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Credit Card Processing

How Credit Card Processing Works

If you are not aware of how credit card processing works, it may be difficult for you to understand payment procedures as well as what types of services you may get from this or that provider. It is also important to know the pricing policy and fees that are typically charged when transactions are processed.

Internet credit card processing is one of the most complex industries. To understand it, you will need to know who participates and what services are involved. You can also try to track an individual transaction and follow it through the entire payment process. This will help you understand not only the services involved in each transaction, but also the fees associated with payments processing.

Who Participates?

Common transactions processing can have several participants, including: As you can see, each payments transaction requires the participation of several players. However, with Internet credit card processing , it takes just a few seconds to process and approve a transaction.

There are several payment gateways that you can use to process transactions:

Track a Credit Card Transaction

Let’s presume you’ve just received a payment of $100. Starting from the moment your client presses the ‘Buy Now’ button on your website, a long journey begins, which will extract a portion of the money in the form of the fees charged for processing this transaction. Such fees depend on several factors, which include the type of your merchant account, payment processor, credit card type and risks.

The first point the money reach is a payment gateway, which charges from 1 to 3 percents per each transaction. Then the money is forwarded to a relevant processor, which in its turn charges around 1 percent. If currency is exchanged, this will make another charge. The next step is money transfer to the issuing bank (which is another USD 2). This bank verifies that the credit card has sufficient funds. If approved, the money is now moved to the acquiring bank (the fee of around 7 cents) and then reaches your merchant account. Thus, you will have $97 deposited into your account.

A very important factor about credit card processing services is their safety and security. You would want to know if your processor has the following: All these security measures are widely used in New York, California, Illinois, Texas, and other states.

Online Credit Card Processing

With traditional payment processing through a physical terminal giving way to online credit card processing, you can now easily buy most goods and services with a virtual account. There’s no more need to verify your credit card transactions with a phone – Internet merchant providers allow you to facilitate the process and process payments online at an unprecedented speed!

There are many online resources offering credit card processing reviews , but let’s look at the benefits of CC processing services in general, which are obvious: With the Internet’s evolution, online shopping has become a common thing used on a daily basis. Many people look for the ways to buy goods and services rather through e-shops than brick and mortar malls. One of the reasons for this is convenience and cost-effectiveness. You do not have to leave your home and waste time and fuel to get to the traditional shop’s building. And there’s no need to wait in huge lines – with just a few mouse clicks, you will buy a product that you need at the moment and have it delivered right to your door. Such credit card processing services as online e-commerce, mail/phone/fax orders and e-checks have proved to be reliable, fast, and secure solutions that save you from wasting precious time on the road and in lines.

If you run your business from home or you are a small business owner, a reliable transactions-processing company will ensure that your business gains more credibility and can accept payments through the Internet. The fees vary through one service provider to another and it takes a little effort to find the one that meets your needs and is rather secure. Moreover, some providers offer special deals, so that you can have each transaction processed at a discounted rate.

Today, even small businesses have enough tools to compete with large organizations and online credit card processing makes it all possible!

Credit Card Processing Services

As a cost effective option that can replace stand alone terminals, credit card processing services may turn any PC or laptop to a virtual terminal. In most cases, all you need to do is to log into your processor’s account and fill out your order details. What makes online transactions even a better solution is that they do not require any additional hardware and software installations, they can be accessed anywhere – you will only need to be connected to the Internet.

Virtual terminal credit card processing can be divided into 4 simple steps:

Step 1 - Data collection

This step involves credit card details collection through a payment gateway. Then all the details are sent to the issuing bank, where they are verified.

Step 2 – Order processing

When the payment details are collected and verified, the funds are sent to your merchant account and/or acquiring bank.

Step 3 – Confirmation

As soon as the transaction is approved, you will get a confirmation notice. Remember that some payment processors keep your funds within their system for up to 30 days. This is done strictly due to security reasons.

Step 4 – Delivery

Once the transaction is processed, you can offer your clients to have their products delivered to their doors or instantly download the item they paid for (this can be a ticket, software, photo, etc.)

When the funds reach your bank account, you can then withdraw them at any ATM supporting the card issued by your merchant account provider.

Telephone Credit Card Processing

Telephone credit card processing is one of the fastest growing payment options available for businesses of any kind. We all understand how payments are processed using standard terminals. But let’s presume we are on a trade show or a meeting where we make a presentation of our products. How a potential client can purchase your items? The sale can be closed only if you convey the client to buy your product(s) and process his/her credit card on the spot. This can be done through the telephone card processing technology, which delivers a safe way to process payments.

Due to a high risk of fraudulent purchases, many business owners prefer to manually process credit cards rather than install credit card processing machines . To help in their mission, telephone processing services provide the next advance in the credit card processing technology. You can close deals and sell your products in the places where there is a phone signal. Remember that many potential clients, who may get enthusiastic at your offer while on a trade show or presentation, may think twice once they get home. Therefore, it is important to have an ability to close deals instantly using simple mobile phones.

The benefits of such payment processing option include:

Credit Card Processing for Small Business

Credit card processing for small businesses plays a major role in today’s economy as small businesses are a driving force of the retail and other types of sales. With so many options available, it is not that easy to find the right solution. First, many banking institutions do not provide merchant accounts to small business owners, who have to take advantage of third-party processors. Second, if you lead an online business activity, you will need a payment gateway system (e.g. shopping cart or payments plug-in). Be aware that not e-commerce solutions work with all the gateways available in the market, so you will need to check with the developers prior to utilizing their software on your website.

To accept payments, many business owners have to pay additional fees. Small business credit card processing is one of the most cost-effective solutions, although they sometimes offer higher fees than merchant account providers. The fees you pay depend on several factors, including your sales volume, business type, your credit card history, total amount of the sales you expect, etc. Third-party providers may add to your costs, since they play an intermediate role between your bank and merchant account providers.

The type of credit cards you are going to accept payments from may also affect your charges. For example, to accept payments through Visa or MasterCard, you will need to pay 2-3 % from the total purchase amount. Discover and American Express typically charge more.

Fees are not the only factors that should be considered. Pay attention to the initial cost of equipment installation, monthly charges and any other costs that may turn to be hidden.

Merchant Account Credit Card Processing

Many small to large businesses take advantage of merchant account credit card processing as one of the best ways to boost sales and online presence. Typically, merchant account providers offer special equipment that enables business owners to process credit and debit card transactions. In addition to Point of Sale (PoS) terminal, you can take advantage of online merchant credit card processing services that will ensure safety, convenience and fast transactions processing. Other benefits include: Today, when plastic cards become trendier than cash, business owners take advantage of card processing services to make the sales process easier, faster, and more secure. Furthermore, the benefits of working with merchant account providers are obvious, especially if you want to stand out from the competition.


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