Understanding POS in Credit Cards: How it Works?

Posted on Tuesday, August 27th, 2024 | By IndusInd Bank

Ever wondered what happens when you swipe your credit card at a store? How does the payment process function, and what role does the Point of Sale (POS) play here? When you swipe a credit card at a store, the POS system reads the card information and sends it to the payment processor for authorisation. The processor communicates with your bank to authenticate funds and approve the transaction, completing the payment procedure.

In the present day’s digital era, being aware of the mechanism behind these transactions is essential, especially if you are a frequent credit card user. So, let’s understand what POS is when we talk about credit cards and how it works.

What is POS in Credit Cards?

POS is a system used by businesses to process sales transactions. For credit cards, a POS refers to a terminal where you insert, swipe, or tap your credit card to pay.

Unlike online credit card payments, where you input your card details for the transaction, a POS system works differently to interpret the card data. Let’s understand this with an example of the IndusInd Bank EazyDiner Platinum Credit Card.

When you insert, swipe, or tap this card, the POS system verifies the card information, processes the payment, and generates a receipt. This smooth process ensures you can make secure and quick transactions using your IndusInd Bank EazyDiner Platinum Credit Card.

Besides allowing you to make contactless payments by tapping the card at the merchant location, the IndusInd Bank EazyDiner Platinum Credit Card offers other benefits. The major welcome benefits offered by the card include:

• Three months EazyDiner Prime membership worth ₹1,095
• Assured 25% up to 50% off at over 2000 premium restaurants and bars
• Prime exclusive benefits like 2x EazyPoints with provision to redeem them for free hotel stays and meals
• 500 welcome bonus EazyPoints
• Lifetime free credit card

Also Read: How To Get a Lifetime Free Credit Card with No Annual Fee in India

With such benefits, using your card at a POS terminal becomes even more rewarding.

How POS Works

Knowing how POS functions can help you leverage your credit card transactions. Here are three major points to illustrate the process:

Initiation of Transaction

When you decide to transact, you present your credit card at a POS. The sales associate or cashier swipes, inserts, or taps your credit card on the POS terminal. This triggers the payment process by sending your card details to the bank.

For instance, suppose you are at a restaurant ready to pay for a meal. For the transaction, you must present your credit card to the cashier. The cashier will insert your card into the POS terminal for the transaction.

Authentication and Authorisation

The POS system then reads your credit card details and sends this information to the bank for authentication. The bank checks if your card is valid and if you have adequate credit to meet the transaction. This includes cross-checking the credit card number, expiration date, and available limit. Once authenticated, the bank authorises the transaction.

For example, at the restaurant, the POS system will send the request to IndusInd Bank to authenticate your IndusInd Bank EazyDiner Platinum Credit Card details and approve the transaction. IndusInd Bank will need to confirm the card is valid and that you have adequate credit to meet the bill. Once confirmed, the payment is authorised.

Completion and Receipt

On authorisation, the transaction is performed and completed, and the amount is deducted from the card’s limit. The POS system generates a receipt, confirming the payment has been successfully received. You receive a printed receipt that details the transaction value and date with your name on it. This receipt acts as proof of payment and can be used for record-keeping purposes.

Considering the example of the transaction at the restaurant, once the payment is confirmed, you receive a receipt. Additionally, you earn EazyPoints, which you can redeem later for more dining benefits, adding immense value to your dining experience.

Ending Note

The POS is an essential part of credit card transactions, ensuring your payments are processed efficiently and securely. Whether you are dining out or shopping, being aware of POS meaning in banking and how it functions can enhance your experience.

The IndusInd Bank EazyDiner Platinum Credit Card, with its distinct dining benefits and zero annual charges, makes using the POS system even more beneficial. Are you ready to make the most out of your credit card transactions?

Apply now for the IndusInd Bank EazyDiner Platinum Credit Card today!

Disclaimer: The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.