For most people, credit card processing can be overwhelming. Aside from being expensive, it is confusing too. But then, this has been a necessary evil among business owners. Without it, they will be left behind.
Thus, getting a credit card does not have to be a bad experience at all. Knowing what is going on and what you are supposed to pay to make it less taxing than what others thought it was. Knowing the options available and the processes you are going to go through make the entire credit card processing experience more pleasing.
So, get to know the three facts about credit card processing as well as every detail in between. Kindly read on.
The moment that your customer uses his credit card, several parties take into action namely the cardholder, the merchant, the card association, the acquiring bank, the issuing bank, and the payment processor. When the cardholder is ready to settle his purchases through a credit card, the payment processor lets him swipe the card to a point-of-sale terminal and requests him to key in the PIN. Then, the payment processing and batching take over in an instant.
Once the credit card payment was processed, the issuing bank pays the acquiring bank (seller’s bank) for the purchases that the cardholder makes. Of course, the cardholder perfectly knows his responsibility in paying back the amount to his issuing bank along with the accruing interest. Then, the acquiring bank accepts the funds and deposits it in the seller’s account. The card association arbitrates and maintains a good network between the acquiring bank and the issuing bank.
Card Processing Service Fee
To avoid overpayment for your credit card transactions, it is important to check your monthly bill. Additionally, the types of fees that come along with your credit card processing depend on your credit card provider. Are familiar with transactional fees, recurring fees, and one-off fees? If any of these fees does not sound familiar to you, let me go into detail.
These are mandatory fees that are linked to every transaction you do with your credit card. This varies depending on the type of card that you are using. The transactional fee is higher with business credit cards but lower with debit cards.
On the other hand, recurring fees are charges that the banks put over your account. These fees are not necessary to accept credit card payments if you are a seller. So keep close attention to fees like this. Lastly, one-off fees are those that are triggered by your actions on early termination, terminal, reprogramming, setup, address verification, payment gateway, chargeback, and retrieval.
Needless to say, acquiring banks earn good profit from all these charges. As a merchant, it is a necessity to get to know these charges better and be meticulous about it.
Security and Compliance
Sellers have the responsibility to handle the clients? sensitive information properly. To ensure that you are doing it the right way, PCI and EMV compliance does the trick.
When we speak of Payment Card Industry compliance, it is a set of standards that ensures appropriate data handling when accepting credit card payments. The merchant completes a short questionnaire each year to stay PCI compliant. A PCI non-compliance fee is charged to those who fail to adhere to the governing laws on information confidentiality.
It makes use of a chip card technology that provides strong encryption to the cardholders’ card information every time it is used. With this kind of security, there is no way that sensitive information is pulled out for unauthorized credit card purchases.
At this point, you might have understood credit card processing better. To tell you, there are a few more things that you should know about it. You?ll learn them in the next days. Just be mindful of your credit card monthly bill from this day forward.