Ace the AFP Exam 2026 – Boost Your Financial Wizardry!

The process of credit card payment clearing involves several critical steps that ensure the transaction is valid and that funds are appropriately allocated. The chosen answer outlines the correct sequence of these steps as follows:

Initially, the transaction begins with the credit card being presented to the merchant for a purchase. This is the first step where the merchant identifies the form of payment.

Next, an authorization request is initiated. The merchant's point-of-sale system sends this request to the cardholder's bank (the issuer) to confirm that the card is valid and that sufficient credit is available for the transaction amount. At this stage, the issuer checks the card details and the account status.

Following the authorization request, the hold on the credit limit is placed. This means that the issuer temporarily reserves the transaction amount on the cardholder's credit limit to prevent them from spending that amount elsewhere until the transaction is fully completed. This step occurs after the authorization request and is crucial for managing available credit, ensuring that the merchant will receive payment.

Finally, authorization is granted by the issuer confirming that the transaction can proceed. This last step assures the merchant that they can complete the sale and that the funds will ultimately be transferred from the cardholder's account.

This logical progression—from presenting the card, to