If your business accepts credit or debit cards, you use payment processing every day. A customer taps or inserts their card, your terminal displays “Approved,” and you move on to the next customer.
It feels simple—and that's exactly how it should feel.
Behind that transaction, however, several different parties are communicating with one another to securely approve the payment and eventually get the money into your business bank account.
As a business owner, you don't need to know every technical detail of the payment industry. But having a basic understanding of what happens after a customer uses your terminal can help you better understand one of the most important—and often overlooked—parts of running your business.
So, let's keep it simple and follow a typical card payment from your customer's card to your bank account.
What Is Payment Processing?
Payment processing is simply the system that allows your business to accept credit and debit card payments from customers.
Your payment terminal is the part you see, but there's much more happening behind the scenes.
When a customer taps or inserts their card, information needs to securely travel between your terminal, the payment-processing system, the card network and the customer's financial institution.
The goal is simple: determine whether the transaction can be approved and, once the transaction is completed, make sure the funds get to your business.
What Happens When a Customer Uses Your Terminal?
Let's say a customer makes a $100 purchase at your business and taps their Mastercard.
Within a few seconds, your terminal says:
Approved.
Here's what happened.
Step 1: Your Terminal Captures the Transaction
The process begins at your payment terminal.
When the customer taps or inserts their card, the terminal securely reads the necessary payment information and creates a request for the $100 transaction.
That request is then sent into the payment-processing network.
Your terminal isn't actually deciding whether to approve the customer's card. It's communicating with the other parties involved in the transaction to get an answer.
Step 2: The Transaction Is Sent Through the Card Network
The request is routed through the appropriate card network, such as Visa or Mastercard.
The card network helps connect the transaction with the financial institution that issued the customer's card.
Think of it as part of the infrastructure that allows your terminal and the customer's bank to communicate with each other.
Step 3: The Customer's Bank Reviews the Transaction
The customer's financial institution receives the request and determines whether the transaction can be approved.
For example, it may check whether the card is valid, whether sufficient credit or funds are available and whether the transaction passes the bank's security checks.
The bank then sends back an approval or decline.
Step 4: The Answer Comes Back to Your Terminal
The response travels back through the network until it reaches your payment terminal.
If everything checks out, you see:
Approved.
All of those steps can happen in just a few seconds.
To you and your customer, it's simply a tap of a card. Behind the scenes, multiple systems have securely communicated with one another to complete the authorization.
What Happens After the Transaction Is Approved?
This is where another important part of payment processing comes in.
An approved transaction and money arriving in your bank account aren't quite the same thing.
When the terminal says Approved, the transaction has been authorized.
The actual movement of the funds happens through a process called settlement.
Throughout the day, your business may accept dozens or even hundreds of card transactions. Those completed transactions are collected and submitted for settlement according to your payment provider's setup and funding schedule.
The funds are then processed and deposited into your designated business bank account.
So, in very simple terms:
Customer pays → Transaction is approved → Transaction is settled → Money is deposited into your bank account.
Who Is Involved in the Transaction?
Although it feels like a transaction is simply between your customer and your business, there are several parties working behind the scenes.
The Customer
The person making the purchase and presenting their credit or debit card.
Your Business
The merchant accepting the payment.
The Customer's Bank
The financial institution that issued the customer's card and ultimately decides whether the transaction can be approved.
The Card Network
Networks such as Visa and Mastercard help connect the different parties involved and allow transaction information to move securely through the payment system.
Your Payment Provider
Your payment provider gives your business the ability to accept and process card payments through your terminal.
They're also the relationship you rely on when you need help with your terminal, deposits, account or payment-processing setup.
And that last part is important.
Your Payment Processor Is More Than Just the Terminal
It's easy to think of payment processing as simply choosing a company that gives you a machine.
But your terminal is only one piece of the relationship.
Your payment provider can also affect your pricing, equipment, account setup, funding, reporting, contract terms and the type of support you receive when something goes wrong.
When everything is working properly, you might not think about your processor very often.
It's when you have a question, a terminal issue, a problem with a deposit or don't understand something on your statement that the relationship starts to matter.
That's why we believe choosing a payment provider should be about more than simply finding a terminal that accepts cards.
Why We Built JAZ Payments Differently
At JAZ Payments, our goal is to make payment processing easier for Canadian business owners to understand and manage.
We're a Canadian family-run business, and we take a much more hands-on approach than the traditional payment-processing experience.
Instead of sending you through different departments or leaving you to figure things out on your own, our clients have a direct point of contact who understands their business and their account.
We also believe your payment-processing relationship should be straightforward.
That means transparent pricing, month-to-month solutions without long-term commitments, modern payment equipment and direct support when you need it.
Most importantly, we want our clients to actually understand what they're signing up for.
Payment processing is already complicated enough behind the scenes. Your relationship with the company providing it doesn't need to be.
Keeping Payment Processing Simple
The technology behind a single card transaction is surprisingly complex.
But for a business owner, the important part is fairly simple:
Your customer pays. Their bank approves the transaction. The transaction is settled. The money makes its way to your business.
Your payment provider helps make that entire process possible.
At JAZ Payments, we believe our job is to make everything surrounding that process just as simple—from getting your business set up to understanding your account and getting help when you need it.
If you're curious about how your current payment-processing setup compares, we're always happy to have a conversation.
Contact JAZ Payments to learn more about our payment-processing solutions for Canadian businesses.
