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Table of Contents

Lead Story

Interchange: What gives?

Patti Murphy
The Takoma Group


Industry Update

Sun setting on PCI version 1.1

Bohemia, payments style

No wiggle room with Red Flag Rule

Processing for newbies

VeriFone turns triple play


GS Advisory Board:
What's up in this downturn? - Part II

The payments doctor is in

Interchange in brief

Industry Leader

Stuart C. Harvey Jr. –
In the zone


Building relationships - priceless

Biff Matthews
CardWare International


Street SmartsSM:
MLS compensation options

Jason Felts
Advanced Merchant Services

PCI vendors: Welcome to the jungle

Tim Cranny
Panoptic Security Inc.

What's your business?

Daniel Wadleigh
Marketing Consultant

Admit, own, fix your bloopers

Jeff Fortney
Clearent LLC

Reduce stress, raise retention

Curt Hensley
CSH Consulting

Be calendar-wise

Adam Atlas
Attorney at Law

Sweet-spot MLS training

Christian Murray
Global eTelecom Inc.

New Products

Mobile computing for feet on the street

Dolphin 9900 Mobile Computer
Honeywell International Inc.

Back office synergy online

Synergy Express
Jack Henry & Associates Inc.


Revamp that problem mindset





Resource Guide


A Bigger Thing

The Green Sheet Online Edition

September 08, 2008  •  Issue 08:09:01

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Processing for newbies

To help individuals new to the payments industry, David Fish, Senior Analyst, Credit Advisory Service, Mercator Advisory Group, presented Merchant Acquiring 101, a teleconference held Aug. 26, 2008, to explain the two-phase authorization and clearing and settlement flow for credit and signature debit card processing.

Step one - authorization

"Card authorization is the card issuer's approval of card payment for a merchant's goods or services," Fish said. After the card is swiped, a request for authorization is sent through the acquirer's processing platform to one of the card networks - Visa Inc., MasterCard Worldwide, American Express Co., Discover Financial Services or , JCB International.

That card network identifies the issuer of the card and forwards the authorization request to the bank issuer that issued the credit or debit card.

The card issuer then approves or declines the transaction based on such things as available credit, whether or not the card has been reported lost or stolen, along with the risk profile of the transaction itself.

If the transaction is approved, then the transaction information is either stored in the merchant's terminal or on the acquirer's host system.

Step two - clearing and settlement

At the end of the business day, the group of transactions authorized at the merchant's POS - known collectively as the "batch" - is cleared for settlement and payment.

"The POS application sends that batch to the acquirer, who gathers the data and puts it in an overall settlement file with all of its merchants," Fish said. "That 'big batch' of an acquirer's merchant batches is sent to the card networks who sort the data by issuer and acquirer."

The networks initiate settlement when those files are distributed to the original issuers. For more information about the teleconference, contact David Fish at

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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