How do Merchant Services work?

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Credit Card Payments: how does the 4-part communication work?

Credit card transactions are four-part communications.

There is the ‘sender’, who originates the communication. Then there is the ‘receiver’ on the other end of the communication. In between the sender and receiver is the ‘message’ itself and the fourth crucial element of communication is the ‘medium’ in which it happens. 

Modern mobile technology and payment terminals change only the speed with which the transaction takes place and the intrinsic nature of the message, rather than the content of it. It is reassuring to think that all credit card payments are basically unchanged since the dawn of commerce. When cavemen first struck on the idea of swapping their flint axe for a haunch of deer, they were engaging in the exact same communication process in 4 parts as you do when paying for venison in your favourite restaurant.

As the sender, you and your card are originating the communication. The medium is numerical, electronic and digital, and unique to you; your unique account number, in combination with your unique personal identification number. The rest of the message is made up of the details of the transaction; amount, date, time etc. Because information is both power and private the message is encrypted, so that it cannot be read and understood by anybody other than the receivers and senders. Data protection was a lot less complex for cavemen. The massive change over time is in the speed with which credit card payments are completed. 

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