Credit Cards

Credit Card Transaction Processing

Credit card transaction processing has increased the speed and efficiency of all consumer spending so that merchants can sell as fast as consumers can buy. This transaction processing is a service that can be in any store and, increasingly, over the Internet. All of this is a chain of events: the purchase, the merchant’s transaction, the interchange fee and request for payment, the credit card company’s bill to the purchaser, and finally, the purchaser payment, a round about way to buy a product. However now, this loop allows for two more profits to be made per purchase: the interchange percentage fee charged to the merchant and the high interest fees levied against the purchaser. In fact, the process has become so convenient that the American Bankers Association now reports that late fees now equal almost 30% of credit card companies’ revenues.

None of this is possible without “plastic money”, but the idea of charging started long before with an enterprising merchant who allowed his customers to “charge” their local purchases which he, in turn, would deposit at the local bank in exchange for payment. Banks immediately caught on with systems verifying credit worthiness, specified limits, and fees for providing the loan service. By 1959, revolving credit was every consumer’s choice: pay off the whole debt or maintain a balance and pay a finance fee. From there, credit card transaction processing has become the norm and cash only purchases have become more of a rarity. This is now a system that permeates the entire economical structure of the nation, even to the point that this “cashless” situation has allowed excessive borrowing.

This credit card transaction processing allows businesses to take credit cards and have actual money transactions handled by the card company instead of the consumer. To be approved, merchants apply for a bank credit application for each card, then buys a mechanism to either swipe or key in the credit card number, and yet again be willing to lose a few pennies on every dollar that arrives long after the date of purchase. The business of buying, selling, and exchange has always permeated society for the better and for the worse. One of the few times Jesus showed an outburst of anger was when money was being exchanged. Perhaps Jesus knew more than we think about transaction processing: “And Jesus went into the temple of God, and cast out all them that sold and bought in the temple, and overthrew the tables of the moneychangers….”

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