Original Credit Transaction: Explore Everything You Need To Know

Original Credit Transaction: Explore Everything You Need To Know

Credit and debit card companies have revolutionized the payment process, replacing cash transactions due to increasing concerns about fraud and safety. These cards offer benefits such as offers, rewards, discounts, and cashback, making it essential to stay informed about the transactions we make using them.

Did You Know? Unlike a cash transaction, the origin of these transactions can be traced; thus, frauds like money laundering have been reduced considerably.

What is a Credit Transaction?

A credit transaction occurs when buyers and sellers agree to exchange goods, services, or financial assets for money. Transactions are recorded in two types: cash basis and accrual basis.

In a cash accounting system, income and expenses are recorded only when cash is received or paid. In an accrual accounting system, transactions are recorded when they occur, forming the basis of credit transactions.

Also Read: Important Guidelines on Contactless Payment and Operations

Example of Credit Transaction

When a seller agrees to receive payment from a buyer at a future date, it is considered a credit transaction. This type of transaction is fundamental in accrual accounting.

Importance of Credit Transactions

Credit transactions have transformed the business culture by enabling convenient buying and selling, incorporating new enterprises, facilitating large-scale production, regulating prices, and improving the standard of living.

What is Meant by an Original Credit Transaction?

An Original Credit Transaction (OCT) is a type of transaction where funds are immediately reflected in the recipient's account. Unlike a normal credit transaction, OCTs provide faster fund transfers.

Visa and MasterCard offer OCTs through VisaDirect and MasterCard MoneySend. Merchants need an issuing bank that recognizes these services and a payment gateway capable of handling OCTs.

How are OCTs Processed?

OCTs are processed through VisaDirect and MasterCard MoneySend. Merchants input the cardholder's credentials to send an OCT, which reflects immediately in the account. OCTs are used for various purposes such as refunds, game winnings, and point redemptions.

Enumerate the cases where an OCT is used.

OCTs are useful in portals with a large clientele or supplier base, supplementing existing payment methods for immigrant transfers.

Also Read: Meaning of Electronic Payments And How Electronic Payments Work

Are OCTs subject to Chargebacks?

The drawback of OCT transactions is chargebacks, which occur when the recipient's account is not configured to accept fast funds. Merchants can avoid chargebacks by ensuring the card is authorized for OCTs and double-checking the entered credentials.


OCTs provide merchants with a flexible option for refunds and payments. They have transformed the business sector and improved customer experiences. However, chargebacks can be a concern, but proper planning and research can mitigate these costs.

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