Crediting the Credit Card Company with your Safety

2007-03-08 10:33:40

( Online Shopping )



What is a Credit Card?

When you use a credit card, it is the equivalent of borrowing money from the bank or credit card company. The credit card companies forward the cash to the recipient of your payment, but at the end of the month, it is up to you to pay back the credit card company for these expenses. The credit card is issued as a way for you to make secure purchases from trusted merchants. An interest rate is usually tacked onto this amount to repay the company for processing credit cards and their service.

The credit card is usually defined by a credit limit which is the highest amount of money you can spend with a specific card. This limit is in place to protect you and the credit card company. If you cannot pay back the money, the credit card company is entitled to reappropriate your purchases or possessions which may be resold for the equivalent of your debt.

Credit Card vs Debit Card

Debit card processing is much like credit card processing, only the amount you spend is automatically subtracted from your bank account. You may specify a limit for these debit cards or the bank's debit processing will stop any transaction when your account reaches zero.

Credit Card Application Process

Although some credit cards are known to come through the mail, processing credit card applications usually include investigations into your income, background and net worth. Credit card companies breathe better when they know that you have the capability to pay them back on collection day. Meanwhile, it is your responsibility to read the fine print on every credit card application and make sure that the payments processing is secure.

Using the Credit Card

The credit card cannot be used if the merchant you are purchasing from does not have a validation machine. Machines processing credit cards use phone lines and magnetic strips to ensure that the card is the genuine article. This process also checks whether you are inside your credit limit. The machine then prints a credit invoice which you sign. This invoice will usually include the clause, "I agree to pay the above amount according to the card issuer agreement." or the equivalent. Once you sign, your signature is checked by the merchant to ensure that you are the true cardholder. Other security devices on your credit card include a picture of your face on the card itself.

Online transactions may be made through merchant payment processing accounts on the Internet. Because of a high risk of credit card fraud or identity theft, merchant payment processing accounts and companies are vital to e-commerce. By coursing payments through these companies, you are ensured that the information you give out cannot be stolen by third-parties, and the merchant is ensured that he will receive payment. Security includes digital fingerprinting and the use of passwords or, more recently, bio-identification. Further some companies will ask for a flat-rate or percentage fee for processing credit cards.


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