Credit card clearing procedure

Credit card processing includes two parts: authorization and clearing. The procedure involved with card holder is authorization, which is the checkout procedure in your online shopping when you enter your information of payment by credit card.   

At that time card holder only authorize merchant to request transaction funds from the bank. The bank check the credit card and card holder information (payment by swiping on POS requires checking magnetic strip information and transaction password, card-not-present environment requires checking three elements and card holder information) and decide approval or reject the authorization.

For real-time authorize transaction information recording, you can call the bank customer service or check text notice of transaction to find the record.  

Regarding the statement generating workflow—clearing: as the bank approve the transaction authorization, the subsequent procedure includes two links

1. Merchant debit at his clearing record, which means he needs to ask for bank to credit him the transaction amount. Actually merchant does not submit clearing document to the bank everyday, the statement will be checked every month or week as agreed. This part has nothing to do with the card holder. 

2. In the mean time, if the authorization is processed through union pay, the union pay will debit on in the clearing document and submit to the issuing bank. 

At night, union pay will collect all transactions record and combined as one clearing document and send to the bank. The bank will process the clearing in batch after receive it. The work is mainly about positing to merchant account. After that, the card holder will be debited in the statement. 

The card holder can also search the “unsettled statement” in bank app on your mobile smart phone.

The above procedure applies for transaction transfer through union pay and bank direct connection.  For Visa/MasterCard/Amex: the cross-border credit card association will not process the clearing document that fast with the banks. And the statement for the unsettled transaction will be generated by a little bit delayed.


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