Different types of credit card processing

Credit cards have been popular for a very long time now. As a result of this, different ways to use a credit card have entered the market. The different methods of credit card processing depend upon the business medium (retail stores, online, or via mobile phone), the seller’s finances, and circumstances. For example:

1.    Credit card imprinting machines. These machines simply make a facsimile of the credit card using carbon paper. The information on the credit card is used to process the transaction. This method is fairly cheap, since these machines are made available for free by some banks, and cost less than USD 40. However, it is also slightly clumsy as instead of currency notes, the seller is now dealing with several slips of paper containing highly sensitive data.

2.    Credit card terminals. These are much safer and more advanced than imprinting machines. They are frequently seen at retail stores – the magnetic strip of the credit card is swiped on the machine, the amount to be paid is entered, and a receipt is printed out for the cardholder to sign. While most terminals need a power supply and telephone line, and offer real-time processing, other models can store transaction information until a power supply or communication channel is obtained. Credit card terminals are fast, safe and also verify the transaction with the cardholder. They can be rented for occasional use, or bought for about USD 200.

3.    Point of Sale ensembles. These ensembles are a combination of hardware and software that can perform the functions of a credit card terminal, but can also do several other things. They can add the prices of different items, use a display pole to display the total to the customer before the receipt is printed out, and use separate swipe keyboards, price scanners and receipt printers. These are extremely popular at retail stores, due to their ease of use.

4.    Virtual terminals. A virtual terminal is merely one of the online options to process online payments. Credit card information and payment details can be filled into a form, following which the payment is processed. This is time-consuming, as each payment’s details must be entered separately. However, since the rental for a virtual terminal is low, it is excellent for small businesses or telephone transactions (where details always have to be entered manually).

5.    Online payment vendors. Online payment vendors offer buyers the opportunity to enter their own card details, minimizing work for the merchant. Large online stores find this method of credit card processing to be optimal, but transactions that take place in person or over the telephone can also be processed through this method.

Therefore, opting for credit card processing facilities in a business does not imply having to restrict oneself to a single processing method. Based on the needs and characteristics of your particular business, it is possible to choose among the credit card processing methods given above as well as other options that are evolving by the day.

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Guest Post by RadAnkh

How to choose a merchant account provider

Whether you own a business with a physical shop or an Internet based business, you will need to accept credit card payment if you want your business to be successful. And for that you will require a merchant account.

Having a merchant account has many benefits. It will give you more business because you will be able to accept payments from every type of cardholder, including ATM/Debit cardholders.

You will also be able to guarantee the safety of your customers when they are making their payment, this way you will win a lot of loyal customers who will tell everyone how safe, easy and hassle free it is to buy things from your website. That is the best thing for any website, being referred to others by satisfied customers.

So if you want your business to grow, you must invest in a merchant account. There are several providers out there who are promising a lot of things and some of them are actually scams, so be very careful about which merchant service provider you set up your account with.

A good idea is to start looking for reviews by your peers and looking for reputed companies instead of starting with the absolutely lowest charging company. If at the end of your research you find out that the best company is also the cheapest, then nothing like it. But don’t go for a company just because it us the cheapest, because you might end up losing more money than what thought you saved.

Many companies offer low cost or free setups but charge you very high transaction fees and minimum monthly rates. With these people, it is low cost to start with and then it is as high as it gets. So instead of looking at setup costs, look at how much money you will be losing regularly. Going for companies that have the lowest rates in this area is generally a good idea.

Also take into account the gateway that you will be using with your account. Some merchant accounts actually provide you with combined offers whereby you get a gateway account automatically with your new merchant account. The better the gateway, the better your operations will be and the more secure it will be. So look for reputed and proper gateways.

Then come the smaller things to consider – the extras in the package. How much automation are they offering you? How much will they charge overall, including all the small and invisible fees? Will they increase their rates in the near future? What are the perks that you get with account?

Many merchant accounts come with fully setup and functional shopping cart scripts that are tied in with your account and Gateway. Some providers also offer custom branded payment pages. All these things make your job easier and make the website more functional, professional, secure and easy to use.

So choose your provider carefully and consider all the larger and smaller details when making the decision. Remember that money is not the only issue here but it is still the main issue. So look for something legitimate that ensures long-term profit for your business.

The reason why every business requires a merchant account at the earliest

A merchant account is a necessity for any modern business. It is something that most businesses won’t be able to do without, especially in modern times when people are hardly paying cash, even when the purchase is in the real world. That is right; people are making their purchases using plastic money, i.e. cards.

