About Credit Card Processing
Exploring new business options like credit card processing can often be just a bit intimidating until you learn how it works. As a matter of fact, it's so simple that you’ll wonder why you waited so long to get a credit card reader and experience the benefits of using a credit card service.
What Is a Credit Card Processor and How Does it Work?
A credit card processor or merchant processor provides the software and credit card machine for merchants (businesses) like you to accept sales by processing debit and credit cards. Also known as an acquiring bank or merchant bank, they see that the funds from card sales are deposited into merchant accounts once the transactions have been approved and funded.
To begin taking credit cards, your business must sign up for credit card service and be approved by a merchant bank. Essentially, the transaction process begins when your customer (cardholder) wishes to make a purchase using a debit or credit card. As the merchant, you ring up the sale and swipe the card through a credit card reader.
The merchant bank receives the information on the card through the reader from you and interacts with card associations and the issuing bank for the cardholder (your customer) to complete the electronic transfer of funds. Credit card transaction fees are determined and passed on to the merchant along with the payment for the sale. The process is efficient and merchants usually receive their money is just a few days.
Benefits of Using a Credit Card Processor
- Accepting credit cards or bank debit cards can often increase sales.
- You’re no longer limited to cash only sales, which means you can now compete with other companies for credit card payments.
- You’ll be able to complete credit sales from customers that only pay for merchandise using credit cards.
- You won’t be missing valuable impulse sales that so many people pay for with cards.
- Merchants often realize an improved cash flow because payment transactions are completed so quickly.
- Being able to provide a credit card service as a virtual merchant (Website owner) to online customers is critical to customers and businesses.
- Many shoppers expect merchants to offer the convenience of credit card processing.
- Merchants often notice less bounced checks as a result of credit card acceptance. This can reduce the cost of bounced check fees at the bank.
- Credit card processing companies are competitively priced these days and processing fees for merchants are usually fairly inexpensive.
- Purchases made using cards are often larger than those with cash.
Getting approved and set up for credit card processing is easy and fast. The benefits to both customers and merchants outweigh the small amount you’ll pay in processing fees and your customers will love the convenience.