Owing a business these days means accepting credit card payments. Reason being, the ease and comfort of card payment have replaced physical cash. Moreover, card payment makes it convenient for the customers to buy products and services anytime they want. However, before getting with this system or you can say merchant services; the first crucial step is choosing the right card processing company. Check out the ten facts related to the same that you may not know.
- The cardholder is the starting of a five-party chain that leads to a business getting paid. When the cardholder swipes the card at the merchant terminal, information is sent to the processing service. For approval, this service then further sends the information to the card association. After the approval, this information is transferred to the card issuer for payment. Now, the issuer makes the payment to the merchant and bills the cardholder.
- Though accepting cards seems easy, there’s so much involved in the process. For instance, a credit card number is entered into the terminal, which is then transmitted to the card association for authorization. However, the transaction has not been done yet. Every detail related to the transaction is saved in the memory of the terminal (in batches) which is then sent to the card association for settlement. These batches are given to the right card issuers for payment, which then gets transferred into the account.
- Terminals are required to process the card payments and depend on the way a business is conducted. For instance, retail operations use terminals that are built either on independent machines that have a card swiper or built in their POS system. Moving on the businesses that are based on the internet, they use a virtual terminal. Talking about companies that do business at mobile locations, customer’s home, trade shows, either use the terminal that is used with a smartphone or goes to wireless terminal.
- To protect sensitive information from the cube criminals and hackers, credit card processors use SSL, i.e. secure socket layers. Using SSL, information is encrypted before sending from one location or another.
- Now this is very important to know that cost of accepting card payments may not be known when the service is taken the first time. However, each transaction adds to the monthly amount, which can lead to a much higher bill than expected. Hence, it is good to know everything about the bill right from the beginning.
Here, it is essential to know that some companies charge an application fee. By checking around carefully, such fee can be avoided. Moreover, if a business does not process a particular amount each month, an additional fee may be charged. Besides, statement fee is also charged. Not only this but cancellation fee is also there if a merchant account is canceled. Hence, facts are a must to know to make sure you don’t get trapped in hidden charges.
6. Evert transaction is charged with a gateway fee to verify details about the transaction, a fee to process and a discount rate which is a part of the total sale. For some transactions, the address is verified and some processors charge for it too.
7. Frauds and identity theft are possible to the merchants as well as the cardholders. When information related to the card is stolen, the issuing bank does not pay anything for the fake transactions. In other words, the merchant loses not only the commodities but also the money. At times, money from such transactions is eliminated from the account of the merchant and that without informing them. This is referred as a chargeback.
8. There is chargeback insurance that protects the businesses against fraud by covering the money that gets lost in a fake transaction. It is important to know that chargeback not only occurs when the identity of the customer is stolen but also when a purchase is made by the customer online and charge is then canceled with the card company after receiving the product or service. These transactions are covered when all the facts are known.
9. Every credit or charge card that’s accepted internationally follows a security standard known as the Payment Card Industry (PCI) Data Security Standard (DSS). This standard restricts the visibility of cardholder information during processing no matter how the information is processed.
10. Many other services may also be included in credit card processing. There are many card processing services that check verification besides card services. Hence, if a customer pays through an electronic check, facts will be verified on the account for the merchant. Not only this but processing service may also offer other electronic payment services and gift card.
These are ten very important facts about merchant credit card processing. To get the best of merchant services, take the services from reputed service provider only.