What goes on in the life of a transaction?

A credit card transaction consists of two parts: the authorization and the settlement.

The AUTHORIZATION is the permission of the card issuing bank to accept a credit card for a payment.

The SETTLEMENT is the clearance through the Visa and MasterCard settlement system of the credit card transactions accumulated by the merchant in the terminal or Host so that the merchant can be paid for them. Both Authorization and Settlement must happen before a merchant can be paid for a credit card transaction.

What is a Check Card?

A Check card is a debit card that has a Visa or MasterCard logo that can be used as a credit card or a debit card. It is issued by a bank when a customer opens a checking or a savings account. A Check card transaction deducts the the funds from the cardholders bank account rather than in a monthly billing like a credit card.

If the customer chooses to use the Check card as a debit transaction the cardholder must enter their PIN at the Point of Sale on a PIN Pad. Once this PIN based debit transaction is completed the funds are automatically pulled from the customer/cardholders bank account. With a PIN based debit transaction the customer is not required to sign the sales receipt.

If the card is used a credit card transaction it will be processed like a credit card transaction and a signature from the cardholder is required.

What is a Chargeback?

A Chargeback is a reversal of a credit card transaction initiated by the cardholder or the card issuing bank that was used in the purchase. This is different from a refund or a credit that is agreed to and initiated at the point of sale. A Chargeback usually occurs when a when the cardholder files a dispute with their card issuing bank. This can happen when the cardholder discovers fraudulent or improper transactions on their statement.

The card issuing bank will investigate disputes and will charge back the value of the original transaction directly from the merchants acquiring bank, which is obligated by to do so under the card network rules and regulations. The merchant acquiring bank will attempt to recover an equal amount of the chargeback from the merchants bank account. Chargebacks are passed along to the merchant as policy from the acquiring bank unless the merchant can prove that the transaction in question was legitimate.

Smart Cards

At Eagle Merchant Services we get asked all the time if we can accept Smart Cards, or are our machines that we sell Smart Card capable. Smart Cards have a computer chip embedded in the credit card and when the card is passed through a Smart Card credit card machine the card can perform numerous functions or access data that is stored in the chip. These cards can be used as Debit cards or credit cards.


Smart Cards are common in Europe, the technology that is required to accept them in the United States is rare. The credit card machines and cards use the magnetic strip technology and to upgrade to Smart Card readers is to costly.

Experts predict that the Smart Card technology will become popular in the future in the US.

What is a Bankcard?

A BANKCARD is issued by a financial institution, it allows the balance to be carried over from month to month. The Issuing Bank assesses the Cardholder the interest they will pay on the unpaid balance against carrying the balance. A BANKCARD allows a purchase amount to be taken from a Cardholders bank account or through a line of credit without having the cardholder write a check.

To accept BANKCARDS merchants must be approved to process BANKCARD transactions through a bank or a credit card processor. The merchant must sign a merchant processing agreement through their merchant service provider.




© Eagle Merchant Services is a Chicago merchant account area provider offering the absolute lowest cost merchant services as well as credit card machines.

Travel and Entertainment Cards

Travel and Entertainment Cards such as American Express and Diners Club originally targeted business customers who used these cards at restaurants, hotels, airlines and car rental agencies. As consumers used these cards more frequently more standard retailers began accepting these card types. To accept these cards the merchant must be approved to process Visa and MasterCard transactions through a credit card processor.

A requirement of these cards is that the cardholder must pay off the balance in full each month.


© Eagle Merchant Services - a premier Chicago merchant accounts area provider providing the best merchant services at the lowest costs guaranteed.

PIN Based Debit Transactions

Just about every credit card machine has the ability to have a PIN (person identification number) Pad and have their customers run a debit transaction or a credit card transaction. Some machines even have a built in PIN Pad which means less clutter for the merchant and still allows customers to enter their PIN. External PIN Pads are possible too, this device is hooked up to the machine and allows the customers to enter their PIN.

Some merchants prefer their customers using the external PIN Pad because they don't want their customers handling the credit card machine. One huge benefit of the PIN based transaction is that the merchant is charged a transaction fee and not a percentage rate; this keeps their costs down.

Eagle Merchant Services offers PIN Pads both internal and external for all of their retail merchants.



© Eagle Merchant Services is a Chicago merchant accounts area provider offering lowest cost merchant services and credit card machines.