dealers](https://www2.payjunction.com/automotive-merchant-services) [Veterinary](https://www2.payjunction.com/payment-processing-veterinarians) [Dentistry](https://www2.payjunction.com/payment-processing-dentists) ##### 800-601-0230 SIGN UP FOR OUR NEWSLETTER  Become a better advocate for your business. 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