subject: How Credit Card Processing Works [print this page] Making sure you have good credit card processing in place is a must for your bottom line and your reputation. You know you need it but how does it work? What services do merchant service providers provide exactly? And what is the credit card issuers role in this whole process?
It's actually pretty simple.
To begin credit card processing, you must first hire a merchant services provider. The merchant services provider will set up a transaction processing plan that will work for your business and your customers. Maybe you need the ability to process transactions online. Maybe you need the ability to accept payments away from your brick and mortar store. Whatever your needs may be, the right merchant service provider should be able to fulfill them.
Partnering with a merchant service provider allows you to begin credit card processing and accepting electronic payments (credit, debit and gift cards) within a few days.
Then,when a customer opts to purchase something from you either in person or online,their credit card information is sent securely to the merchant services provider you have hired who then makes contact with the company issuing the card(Visa,Master Card,American Express,etc).). The issuer of the card makes the determination as to whether the customer has the funds in his or her account or available in their line of credit ,to pay for the transaction. If they do, the card is accepted; if this does not happen,the card will not be accepted. At this point, the card company will also verify that the card has not been reported lost or stolen. By allowing you the ability to check beforehand that the customer has sufficient funds to pay for their purchase and that the card wasn't stolen, having the proper processing system in place can reduce financial risk to your business.
When the card gets approved or declined, this information is transmitted from the credit card issuer to your merchant services provider back to your business within seconds. Last, the money processed will be routed through the merchant services provider and into the merchant's business bank account within 2 days.
The entire credit card processing procedure is simple and hassle-free for both your business and its customers. And credit card processing provides benefits to both your business and its customers.
Having credit card processing in place allows your customers to enjoy the convenience of being able to pay with plastic while allowing your business to enjoy all the benefits of accepting credit cards. Studies show that businesses that have credit card processing in effect can see an increase in both sales volume and revenue.
In simple terms,people spend more when paying via credit which means more profits for your business.
