Guide to Credit Card Processing

Until you are selling pencils and erasers in today’s world accepting payments by cash is going out of fashion. If you are selling anything bigger than that then probably you should be accepting the payments by plastic i.e. by credit cards. The process of accepting the credit cards produced by the Power Pay Service by the merchants is also called “Merchant Acquiring”. Here we would be giving you an idea about how the credit card processing is done.

It starts right from the time a customer enters your store to buy an item. Customer will present you the credit card produced by the Power Pay Service for processing. Then you would swipe the credit card at the terminal and enter the amount for which the transaction is to be made. Then if required some authorization key will be entered and request is sent to the bank for the authorization and in few seconds’ authorization is received and payment is completed. Customer is done at his end and walks away with his buy.

There is complex authorization involved in this credit card processing. When the card is swiped, then all the data related to credit card is sent to the merchant account provider. Then the provider sends that transaction request to the credit card company which in turn requests the bank who issued that credit card for the authorization. If the transaction is authorized then the authorization code is sent back through the same channel and the transaction is approved. It looks to be quite a long circle to complete but no it is not so. It is completed in a few seconds. Now it might look that everybody has got his dues and everything is perfectly settled but no only the customer is the one who has done his part. Merchant who sold his product has not yet received the amount. His part will be cleared at the end of the day, when he will deposit all the slips of that’s days transactions with the merchant account provider. These slips can also be submitted by credit card terminal to the merchant account provider without going to the provider’s office. Now the provider sends all the transaction details to the credit card company like Visa or MasterCard. These credit card companies then send them further to the banks who issued those credit cards. Now they approve the transactions and the money is deposited in the merchant’s account. Merchant account provider deducts the discount rate which can vary from 1.5% to 3% of the total pay.

This process explained is related to the basic type of credit card processing that is done. There are other ways also in which the transaction is done on phone, by fax or on internet through your website. In that kind of transactions it is not possible to verify the authenticity of the credit card holder so the chances of fraud are higher and hence the provider also charges higher discount rate. These kinds of transactions are called Mail order or Telephone order and hence are clubbed as “Card not Present” kind of transactions.

 Setup a credit card processing merchant accounts to accept credit cards today!