Simpler Smarter Savings

Approval or Approved

“You have been approved” is the message you receive in the mail for your credit card. It is also the message for when your financial transaction has been completed. When a credit card is swiped, read or recorded by a merchant, the transaction process is just beginning with the sending of an authorization request. Here is an explanation of the credit card processing transaction Approval.

Who approves credit card transactions?

The credit card issuing bank has the authority, power and duty to approve credit card transactions. The credit card issuer sets the rules, licenses third-parties and controls the keys for completing financial transactions. The credit card issuing banks have licensed and authorized some acquiring banks to approve debit and credit card transactions too.

Credit Approval Process

The merchant account must get a clear-cut approval before funds are transferred from a customer account. After a customer hands his debit or credit card to the merchant, the merchant’s electronic system records the identification number and password. This data is then sent to the credit card processor, acquirer or acquiring bank for account verification.

This acquirer will verify the authenticity of the credit card by checking the PIN with the official credit card bank records. If the credit card is legitimate, then the authorization request will be sent to the credit card issuing bank.

Some acquiring banks might issue their own debit or credit cards, along with providing electronic point-of-sale (POS) machines. If the merchant account and customer account are branded in the name of the acquiring bank, then the acquiring bank might verify and approve the transaction.

What does final credit card transaction approval mean?

When the authenticated private consumer data reaches the credit card issuer, the individual’s bank account will be opened. The amount to be debited will be compared to the amount available to see if there is enough money to complete the transaction. If the funds are available, then the financial transaction will be approved.

When the merchant account receives the approval message, it means that 1. the customer has provided the authentic password and ID, 2. the customer had enough money in his bank account to pay for the products or services and 3. the customer’s account has been debited and the merchant account has been credited.