Credit cards have turned contemporary commerce into a cashless market. You can purchase virtually any good or service with the swipe of a card. Consumers prefer credit card payments to cash payment due to the numerous benefits cardholders enjoy. The popularity of credit cards has caused small businesses adopt the payment method, and the results are unmatched. From increased sales to improved security, merchants also benefit from accepting credit card payments. Since credit cards are common and are rapidly becoming the norm in business transactions, it’s important to understand credit card processing. Although the process is complex, the payment processor and gateway make it all simple.
The Payment Processor and Payment Gateway
Any transaction completed through a credit card goes through a complex system that transfers data between all the involved parties. At the center of the entire process is the payment processor. The payment processor carries out the function of processing payments. It offers the technical facilities to accept credit card payment. When the transaction occurs on the Internet, then the payment gateway and initiates the payment process by sending information to the credit card network and the issuing bank. Authorization is given from the issuing bank and the transaction proceeds to the next stage. A good payment processor will offer all the technical support surrounding credit card processing and ensure all transactions are completed.
Several considerations may be made before settling on a particular service provider.
- Convenience: A good payment processor and payment gateway are simple to use and convenient for both the merchant and the buyer.
- Safety: Payment processors and payment gateways encrypt data forwarded during the credit card processing to ensure the safety of the merchant and the buyer.
- Price: Credit card processing incurs charges that vary between different payment processors. An affordable payment processor allows you as the merchant to maximize on profits from sales.
- Reliability: A reliable payment processor or payment gateway has no hitches or delays.
The Transaction Process
Credit card processing begins once a purchase bill is generated and the client either swipes their card or gives their credit card details. The credit card data and the details of the purchase are forwarded to the issuing bank, which is the bank that issued the credit card to the cardholder. The issuing bank verifies the card details, checks if there are sufficient funds, and gives authorization for the transaction. The information is then forwarded back to the acquiring bank, which is the merchant’s bank, and the funds are available. The process of processing credit card payments only takes a few seconds despite the numerous parties involved. However, clearing and settlement of the transaction fees takes one to three days.
For more information on credit card processing for businesses, or to sign up for a merchant account, please call (888) 924-2743 or go to Charge.com.