How Credit Card Payments Work

Three steps in the payments process

Authorization:

When customers use their cards to make a purchase, the process of checking that the customer has sufficient funds and authorizing the purchase is called authorization.

Capture:

Next, the customer's bank verifies that the funds are available and places a hold on those funds.

Settlement:

The process of sending funds from the customer's account to the merchant bank is called settlement. A payment network handles the settlement.