There are more than 3 billion people who use credit cards. Each holds at least three payment cards. This statistic shows how these cards have become a vital part of our life.
When credit vouchers came into the picture, people got curious about it. Thus, they looked for a credit card processing service that would help them get this card. At first, people were only using it for buying items. As the years went by, credit card holders are now using it for paying bills. With this voucher, you don’t need to bring a hefty amount of cash in your pockets.
There are lots of credit card processing service providers that you can choose. Each offers different methods of processing payment cards. With these options, it’s quite hard to select a method that fits your business. If you’re looking for the right credit card processing platform, then you’re in the right place!
In this article, you will learn the four basic methods used by top credit card processing companies. But before we proceed to this topic, you need to know what it is, and why it’s important. You also need to know how this system works. So we won’t put you on hold. Let’s begin the discussion!
What Is Credit Card Processing and Why Is It Important?
Credit card processing refers to the handling of electronic payment transactions. It gives the credit card processor the right to access your credit card processing merchant account.
There are three big names in this industry. First is Visa. It has more than 300 million users. The second spot goes to MasterCard. This corporation has more than 200 million cardholders.
Third: the American Express credit card processing service. It now has more than 100 million clients in the US alone.
As mentioned earlier, credit cards have become a vital part of our life. Though cash payment is a good choice, credit vouchers provide more benefits. For store owners, it makes their shops more credible. Consumers are looking for stores where they can get payment options. That way, they can choose a payment method that suits them.
Another reason is protection. Security is a primary concern of many cardholders. They want to ensure that their card information is safe. Thus, if you provide them with payment options, people will think that it’s fine to shop at your store.
Last is trust. The trustworthiness of a business doesn’t rely on the products and services alone. It also lies with your payment options. If a business has credit card processing machines, people will most likely go to your store.
How Does Credit Card Processing Work?
Most of us think that credit card processing is complicated. Well, we can’t blame these people why they think that way. Due to the conflicting information on the Internet and elaborate contracts, it would cause a confusion regarding how it works. For the sake of this article, we will discuss the steps it undergoes when there’s a transaction.
A purchase starts. The moment you swipe the card, or enter the credit card number, a transaction has begun. The credit card details go into the system and then…
The data goes to the processor. When information has entered into the system, it goes directly to the processor. The machine now handles the proceeding steps.
The processor asks for permission. Since it has the information that it needs, the processor contacts the bank that issued the card. For instance, the customer uses a Visa credit card. The processor sends an application to Visa to ensure that the cardholder has enough money to pay for the expenses.
The bank answers the request. When the bank gets the request, it starts checking the user’s account to see if there’s enough money. If yes, the bank gives the processing company thumbs up. If no, it gives the processor thumbs down.
The processing service sends the answer. After receiving the bank’s response, the processor relays it to the retailer.
The transaction ends. If the machine shows that the answer is no, the merchant informs the credit cardholder that the action fails. If the computer says yes, it means that the deal is complete. The customer can go back to their place with no worries.
The steps may seem a lot, but it only takes seconds to finish the process. The procedure repeats as the clerk swipes the card on the machine, or the customer enters the credit card number.
Different Types of Credit Card Processing
Now you know what credit card processing is, and how it works, let’s discuss its methods. There are many processing methods used by top credit card processing services. However, the most common are imprinting machines, credit card terminals, mobile devices, and online payment processors. Let’s discuss each method one-by-one.
Credit Card Imprinters
It’s one of the simplest and the longest way to process payment transactions. This method uses a machine that prints credit card details, which you can process later. However, this system has a glitch. It cannot distinguish if the credit card has not enough funds to pay the bills. You’ll only know the answer when the customer has left the store.
Imprinting machines are an easy and affordable way to gather on-site information. However, you still need to process it using another method. Moreover, carrying the printed slips around involves risks. For one, there’s a possibility of losing slips. There’s also a chance of giving funds to a treacherous person.
Thus, many people use it as a temporary credit card processing service. It’s also best for short-term payment transactions.
Credit Card Terminals
If your company receives a hefty amount of cash, then you should use credit card terminals. These little machines require three steps to finish a transaction. First, the user must swipe the card on the system. Next, she needs to enter the amount using the keypad, then the device processes the transaction.
There are two ways to get this platform. First: buy the machine. It’s best to buy this device if you want to use it regularly. You can go to the bank that operates your merchant account as it’s the best place to buy this system.
However, if you only need it for a particular event, it’s best if you just rent the machine.
Terminals are efficient in several situations. However, combining it with a database can be difficult. If you need to do this, then you should try another processing method that works for this action.
Mobile Devices
Nowadays, smartphones and tablets aren’t just for communication purposes only. You can also use it as a credit card processor, as long as you have access to the Internet. The mobile credit card processing service can help you save money. Since you can use it as a credit card machine, you don’t need to buy credit card terminals.
There are two ways to use this device as a credit card processor. The first method is the cheapest technique. You just need to download an app to transform your phone into a credit card machine. With this system, you only need to enter the credit card number to make a transaction. The second method uses hardware where you can swipe the card.
When planning to use this tool, you need to consider your customers’ and constituents’ expectations. Some are not comfortable with this device. They feel like it’s not safe to use a mobile phone as a credit card processor. To avoid skepticism, you can label your device with the name of your company. This simple act will remove doubts in their minds.
Online Payment Processors
It’s one of the widely used payment processing tools nowadays. This method enables customers to process their payments on their own. They just need to register to do this process.
These are the common methods used by credit card processors. As you can see, each strategy has pros and cons. You just need to weigh in their risks and benefits.
When searching for the right processing method, you need to consider the type of business you have. For instance, if you’re running an online store, then you should use a web-based payment processor.If your store is new, then you can use the credit card imprinting machines.
Apart from that, you also need to consider the volumes of payments you receive. Get a payment method that can handle the number of transactions that you get daily. That way, it won’t be difficult to collect information.
The number of times of using the machine is another crucial factor. There are situations in which they don’t require you to use payment processing devices. If you only need it occasionally, then you should use a tool that you can rent.
Lastly, you need to read reviews of credit card processing services. These write-ups will tell you whether or not you should get their service.
There are many websites dedicated to providing customer reviews. However, if you’re looking for honest reviews of credit card processing companies, then you should go to the CrowdReviews’ website. The site provides a list of credit card processors and ranks them according to the customer reviews.
Jeev Trika
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