Diagram illustrating the card authorization process

Today, credit cards play an important role in our lives. We can carry out almost all of our transactions with a credit card, without carrying cash. During a purchase, we hand our card to the cashier, enter our PIN on the POS menu, take our receipt and the product, and leave the store.

So what happens behind the scenes? Have you ever wondered?

Let's go through it step by step:

  1. First, when the card is inserted into the POS device, the POS device reads the card's chip information.
  2. Before the transaction goes online to the issuer bank (the card's bank), the terminal verifies the card. (The verification method may be DDA or CDA.)
  3. If both the POS and the card approve offline verification,
    the PIN we enter on the POS menu is verified against the PIN stored on the card using OFFLINE PIN verification.
  4. If the POS or the card requires the PIN to be verified online, the entered PIN is verified online by the issuer bank.
  5. If the transaction is a contactless transaction and is below the maximum contactless transaction amount (90 TL as of March 1, 2018), and both the card and the POS decide on offline approval, the transaction is approved without going to the card's bank.
  6. Depending on the scenario in which the transaction is performed by reading the chip and sent online: -The POS device determines whether the card is Onus or Not Onus based on the card's BIN number (the card's first 6 digits).
    - If the card's bank is the same as the POS's bank (Onus), the transaction enters that bank's authorization traffic and the approval process is completed.
    - If the card's bank differs from the POS's bank (Not Onus), the transaction is forwarded by the POS to BKM.
    - BKM forwards the transaction to the issuer bank (the card's bank) indicated by the relevant BIN number.
    - The issuer bank evaluates the authorization request it receives and sends the authorization response back to BKM.
    - BKM forwards the authorization response received from the issuer bank to the acquirer bank.
    - The acquirer bank prints the authorization response received from the issuer bank onto the POS receipt.
    - The POS device produces 2 receipts for the transaction result: one copy to be given to the cardholder, and one copy to remain with the merchant.
  7. A batch (end of day) is run on the POS device so that the relevant amounts are transferred to the merchant's account.
  8. The transaction is reflected in the card's statement activity 2 days later if it was Not Onus, or 1 day later if it was Onus.