A Few Interesting Facts About Credit Card Payments

If you’re the owner of a business then you’ll know that being able to accept credit card payments is very important but choosing the right credit card processing company can be a difficult decision. Here are 5 facts you might not know about credit card processing.

1. When the cardholder wishes to pay it will go through 5 different steps. The cardholder will use their card at the credit card terminal which then sends the card information to a processing service. The processing service will then send the information to the card association (MasterCard, Visa etc.) for their approval. Once it has been approved the information is then sent to the card issuer for their payment. The issuer then pays the merchant and it will automatically take the money out of the cardholders account.

2. Transaction fees can add up quickly as each transaction is charged a gateway fee. This fee could be for verifying the transaction information, a transaction fee for processing and a discount rate which is a percentage of the total sale. Some of the payment transactions will also require address verification which some processing companies will charge extra for.

3. Card payments are processed through a credit card terminal. The best terminal for you will depend on your business. Retail businesses will generally use the terminals that are built into their POS system or independent machines with built-in card readers. Online businesses will use a virtual terminal to accept payments online. Businesses who work mobile or who are doing business at trade shows will tend to use a wireless card machine.

4. Card processors will use secure socket layers (SSL) to protect the cardholder’s information from hackers. This information will include things such as the customer’s name, address, bank balances and other personal details. Processing services will use a secure socket layer to encrypt the information before passing it on from one location to another electronically.

5. Acts of fraud will not only affect the cardholder but it will also affect the merchant. This is because when a cardholder’s information gets stolen, the bank will not pay for the fraudulent transaction meaning that the merchant will experience a loss of the merchandise and money. However sometimes the money from these transactions can be removed from the merchant’s account without their knowledge, which is called a chargeback.

Before selecting your credit card processing company make sure you’re aware of all the different services they may offer. Many services will offer check verification in addition to other card services. They might also offer gift card and other electronic payment services so take your time and pick a company that’s right for you and your business.