They use Credit Cards and Debit Cards mainly and then there are those strange hybrid cards that are sort of both. So when you get a customer who wants to pay through card, what do you do?

If you have a merchant account, you smile, take the credit card, swipe it and do the rest of the things as the need to be done. If you do not have a merchant account, you frown and say that you do not accept cards and would the customer please pay in cash; resulting in a failed sale.

A merchant account allows you to accept payment through credit cards and debit cards. This is can be either physically in a shop or virtually through your e-commerce website. To accept credit card payments anywhere, you need to have a merchant account.

There are many companies that provide businesses with merchant accounts and if you Google them, you will come up with many options. There are so many companies offering this service, you will be hard put not to find something that suites you. There are plenty of payment packages and services and one of them at least will fit your bill.

Once you have a merchant account, you will get your swipe terminal for your physical transactions. For electronic transactions you have a few choices. You can choose to have a link to the payment gateway used by the account provider to process the payments. Many companies offer custom branded payment gateways for merchant account holders, so your customers won’t feel uncomfortable going to someone they don’t know.


You can also connect the account services to your shopping cart feature on your website. This way you can receive payments on your own website. There are several issues here like having a secured SSL connection, getting security certificates etc. But most companies offering merchant account will help you with setting up your website with your account, so you do not need to worry. There are many good services on the internet who will allow you to host 128 bit secure SSL websites and quite a few are very reputed companies.
So once you have chosen your preferred company and the payment package offered by them, your are almost ready to start accepting credit card payments.

Before you apply for a merchant account, here are a few things you should know. Firstly, watch out for scams that are simply waiting to dupe you in to losing your money. Use this simple rule to judge potential offers for scams – if it is too good to be true, it probably is. Second thing to do is to read the list of required proofs and documents and arrange them accordingly. Reputed providers will put you through a strict checking process, it is quite normal so do not get turned off.

The what’s and how’s of credit card processing

Credit card processing is the name for the entire invisible set of operations that take place whenever a credit card is used either at a retail outlet, online or through mobile phones. This process takes place in several stages, and with the correct service provider, should ensure maximum efficiency, speed and security.

There are various people and virtual checkpoints involved in credit card processing. These are:
The cardholder, i.e. the person using the credit card

The merchant, i.e. the account-holder of the business accepting payment from the cardholder in exchange for goods and services.

The acquirer, who provides credit card processing services to the merchant
The card association, who works as a go-between or gateway in between cardholder and merchant. Example: Networks like VISA or MasterCard

The issuer, i.e. the bank or credit card company that issues the original credit card to the cardholder.
To ensure a completely smooth and secure transaction involving these five entities, a rather elaborate process has been designed for credit card processing.

Step 1: Authorization. Before the cardholder’s transaction is processed, a lightning-fast process of verification takes place. The transaction is transferred from the merchant account to the acquirer, who verifies the existence of the given credit card with the issuer.

Step 2: Batching. The transactions, once authorized, are grouped together in batches. After a certain time period (usually at the end of the working day), the merchant sends the entire batch of transactions to the acquirer for further processing and payment.

Step 3: Clearing or settlement: This is when the money is actually debited (i.e. taken out from) the issuer, and credited (given) to the acquirer. In this step, the batched transactions are sent by the acquirer to the card association, e.g. VISA, which manages the transaction between acquirer and issuer.

Step 4: Payment to merchant. Only after the acquirer receives payment will the merchant get paid. The merchant’s payment is slightly less than the sum paid by the cardholder, as the discount rate (percentage or amount paid to the acquirer) is deducted from it.
These are the steps involved in an uncomplicated, error-free credit card transaction online. Typically, the process takes three days. This duration can be lessened if the issuer and acquirer belong to the same company (e.g. Bank of America card holders using Bank of America’s Merchant Card Processing services).

Credit cards are becoming more and more popular by the day for businessmen. For small businesses, setting up a merchant account for credit card processing is growing viable. It allows them to gain greater functionality for the website – a shop can be maintained without having a single retail outlet.

For consumers, credit cards are extremely convenient. They can be used at times when one is short of ready cash, does not want to carry too much cash, or when buying online proves cheaper than from a retail outlet. Growing familiar with credit card processing helps to demystify the usage of a credit card, and will hopefully encourage more and more people to use them.


