How’s is a card purchase processed at a supermarket?


When I use a debit card at a supermarket, how is the money processed after I use my card?

In: 2

Your card mostly just contains your bank account credentials. After you authorized the payment the device will contact your bank through the internet to transmit the billing information and they will put the payment task into their system from where it’s executed sooner or later.

And yes it’s all encrypted, your account information can’t be easily stolen.

Jump back to the 80’s and 90’s…

When you wanted to buy something using a credit or debit card, you would hand over your card to the merchant. They would make a note of your account number and other details on a bit of paper (by imprinting your card on it – this is why the letters were traditionally all raised on the card), wrote down the transaction details like the price, and get you to sign it to validate the transaction. You would then take your shopping and go about your day.

At the end of the day, the shop would then collect in every transaction slip from the days trading, and take them over to the bank. The banks would then work together to process them all, transferring money out of the paying account and into the recieving ones.

This is why there was a delay in card payments being taken – it took time for the shop to pass on the transaction slip, and for the bank’s to process them.

Today? We basically use the same system, only computerised through phone/internet connections. So rather than worrying everything down and handing over a bit of paper, a computer scans the same information off your card and phones or directly through to a computer at the bank, which transfers the money automatically between the accounts.

Assuming by debit you mean visa/MasterCard/etc, the PoS terminal (thing on the counter) contacts the merchant’s (supermarket’s) payment processor which is typically their bank.

The payment processor then uses the appropriate card network (e.g. Visa) to contact the cardholder’s bank/issuer with an authorisation request. The issuer then checks that the amount is ok, runs any anti fraud checks, etc and sends back an authorisation confirmation.

At this point no money has changed hands, that will happen later at a process called “settlement” where the various banks, issuers, payment processors, etc come together and sort out who owes who what. However, typically your card company will immediately deduct or at least hold the money from your account.