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In business, there are many different transactions which take place from time to time. The transaction between a customer and a merchant brings in a sale and profit. Businesses therefore make profits by interacting with customers and selling to them goods and services. A transaction starts when the company buys products to sell to the customer. The products are displayed on the retail outlet for the customer. This may be a supermarket, a candy shop, a boutique, a chemist or an online store. The customer views the different products, their benefits, prices and compares them with other competitor products.

When a customer goes to the supermarket to buy i.e. bread she finds all types of bread displayed on the counter. These range from white bread, sweet bread and whole meal bread from many bakers. The customer is free to choose the type of bread she prefers for the price that suits her budget. She picks the bread and puts it in her trolley or shopping cart. She moves to other counters picking other items and adding them to the shopping cart. She proceeds to the point-of sale and pays. If she uses a credit card, the terminal will swipe her card details or the cashier will key-in her credit card number and other details. These transactions are followed for other types of sale.

Web businesses operate using similar transactions. When the web customer reaches the check-out point on the website, she will be asked to key-in the credit card details. Her browser will encrypt these details so they are not accessed by unauthorized readers. This encrypted information is sent to the merchant and then to the card processor for authorization within seconds. The card processor sends the details to the credit card provider and if there are enough funds the issuer deducts exchange fees and sends the amount to the card processor. This transaction also takes seconds. The card processor deducts the discount fees and sends the amount to the merchant who releases the goods to the cardholder.

The next transaction is batching. Each day the merchant batches all the day's sales and sends them to the acquirer for payment to be sent. The card processing company charges fees per transaction or on a monthly basis. Different card processors charge different rates depending on the value of the transactions and the credit rating of the cardholder and merchant. Debit cards are charged very low rates.

The final transaction is payment. The money is credited to the merchant account within a short time at most 3 days. If the business has a merchant account in the same bank as the customer, the transaction takes lesser time. The money can also be transferred from the customer account to merchant account in a different bank. This quick payment avails the money to businesses faster than ever before. Business competition is stiff and unless a company accepts credit and debit card payments, they may not be able to compete in this global market.

Last modified onWednesday, 03 April 2013 05:44

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