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Know The Parties Involved In Credit Card Processing

Updated: Apr 11

Accepting credit card payments is crucial in doing business today. Opening up more payment options to your customers will definitely increase your sales opportunities. We’ve seen many merchants still discouraging their customers from using debit or credit cards for purchases. We also know many merchants don’t really understand how the payment process actually works and who is actually involved.


At Loyent, it’s important that we prioritize educating our merchants on payment processing because we believe that a well informed consumer will make better decisions for their business. You don’t need to become an expert in payments, however you’ll definitely be a better consumer if you know how credit cards processing actually works.

debit machine

In today’s post, let’s look at the actors involved in the payment process and their roles. It’s important to understand the financial middlemen between a customer and a merchant.


The cardholder a.k.a your customer gets their credit or debit card from an issuing bank (TD, CIBC, BMO, etc.) and uses their card to pay for goods and services at your business.


The merchant ( that is you) accepts card payments in exchange for goods and services.


The merchants bank allows you to accept deposits from credit and debit payments.


The payment processor is a company that processes credit and debit card transactions. They are the one-stop-shop company a merchant deals with to set up payment card processing. You can work with them directly, or you might work with one of their resellers. Loyent is a reseller. Essentially, the payment processor will connect the merchant, merchant's bank,and the card networks (Visa, Mastercard, etc.) to make card payments possible.


The issuing banks are the financial institutions that issue debit and credit cards to cardholders through the card associations.


Visa, Mastercard, Discover and American Express are part of the card associations. They are the companies that create credit cards and often called credit card networks, they set all the rules, determine a fair processing rate for each industry, maintain the security and encryption of hardware and software.


To learn more about how credit card processing works, connect with one of our payment advisors. We’re always happy to answer any questions you may have.

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