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Content created by Radical Ancient, soon to join this blog as a contributor.

Merchant account for Internet businesses: Why you must have one.

The Internet is a powerful influence on everyone who regularly uses it. It is fast becoming the world that we live in and everyone is using it daily for making online purchases. The goods and services bought and sold are innumerable and they are varied. But one thing ties them all together. A large percentage of the payments, the majority actually, is made through credit card transactions.

These transaction often happen right on the merchant’s website through a shopping cart or through the page made available by the merchant account provider. This is how e-commerce websites can accept credit card payments in exchange for the goods or services sold.

So if you want to start a site where you will be charging people money, you absolutely cannot forego a merchant account. This is because when it comes to online payment, almost everyone has to use a credit card to make payments. So unless you are ready to accept payments through a credit card, there is no way you can do business on the Internet.

A merchant account is thus indispensible for Internet businesses. And there are many benefits of having a good merchant account provider. You will get many offers from various websites and they might look lucrative but do read the fine print.

It is better to go with a reputed merchant account provider to ensure that you are not buying to a scam and most importantly to ensure that your payments are not stolen from you. Besides, good merchant account companies will have tie ups with major gateways that have a high amount of reputation. This ensures that you and your customers are completely safe from being defrauded.

A merchant account will also provide you with all the tools necessary to setup your own ecommerce website complete with a shopping cart and a secure payment page, so you wont have to do much.

You will get all the help you need to process the credit card payments that you receive. With a merchant account, you will be able to accept almost every credit card and ATM/Debit cards that are used worldwide. This will help you attract more customers because customers love having multiple payment modes. Also, being able to accept so many different cards also makes your website more credible and makes it look more professional to visitors and potential buyers.

Everyone spends a lot of money on getting a proper site made and getting the goods to sell but with a proper merchant account you will be able to ensure a complete peace of mind on the customer’s side, you will receive more business and will be at a lower risk of frauds and losing payments.

Think of the major benefits of being able to offer so many choices. Once your customers are convinced that they are not at risk on your website, they will buy happily and frequently. You also be able to handle disputes better with a good merchant account, so you also get some peace of mind.

It is easy to see by now why every inter\net business needs a merchant account. Think about it – payment comes at the end of a sale and remember the old saying “all’s well that ends well”.

Introduction to Merchant Account Jargon: Say what?

Sometimes, when you are just beginning to get in to a new area of work or service, you will hear a lot of technical terms being thrown around and everyone around seems to know what is being talked about; whilst you remain clueless. Welcome to the confusing world of jargon.

To make sure you are not left scratching your head when looking around for a merchant account, here are few of the common terms described.

Gateway: This means a virtual passage through which the credit card information provided by the customer passes and gets verified by the issuing bank. After this the transaction happens. VeriSign is a popular gateway and a very reputed one. Some providers will charge a monthly fee for the gateway but it is not common to all providers.

Transaction rate: This is one part of the fees incurred at each transaction. It is a percentage of the total value of the transaction. Both the rates vary a lot.

Discount Rate: To encourage customers to use Credit Cards, there is usually a small discount that the business has to bear, this is the other part of the fees paid when accepting a transaction with your merchant account.

Reserve: This is a percentage of the transaction amount that is withheld usually from high-risk merchants, which is meant to cover any chargeback claim. It is released to the merchant after a while. To know the time and the percentage of the reserve and whether it applies to you, ask your provider.

Chargeback: This is what the customer does when he/she files a dispute with the card issuing company and wants their money back. Many customers file disputes dishonestly while others do it when they do no recognize the name of the company for which they were charged.


Monthly minimum: this is how much you absolutely have to pay your provider no matter how low your sales have been. If the transaction percentage cannot reach this amount, you have to pay the difference. The usual fees are around $25.

Authorization: the process during which the card issuing authority (the bank usually) checks to see if the card has the required amount of credit to meet the cost of the transaction.

AVS: This is a safety measure that stands for Address Verification System. It is used to check whether the given address is the same as the billing address on the records of the card issuer. You may choose not to use this feature but that will cost you an extra percentage on the transaction fees.
Card Verification Value: Another safety Measure that was brought in to reduce credit card frauds. Also referred to as CVV2 or CVC2, you may opt to make it necessary during checkout or you may not. But if you do use it, it will probably save you from potential fraud (especially in combination with AVS) and might also save you on processing costs.

So that was a short list of the major terms used, search for more such terms and learn about them.