The five parties
Every card transaction involves the same cast. The cardholder pays. The merchant, you, accepts. The issuing bank issued the customer's card and carries the risk that they do not pay their bill. The acquiring bank holds your merchant account and takes on the risk that you fail to deliver what was paid for. The card network, Visa or Mastercard or Amex or Discover, sets the rules and moves the messages between the two banks.
Your processor sits between you and the acquiring bank, handling the technology and the relationship. On some setups the acquirer and processor are the same company; on others they are not. That distinction rarely matters to you until something goes wrong, at which point it matters a great deal.
Step one: authorization
Two seconds, and four things happen in them.
The card is read
Tap, dip, swipe, or keyed entry. The terminal or gateway captures the card data and immediately encrypts it.
The request routes
Your processor sends the authorization request to the card network, which routes it to the issuing bank.
The issuer decides
The issuing bank checks available credit or funds, runs its own fraud scoring, and approves or declines. This is where most declines originate, not with your processor.
The answer comes back
Approved, and the amount is placed on hold against the cardholder's account. Nothing has moved yet. No money has changed hands.
Step two: batch
At the end of your business day, your terminal or gateway submits the day's approved authorizations together as a batch. Most terminals do this automatically at a preset cutoff time, which matters more than it sounds: a batch that fails to close sits overnight, and a batch closed after your processor's cutoff funds a day later than you expected.
This is also the point where tip adjustments are applied. A restaurant transaction authorized at $80 and tipped to $96 settles at $96, provided the adjustment lands before the batch closes.
Step three: settlement
The card network moves funds from each issuing bank to your acquiring bank. This is where the fees are actually applied, and it is worth understanding that they are deducted before the money reaches you rather than billed to you afterward.
Interchange is deducted and kept by the issuing bank. Assessments are deducted and kept by the card network. Your processor's markup is deducted and kept by the processor. What remains is yours.
Across the entire US market in 2024, that middle layer came to $187.20 billion in merchant processing fees on $11.9 trillion of card volume.
Step four: funding
Your acquiring bank deposits the settled funds into your business bank account. The gap between settlement and deposit is entirely a matter of processor policy, not technical necessity, the funds have already moved between banks.
Most processors run a one to two business day gap. Some new accounts sit on a longer hold for the first several deposits. And some charge a percentage to give you the money faster, which is a fee for removing a delay they introduced.
Where each dollar goes
On a $100 sale at a typical effective rate, the rough split is: the issuing bank keeps the largest share as interchange, the card network takes a small fixed slice as assessments, and the processor keeps its markup. Across the US market in 2024 that whole stack averaged $1.57 per $100 accepted.
The important part: interchange and assessments are identical for every processor. When one processor is cheaper than another, the difference is entirely in the markup, which is exactly why pricing models that hide the markup are worth being suspicious of.
What can go wrong at each step
Authorization declines
Usually the issuing bank, not you. Insufficient funds, fraud scoring, or an expired card.
Batches that do not close
An unclosed batch means unfunded sales. Automatic batching at a set cutoff prevents this.
Downgrades at settlement
Missing address data or late settlement can push a transaction into a more expensive interchange category. You only see this on an itemized statement.
Funding delays and holds
The step with the most discretion and the least explanation. A processor can delay funding at will, which is why underwriting done properly upfront matters so much.
Common questions
How long does a card payment actually take to process?+
The authorization happens in about two seconds: the card is read, the request routes through the network to the issuing bank, the bank approves or declines, and the answer comes back. Actual money movement, settlement and funding, happens later.
When do I actually get the money from a card sale?+
Not at authorization. Approved sales are batched at the end of your day, settle between banks, then deposit to your account. The gap between settlement and deposit is processor policy, commonly one to two business days. CoreCommerce funds next business day.
Why do two processors charge different rates for the same card?+
Interchange and assessments are identical for every processor, set by the banks and card networks. The only part that varies is the processor's markup. When one is cheaper, the difference is entirely in that markup.
What is the difference between my processor and my bank?+
Your acquiring bank holds your merchant account and receives the funds. Your processor sits between you and that bank, handling the technology and the relationship. On some setups they are the same company, on others they are separate.
Where does the money go out of a $100 card sale?+
Fees are deducted before the money reaches you, not billed afterward. The issuing bank keeps the largest share as interchange, the network takes a small assessment, and your processor keeps its markup. In 2024 that averaged about $1.57 per $100.
See what your processing actually costs.
Send us a recent statement and we'll break down where every dollar goes, line by line. No cost.
More on merchant services and credit card processing, or read the payments glossary.