Accepting payments from customers is the backbone of your business's revenue. Modern payment processing tools make it simple for businesses to set up online and in-person credit card processing. However, while business owners no longer need technical know-how to accept credit card payments, not understanding credit card processing and how it works leads to payment shortcomings. Likewise, it results in many business owners overpaying for credit card transactions. This guide explores processing credit cards, the participants in the process, the factors to consider when choosing a payment processor, credit card transaction fees, and a range of related topics. Read ahead to become an expert on modern payment processing! What Is Credit Card Processing?Processing credit cards is the electronic handling of credit card transactions. It involves the authorization, authentication, and settlement of payments. Credit card processing enables businesses to accept payments from customers using credit cards, ensuring payment convenience for customers and staff members. Modern payment processing offers efficiency, speed, and security. It enables swift transactions, reducing processing times. Enhanced security features like encryption and tokenization protect sensitive information, and integration with digital platforms fosters seamless transactions, improving user experience. Who Is Involved in the Process?While credit card payments occur almost instantly, behind the scenes is a complex network of stakeholders responsible for performing various tasks to ensure the transaction runs smoothly. The transaction process is automated and occurs without manual input, but to fully understand how payment processing works, it's essential to know which stakeholders are involved. Below, let's explore who is involved in the process:
How Does Credit Card Processing Work?While credit card transactions feel instantaneous to merchants and customers, they involve a multi-stage process. Below, let's explore the three stages of credit card processing in more detail: AuthorizationThe authorization stage of payment processing involves verifying if a transaction is valid and whether a customer has the available funds for a purchase. This process involves the payment processor requesting approval from the issuing bank. If the issuing bank communicates that the transaction is invalid or the customer doesn't have sufficient funds, the transaction will decline. AuthenticationNext, it's time to confirm the identity of the cardholder. Credit card processors will use security measures, such as CVV, zip code confirmation, and more, to determine whether the cardholder is the individual purchasing the product or service. Again, the transaction will decline if the authentication process fails due to incorrect information. SettlementLastly, it's time to finalize the transaction and transfer the funds. The payment processor submits approved transactions for payment and funds transfer from the issuing bank to the business's merchant account. Types of Credit Card Processing EquipmentTo accept credit card transactions, businesses require hardware and software to facilitate the process. Below, let's explore the various types of credit card processing equipment and software your business may want to consider: Via https://www.emscorporate.com/news/credit-card-processing
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