New to the world of credit card processing? It may seem like a complex process, but really, the ability to accept credit cards for your business is simple and extremely beneficial. Credit card merchants can enjoy increased sales, streamlined payments, advanced security technology, and much more.
In eight simple steps, we’ll give you the basics on how credit card merchant processing works. Read below.
The customer finds a product that he or she likes and decides to make the purchase. The customer can use a credit card to pay for the item in the store, through an online payment gateway, by phone, or by mail.
The credit card is swiped or dipped using a secure credit card reader, or the card and transaction information is manually entered using a virtual terminal. For eCommerce transactions, the cardholder keys in the payment details on a hosted payment form on the website.
The credit card data is encrypted and transmitted for approval as the terminal, POS system, or secure payment gateway is connected to the processing network.
Once the data is transmitted, the credit card issuer can approve or decline the transaction. This is based on the validity of the card, the amount of the transaction, as well as the cardholder’s available funds.
If the transaction is approved, the processor and the merchant receive an authorization response.
The merchant completes the transaction by issuing a receipt to the customer. For eCommerce orders, the merchant then prepares to ship the items to the customer.
The merchant completes the credit card payment process with a batch closure. This closes out the transactions that have been processed on that day. The processor’s acquiring bank then collects the funds from the credit card issuers.
The processor’s acquiring bank then deposits the funds into the merchant’s business account. This typically takes up to 48 hours. In addition to the steps outlined above, click here for information about how payment gateways work.
As a business owner, accepting credit card payments makes it convenient for your customers to pay for goods and services, which helps improve your cash flow and boost profitability.
If you’re looking to accept credit cards and other electronic payments, connect with a representative today.
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