What Does CC Mean in Payment & How Does It Work?

In financial and payment contexts, abbreviations streamline communication. This article demystifies “CC” in the payment landscape, explaining its meaning, the information required for transactions, and the steps involved in processing.

“CC” as Credit Card

In payments, “CC” almost universally refers to a credit card. A credit card is a payment instrument, typically issued by a bank or financial institution, that allows individuals to borrow funds up to a predetermined limit to make purchases of goods and services. This borrowed amount must be repaid to the issuer, often with interest if the balance is not paid in full by the due date. Credit cards provide a revolving line of credit, enabling users to repeatedly borrow and repay within their credit limit. They are a widely used and convenient method for transactions in both physical stores and online environments.

Information for Credit Card Payments

To complete a credit card payment, specific information is generally required. The primary account number (PAN), commonly known as the 16-digit credit card number, uniquely identifies the cardholder’s account. This number is typically embossed or printed on the front of the card. The expiration date, usually displayed as a month and year, indicates when the card becomes invalid.

The cardholder’s name, as it appears on the card, is also necessary for verification. For security, especially in card-not-present transactions like online purchases, a card security code (CVV, CVC, or CID) is essential. This three or four-digit value is typically found on the back of Visa, Mastercard, and Discover cards, or on the front for American Express. This code helps verify the card’s authenticity and confirms the cardholder’s possession of the physical card. Providing the billing address, including the street address and zip code, can further enhance transaction security.

Processing Credit Card Payments

The processing of a credit card payment involves a multi-step procedure. When a customer presents their credit card, the merchant’s point-of-sale (POS) system or payment gateway sends transaction details to a payment processor. This processor then routes an authorization request to the appropriate card network, such as Visa or Mastercard. The card network forwards the request to the cardholder’s issuing bank, which verifies the card’s validity, checks for sufficient funds or credit limit, and assesses for fraud.

The issuing bank then sends an approval or denial response back through the card network and processor to the merchant. If approved, the issuing bank places a temporary hold on the funds in the cardholder’s account, earmarking the amount for the transaction. This authorization typically occurs within a few seconds. At the end of the business day, merchants usually submit all authorized transactions in a “batch” to their payment processor for settlement.

During the settlement phase, the payment processor and card networks coordinate with the issuing banks to facilitate the transfer of funds. The issuing bank transfers the funds, minus interchange fees, to the merchant’s acquiring bank. The acquiring bank then deposits these funds into the merchant’s business bank account. This entire settlement process, from transaction authorization to the merchant receiving funds, typically takes one to three business days.