subject: What Are Credit Card Merchant Processors [print this page] What Are Credit Card Merchant Processors What Are Credit Card Merchant Processors
Credit Card Merchant Processors are devices that enable a merchant to process the payment request for a transaction with a customer. These devices facilitate the process of the merchant bank paying the merchant the amount that was transacted between the merchant and the customer.
When a customer makes a purchase at a merchant outlet and presents a credit card for making the payment, the credit card is swiped at a terminal (also known as a Point-of-Sale terminal), the credit card information is sent and verified at the merchant bank which in turn verifies and pays the amount of transaction to the merchant, if verified.
There are a number of credit card merchant processors today, available in the market and they are being widely used by merchants all over the world.
Let us take a look at the process of how a Credit Card Merchant Processor works.
First, the customer selects the item to purchase and presents the credit card to the merchant.
Second, the merchant swipes the credit at the terminal (also known as a Point-of-Sale terminal). This starts the process of reading and verifying the information in the credit card by the merchant bank.
Third, depending on the type of credit card merchant processor, there may be a polling service that collects the card information (such as Card Verification Value and the Card Expiry Date) and sends them to the merchant bank for verification.
Fourth, the merchant verifies the information and on successful verification, immediately credits the transaction amount to the merchant account. The entire activity usually is accomplished in a matter of seconds.
What is the typical structure of Credit Card Merchant Processors? These devices typically contain a modem, printer, keypad, magnetic card reader and power supply.
The modem facilitates the sending of the data to the merchant bank; the keypad is used to key in the card information (such as Card Verification Value and the Card Expiry Date) and the transaction amount; the printer prints out a slip that gives the transaction details such as the amount of transaction and the date.
These devices have transformed the way business is conducted. The proliferation of the credit card industry has meant that the customers are not required to carry a lot of cash anymore. The customers also do not have to pay for the transaction right now and can pay them later.
From the credit card merchant perspective, they are not required to count the money at the counter and store a lot of cash which at times may be risky. The entire process has enabled them to electronically process the amount and the amount is quickly credited in to their account.
