Payment processing

Offline and online transaction processing in the bank system is always a secret for many people.  For different cards association, the processing is a little bit different. For example: payment by credit card through union-pay card or Visa/Master card.

Union-pay card after swiped, the order charge information is submitted by POS to the acquiring bank system. The acquiring bank report the request through their inside processing network to the card issuer. The card issuer debit the amount according to the order instruction. The union-pay inner processing network receive the success response from the card issuer and returns the transaction result through the original channel to POS device. Within the transaction date before 11pm, it begins to process the settlements in batch. The next date, the card issuer transfer from the cash position account in PBC, which is to transfer the transaction funds the card issuer to the merchant acquiring bank. The acquiring bank then settle the funds to the merchant’s bank account.

Master card transaction processing and clearing workflow is as following:

The customer paid by mc, the merchant terminal system obtain the customer account information and pass on to the acquiring bank in secured. The merchant acquiring bank demand Master card  to request an authorization code from the customer card issuer. Master card submit the transaction to the card issuer and request authorization. The card issuer authorize the transaction and return the result to merchant. The card issuer transfer the funds to merchant acquiring bank and the acquiring bank deposit the funds to merchant account.

I’d like to add a little bit, if the acquiring bank and the issuing bank is the same one, the transaction will not have to be submitted through union-pay bank or Visa/Master.  The time of card swiping is not the time of funds deduction, it’s the time when the card credit is being reduced. The time of actual deduction is when the transaction date later at night the batch is processed. That’s when the clearing document is sent from the acquiring system to the issuing system, the card system being positing.


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