A Guide to Credit Card Processing
Credit cards are being used for online business transactions in today’s marketplace. In any country of the world, credit card payment method is a very common way of paying for a business transaction. There are benefits when using credit cards as a payment method not only for the consumer but for the business as well. With the use of credit cards, the following benefits can be gained by a business: prevention and detection of fraud, no more bouncing checks to deal with, money can be quickly deposited in the business bank account, paper currency high security, and ease in accounting. However, if you start to accept credit card payments for your business you need to learn several things including the jargon associated with it. The three main aspects of credit card processing are: the merchant account, the payment gateway, and the payment processor.
To be able to receive credit card, debit card, and electronic check payments, the bank gives a business a merchant account, which is a special kind of bank account. This account accepts electronic money and can be regarded as a virtual bank account. Obtaining a merchant account for business is typically done by having an agreement with a merchant services company. Merchant services companies are like a one-stop-shop for credit card processing because they provide businesses with a merchant account, sets up payment processor contracts, offers payment gateway services and equipment.
Payment gateway is an online program that can be compared to a traditional card swipe terminal. A gateway payment will allow a business to charge credit cards online after the business logs in to their online terminal and fill out a virtual terminal form with a customer’s payment information. A business with payment gateway will give customers an interface where they can integrate their credit card processing with the order forms and shopping carts. The way the payment gateway works is tat when the business charges a credit card for payment and the payment processor verifies the information, the merchant account is credited the payment amount which is debited from the customer’s credit card. The money goes to the merchant account is a minimum of twenty four hours from the time of payment.
The most important facet of card processing is the payment processor. The transaction information is verified and processed by the payment processor which is a financial institution different from the merchant bank. They are the ones responsible to transfer funds between consumers and businesses. The merchant bank receives the money from the payment processor and deposits it in the merchant account. With a payment processor, the credit card payment of a customer will surely reach its recipient.