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Published July 28th, 2016 by

Things You Need to Know in a Credit Card Processing Company

Things You Need to Know in a Credit Card Processing CompanyWhen starting up a business, you would like your customers to have the option to pay using their debit or credit cards. Here’s when credit card processing companies come in. They are there to facilitate debit or credit card payments your customers make. We’ll talk about what they do and other information you need to make sure you select the one right for your company.

If you’re very busy and don’t have time to read and compare the top credit card processing companies, you can look at CrowdReviews’ website to find out what other people have to say.

How Does It Work?

“How does card processing work”, you might ask. Card processing may be a bit confusing at first. We’ve explained this as simple as possible.

Let’s start with who are involved in card processing. There are four participants in card processing. We have the following:

  1. This is you, the owner of the business. You are the merchant that receives payment for the goods or services you offer.
  2. The customer is YOUR customer, the one paying for your products and services. They can also be referred to as the cardholder.
  3. Acquiring bank. The acquiring bank is the bank or financial institution that you use to provide credit or debit card processing services. To avoid confusion, in this article we’ll call them the company.
  4. Issuing bank. The issuing bank is the bank or financial institution of the customer. The issuing bank is the one that is associated with the credit or debit card used by the customer.

Now we know who are involved with card processing. The next thing that we need to know is how the payment transaction flow is. This is how the payment is made, from the start of the customer’s purchase until the transaction is complete. To make it easier, we’ve summarized it in 9 steps.

  1. Step one. Your customer will select and choose your products or services. They will then purchase them using their debit or credit card.
  2. Step two. The payment will be requested to the acquiring bank, asking them to authorize the transaction. Aside from the payment details, other details about the customer may need to be provided. This request can be done in four different ways. It could be requested using a Point of Sale (POS) terminal where a physical terminal is used, with an online software, a standard terminal using a phone line or a payment processing gateway (a third-party service).
  3. Step three. The acquiring bank submits the transaction request data to a processor. A processor checks for the validity of the card and if there are funds available.
  4. Step four. Once the processor verifies that there are funds available and the card details is valid, they will now contact the issuing bank to let them know if it is all right to approve the transaction or deny it.
  5. Step five. The issuing bank will let double check the details. Once the cardholder’s request is approved, the issuing bank will give the authorization to the processor to continue the transaction.
  6. Step six. The processor receives the authorization and relays the information to the acquiring bank.
  7. Step seven. The acquiring bank will then provide the authorization to the merchant, asking for additional information (if applicable) such as a signature to make sure that the customer agrees to the payment and approves of it.
  8. Step eight. The issuing bank will send a statement to the customer.
  9. Step nine. Once the customer receives it, he or she will pay the amount to its issuing bank.

This process does not end here. What will happen next is a settlement. It is process where the money will be given to the merchant. Once a payment has been settled, the funds will be withdrawn from the customer and it will be deposited to the merchant. A refund is made if the opposite happens. There is a possibility of a dispute, where the customer will let the issuing bank know that the transaction was not authorized, becoming a chargeback. The best credit card processing company should be able to make sure that your customers experience in making payments are smooth, quick and an enjoyable experience to make them purchase more.

What Kind of Merchants Need One?

There are a lot of industries that can utilize a credit card processing company. These are:

  1. Professional merchants. People who are in the consulting, legal, financial or other industries can use them for increasing their business revenue.
  2. Retail or store front. This helps shop owners utilize their time more and increase their revenue.
  3. Mail Order and/or Telephone Order (MOTO). Companies with MOTO services will help them increase their sales.
  4. E-Commerce. Business owners that sell online will also help them boost their sales.
  5. M-Commerce. Just like E-Commerce and MOTO, they would benefit from improved sales. The only difference is that they’re using mobile payments.
  6. This is normally used by dentists and other healthcare providers to help them in their busy schedules.
  7. Home improvement. Plumbers, landscapers, maintenance men, electricians and a lot more can help them increase their revenues and increase customer satisfaction.
  8. Theme park owners, tour guides, hotel owners and others that are associated with the hospitality or tourism industry can allow their guests or customers to quickly reserve rooms or purchase tours and other accommodations.
  9. Food and Beverage. Restaurants and bars professionals such as waiters, bartenders and bakers commonly use these companies to make sure their clients can pay for their food bill without any worries.
  10. Charitable organizations. Charitable institutions or organizations use card payment processors to help them accept donations and give them to its recipients easily.
  11. Other industries. Other business industries can use payment processing companies to cater to their customer payment needs.

Whether your business is big or small, you’ll be able to find the company that’s right for you. I’m sure that by using one of the top credit card processing companies, you’ll be able to increase your profits and improve client satisfaction.

How Do Companies Process Card Payments?

There are different ways in processing credit or debit card transactions. Choosing the type of payment suitable for your business can improve your company’s overall finances. These are:

  1. Point of Sale (POS) terminals. These are physical machines that are attached to a cash register. They process payments using an internet or a phone connection. These are often found in malls or in front of shops. There are two kinds of terminals, the “Tap and Pay” or the “Swipe” method.
  2. Payment transactions using this method do not require any expensive equipment or software. They just use a manual credit card reader to make a copy of the cardholder’s credit or debit card. When we say copy, it means that it physically copies the actual card with its details such as the card number and cardholder’s name. The card details would then be manually entered and given to the merchant.
  3. The online method would need an Internet connection to make any payment transactions, so you must make sure that you have a good Internet connection. It is recommended to have a backup server in case the main one malfunctions.
  4. You are required to use a compatible mobile phone, usually in the form of a smartphone, tablet or iPhone using this process. You have the option to connect your phone to a card reader to make the transaction or you can download and use an app for it.

Each processing type is very different. In some instances, there are companies where you have the option to combine them. Compare their pros and cons such as fees, rates, accessibility and equipment. To find out more about the payment processing types by checking out Business News Daily’s article. You can also check reviews of credit card processing companies by CrowdReviews here.

What fees do they charge?

These card processing companies have different rates and fees. Here is a credit card processors list for their most commonly charged fees:

  1. Setup fee
  2. Annual fee/monthly fee
  3. Minimum monthly fee
  4. Transaction fee
  5. Chargeback fee
  6. Address verification fee
  7. Termination fee
  8. Gateway fee (if applicable)
  9. Equipment fee (if applicable)

There are several fees not yet included in the list above. These fees may or may not be present in a card processing company, it will really depend on what they offer, what type of industry they cater and other packages that they have.

A Credit Card Processing Company can be beneficial to one’s business in the long run. All you need to do is make sure that they you gain profits from them by considering your sales volume, your industry and your budget. If you like to read more about credit card processing online, check out Business.com’s article.

Just consider these helpful hints when you’re choosing the card processing company for your business. So why not check on the Reviews of Credit Card Processing Companies by CrowdReviews if you want to compare or find out more?

Trevor Price

Trevor Price helps small businesses leverage mobile technology to reach their audience and extend their capabilities in delivery, information, and tracking.

Our rankings are completely independent, transparent, and community driven; they are based on user reviews and client sentiment. These credit card processing companies had to earn their way up and didn't just pay their way up.

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