Rails Day Business

Archive for January, 2010

Credit cards are very popular to all of us due to the trouble-free power to purchase that it grants to anyone who owns them. To have more in-depth understanding of how credit cards literally work, here are the different phases that every swipe undergoes. There are three major components of the credit card transaction and these are authorization, clearing and paying, and funding.

When the credit card owner uses the card to purchase a product, the information that he provides to the seller is sent to the credit card company by means of swiping the credit card into a terminal. This is the authorization phase. In this phase, the credit made by the credit card owner is recorded so that it can be included in the bills that he needs to pay when the bill arrives. Necessary security measures are taken into account in this phase to verify the identity of the user and the owner.

Clearing and paying is the phase where the credit card owner gives back the amount that he has incurred upon the purchase made. Once the total amount that he has used is paid back, he has been cleared of the responsibilities for that specific deal alone.

Finally, after being cleared by the credit card company, the owner is once again given a fresh credit limit that serves as his source of fund. This is called the funding phase and after this phase the cycle can already repeat itself.