The Full Card Payment Chain — From Tap to Settlement
Every card transaction travels through a complex chain of issuers, acquirers, processors, networks, risk engines and settlement systems. This site breaks it down step-by-step.
Explore Technology HubWhat Is the Card Payment Chain?
When you tap or enter your card details, the transaction doesn't go straight to your bank. Instead, it travels through a chain of specialized actors:
- Merchant – where the purchase happens
- Payment terminal or gateway – captures card data
- Processor – formats and routes the authorization
- Acquirer – the merchant's bank-like provider
- Network – Visa, Mastercard, Amex, etc.
- Issuer – the consumer’s card-issuing bank
This chain works in milliseconds, with security, risk scoring and compliance checks happening automatically.
The 5 Core Steps of a Card Transaction
1. Authorization
The merchant requests approval from the issuer through the acquirer and network. Fraud checks, balance checks and risk scoring occur instantly.
2. Authentication
Depending on region, the network may require additional steps such as 3-D Secure or biometric authentication.
3. Clearing
After authorization, the transaction is added to a clearing batch sent through the network for accounting and matching.
4. Settlement
Funds flow from the issuer to the network to the acquirer, then onward to the merchant.
5. Reconciliation
Merchants and processors match settlement files with their internal systems to ensure accuracy.
Interchange, Scheme Fees & Acquirer Pricing
Behind each payment are multiple fee components:
- Interchange: paid from acquirer → issuer via the network
- Scheme fees: paid to Visa/Mastercard/etc.
- Acquirer markup: merchant-facing pricing
These vary by region, card type, MCC, risk profile and transaction size.
The Chain in One Diagram (Explained)
A simplified view of the full payment flow:
| Stage | Key Actors | What Happens |
|---|---|---|
| Authorization | Gateway → Processor → Acquirer → Network → Issuer | Approval, fraud checks, risk models |
| Clearing | Acquirer ↔ Network ↔ Issuer | Transaction details are matched & batched |
| Settlement | Issuer → Network → Acquirer → Merchant | Money moves between institutions |
| Reconciliation | Merchant | Accounting & verification |
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Ready to Dive Deeper Into Card Technology?
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