Transaction (Tx)

In the payments industry, the term "transaction" refers to an economic event that involves the exchange of an asset for payment between a buyer and a seller. Typically, this encompasses the transfer of funds from a shopper (buyer) to a merchant (seller) in exchange for goods or services, or to fulfill other obligations agreed upon by both parties.

A transaction is characterized by several key elements:

An example of a typical transaction is when a consumer makes a purchase at a retail store using a credit card. Here, the retailer must verify the card details, ensure there are enough funds, and obtain authorization from the credit card company. Once approved, the transaction amount is transferred from the consumer’s credit card account to the retailer’s bank account, completing the financial exchange.

Transactions are fundamental to the functioning of economies, enabling the flow of money and goods, facilitating consumer spending, and supporting business operations globally.