A card payment is a transaction funded through a payment card and processed between the merchant, acquirer, card network and issuer. Authorization confirms whether the transaction may proceed; settlement moves the resulting funds later.
What happens during a card payment?
The merchant submits transaction data through a gateway or processor. The request travels through the acquirer and card network to the issuer, which approves or declines it. Approved transactions are later cleared and settled.
Authorization versus settlement
Authorization reserves or approves the amount but does not prove the merchant has received funds. Capture, clearing and settlement follow, subject to reversals, disputes and provider timing.
What does a card payment cost?
Total merchant cost may include interchange, network assessments, processor or acquiring markup, gateway charges, cross-border fees and currency conversion. Pricing can be blended or itemized.
For example, a $10,000 payment charged at 2.6% plus $0.30 costs $260.30 before any separate cross-border or conversion fee: $10,000 × 2.6% + $0.30.
What controls are required?
Use secure data handling, access controls, fraud screening, authentication where applicable and reconciliation between processor reports, bank deposits and customer balances.
When may cards be unsuitable?
Large B2B payments can face acceptance limits, high percentage fees or supplier non-acceptance. Compare the total cost, settlement timing and dispute model with bank transfer or account-to-account methods.
