How does credit/debit card work on merchant PoS

Building seamless user experience requires lot of underlying technology to support the user experience. There is lot that goes into what looks like a simple card swipe and PIN entry to make payment at a shop. I am sharing my first hand experience on how does the card swipe or dip works on a PoS device and how does the payment flow.

Following steps are involved for a bank issued card to work on a merchant PoS

1. Stakeholders in the transaction

Consider a customer with debit/credit card who walks-in to a merchant to buy product and make payment on PoS using his/her card. Following are the stakeholders involved in the transaction:
a. Acquirer Bank- The bank of merchant whose PoS is deployed in merchant’s shop.

b. Merchant PoS- PSP who has deployed PoS at the merchant’s shop on behlaf of acquirer bank. There are many players in the market currently like mSwipe, Pine Labs etc.
c. Payment Network/Scheme- Payment Network or scheme connect different banks for authorization of transaction. Visa, MasterCard, Rupay etc. are the major payment network.
d. Issuer Bank- The bank of cardholder/customer.