Transaction

In the realm of payments, the term transaction encompasses the exchange of goods, services, or monetary value between a buyer and a seller. It's the process of funds shifting from the buyer to the seller in return for goods or services. Returns or refunds are also considered transactions, as they’re basically sales in reverse.

In the case of a payment card transaction, the process starts when a consumer uses a debit or credit card to make a purchase. This could be dipping, tapping or swiping a merchant’s payment terminal (in physical locations like department stores) or keying in a credit card number online or over the phone.

The card information is transmitted to the card-issuing bank for authorization, verifying whether the buyer possesses adequate funds or credit for the desired purchase. If the sale is authorized, the consumer receives the item, and as far as they are concerned, the transaction is finished. The merchant and its service providers will later go through the steps that actually move the money from one account to the other.