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A Merchants’ Guide To 4 Types Of Credit Card Transactions

Card online payments are usually fast, convenient, secure, and more importantly, flexible when it comes to the types and modes of credit card transactions. Customers prefer using a credit card for their payment transactions due to its seamless and fuss-free process which is also anti-scam, having everything settled with just a tap or swipe.


As merchants, it is important for you to be aware of the types of credit card transactions available to ease the payment process for both you and your customers. Read on to find out a quick overview of the various types of credit card transactions and how you can navigate each of them efficiently.


Charge, or Sale


For online purchases, customers will choose the intended product to be purchased before checking out and paying for their goods. Once confirmed, you as the merchant will send a charge request to the payment gateway (like us, Millennium Payment Systems) which then informs the acquiring bank, which is the bank of the merchant. The acquiring bank will then inform your customers’ bank, the issuing bank, about the applicable charges and simultaneously check whether your customer has the amount in his/her bank account. Once the checks are done and all is good to go, you’ll be informed of the completed financial transaction.


Partial or Full Refund


If you want to refund any of the transactions for any reason, note that there is a partial refund and a full refund. The refund request will be sent to the payment gateway which then transmits the information to the acquiring bank. Once checks are completed, the refunded money will be sent to the issuing bank, which is your customer’s bank.


Authorization and Capture


Similar to charge, customers will choose the intended product to be purchased, check out, and then pay for their items. This authorization request is then sent to the payment gateway, informs the merchant’s bank, and then the merchant’s bank will inform the customers’ bank about the authorization. When this is done, the funds are then blocked on the customer’s bank account.


In the process of doing so, you should verify and decide whether you want to complete the transaction. You can avoid the transaction if you do not want it to proceed, and this sends information via the payment gateway to the issuing bank. On the other hand, if you want to complete the transaction, you can issue a capture. This means that the capture request will be sent to the payment gateway. Once the acquiring bank is informed, money will be captured from the customer before finalizing the transaction.


Transaction Errors


Transaction errors are sometimes inevitable due to bugs or lags in the system. While errors can also happen as a result of technical issues, high risks of fraud identified, or even inadequate funds in your customers’ bank account, your acquiring bank can always cancel the transaction when the funds do not proceed as per usual. You will be informed of the unsuccessful transaction sent via the payment gateway should this issue arise.


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