How does international credit card processing work?

International credit card transactions are typically processed in the following manner:

1. A cardholder submits payment information electronically, via telephone or in person with an international credit card.
   • If the transaction takes place online, payment information is relayed to a merchant’s payment gateway (the virtual equivalent of a physical point-of-sale terminal) via a secure, automatic connection with the merchant website’s shopping cart.
   • If the transaction takes place over the phone,the merchant keys the payment information into the point-of-sale terminal.
   • If the transaction takes place in person,the merchant keys or swipes the payment information into a point-of-sale terminal.
2. The credit network requests authorization from the international bank that issued the customer’s card.
3. The issuing bank verifies the validity of the cardholder’s credit card for authentication. The transaction is approved or declined and the information makes its way back to the payment processor, the payment gateway/point-of-sale terminal, and eventually both the customer and the merchant.
4. Authorized purchase information runs in batches back through the payment processor, credit network and international bank, which pays the merchant’s bank, resulting in funds finally being deposited into the merchant’s account.

This process takes just a few seconds. But having a transaction cleared and posted to the cardholder’s statement is generally completed within three days of a payment first being sent. Keep in mind that transactions processed by international merchants, whether online, or in-person, while abroad, can be subject to foreign transaction fees. So make sure to always use a no foreign transaction fee credit card for your international purchases.