NEXSYS Knowledge Base | Merchant Services / Payment Processing
Every time a customer taps, swipes, or enters their card number, a lot happens behind the scenes in a matter of seconds. Understanding that process helps you make better decisions about your payment setup, troubleshoot issues when they arise, and have more informed conversations with your processor.
This article walks through the full lifecycle of a payment transaction — from the moment a customer pays to the moment funds hit your bank account.
Before walking through the steps, it helps to know who's involved. Every card transaction moves through five parties:
A transaction happens in two phases: Authorization (real-time, happens in seconds) and Settlement (happens in batch, usually overnight).
Phase 1 — Authorization
Phase 2 — Settlement
Understanding the flow of a transaction helps you in a few practical ways:
| Declines aren't always your fault | Most declines originate at the issuing bank — insufficient funds, fraud holds, or card limits. Your terminal or processor isn't the problem. |
| Authorization ≠ payment received | An approval only reserves funds. Actual money doesn't move until settlement — which is why batching on time matters. |
| Fees come out at settlement | You don't pay processing fees upfront — they're deducted from each batch before funds are deposited. What hits your bank is always net of fees. |
| Funding speed depends on your setup | Standard funding is 1–2 business days. If cash flow is tight, ask your NEXSYS rep about next-day or same-day deposit options. |
Every processor uses the same underlying network infrastructure — Visa, Mastercard, and the issuing banks don't change. What differs between processors is pricing, service, hardware, and how fees are structured. That's where NEXSYS focuses on delivering value.
Whether you're evaluating a new terminal, comparing pricing structures, or trying to understand a line item on your statement — your NEXSYS representative can walk you through it. We believe informed merchants make better partners.
Have questions about your payment setup? Contact your NEXSYS representative or reach us at support@nexsyspros.com.
| 5 | Batch close At the end of the business day (automatically or manually), your terminal or POS system submits all authorized transactions as a batch to your processor. This triggers the actual movement of funds. |
| 6 | Funds move through the network The card network coordinates the transfer of funds from the issuing bank to your acquiring bank. Processing fees — including interchange — are deducted at this stage. |
| 7 | Deposit hits your account Your processor deposits the net amount (sale total minus fees) into your business bank account. Standard funding time is 1–2 business days, though same-day and next-day options are available depending on your setup. |
| 1 | Customer initiates payment The customer swipes, taps, inserts, or enters their card number. The terminal or payment gateway captures the card data and transaction amount. |
| 2 | Request sent to your processor The transaction data is securely transmitted to your acquiring bank (payment processor), which forwards it through the card network. |
| 3 | Card network routes to issuing bank Visa, Mastercard, or the relevant network routes the authorization request to the customer's bank, which checks the account for available funds, fraud flags, and card validity. |
| 4 | Approval or decline returned The issuing bank sends an approval or decline code back through the network to your terminal. This entire process typically takes 1–3 seconds. An approval means the funds are reserved — not yet transferred. |
| Party | Who They Are |
| Cardholder | Your customer — the person making the purchase with their credit or debit card. |
| Merchant | You — the business accepting the payment. |
| Acquiring Bank | Your bank or payment processor — the financial institution that holds your merchant account and receives funds on your behalf. |
| Card Network | Visa, Mastercard, American Express, or Discover — the network that routes the transaction between banks and sets the rules. |
| Issuing Bank | Your customer's bank — the institution that issued their card and ultimately approves or declines the transaction. |