How Does Credit Card Processing Work?

Credit Card Processing

For many small and large businesses, understanding the basics of setting up a credit card processing account can be an overwhelming and daunting task. Below we break down how credit card processing works and the various steps it takes to securely process a credit card. With these basic facts you will feel confident enough to find the right credit card processing solution for your business.

Before Beginning

Before you begin the process of setting up a credit card processing account, we recommend you gather a few months of bank financial statements or credit card processing statements if you are already have a merchant account and are shopping for better rates. The first question you will most likely be asked is your average sales volume. Knowing your sales volume will help your merchant account provider find the best fees possible for your business. With your banks financial records you can now set up a merchant account.

What is a Merchant Account?

A Merchant Account is simply the term used to describe all the processes that interface with the credit card processing system. Your merchant account does all the work of passing information through the right portals to find out if a card is accepted or declined. A merchant account is also responsible for moving funds to your bank. A merchant account is also responsible for depositing funds generated via credit card sales into your preferred bank account.

Why do I need an “Internet” Merchant Account for Ecommerce?

Having a “retail card present” Merchant Account does not automatically mean that you are set up with the ability to processes through an Ecommerce website. It is best to check with your Merchant Account provider to see what options are available. Without the ability to physically swipe a credit card through a machine, an Internet Merchant Account is capable of processing credit cards has to process credit cards through an online payment gateway security service. This service accepts or declines the card and also works to protect your online business from fraud.

Payment Gateway for Ecommerce

The highest priority for your Payment Gateway is to make sure that sending credit card information from your ecommerce site to your Merchant Account is done as securely as possible. It helps to visualize the payment gateway as a body guard for your credit card information. It picks up the information at point A and securely relays it to point B. When it reaches point B the merchant account either approves or denies the information.

There are a multitude of Payment Gateway service providers. Some of the most popular and familiar providers for High-Risk payment processing are high-risk authorize.net and NMI.

PCI Compliance

PCI Compliance is a set of security rules by which all companies that process, store or transmit credit card information must comply. There are typically 12 requirements that are needed to maintain this standard. If these 12 requirements aren’t followed you can quickly garner a large amount of fees until you have complied with all security requirements. This is another reason to rely on Payment Gateway providers to take all of the stress out of compliance.

So How Does It All Work?

A typical credit card transaction goes through the following steps:

A customer decides to purchase a product on your ecommerce website using your merchant account provider. They submit their personal credit card information.

The payment gateway security will pick up the credit card information and begin to route it to your merchant account processor.

Your merchant account will receive this information and contact your credit card provider (Visa, Mastercard etc.)

The credit card provider will then route the information to the bank that issued the credit card.

The bank will check to make sure that the customer has the appropriate funds in their account and then send an approval or denial back to the Merchant Account processor.

The Merchant Account will send the approval or denial to the Payment Gateway.

The payment gateway does two things. It stores the transaction securely on its server and it will also send an approval or denial back to the website.

Fees

One Time Set Up
Typically, a merchant account provider will charge a one-time set up fee (between $100 – $500). SecureGlobalPay will waive this fee.

Month to Month
It is not unusual for your merchant account provider to charge a monthly fee to help maintain the merchant account. These fees average between $20 – $50 per month. However we can make special arrangements where you don’t have to pay a monthly fee.

Per Transaction
There is generally a small per transaction fee charged for each transaction (unless you choose to have a larger month to month fee) and a percentage fee, typically between 2.00-3.00% for MasterCard/Visa and American Express.

SecureGlobalPay Fees
We will do everything we can to get you the best deal possible. Call us today and we will waive all one time set up fees and treat you the way you deserve to be treated. We can also offer a really great percentage fee as low as 0.35% in most cases for Mastercard, Visa and American Express. CONTACT US TODAY!

Questions to Ask Your Merchant Account Provider

Flexible Payment Options for Terminals
Are you locked into long-term rental contracts? Or does the processor provide you with options to buy or lease-to-own terminals? Ask your SecureGlobalPay representative about our free terminal placement program.

Future-Proof Terminals
Are the terminals designed to accept future chip technology or EMV? EMV chip technology uses Europay, MasterCard and Visa, a global standard for inter-operation of integrated circuit cards (IC cards or “chip cards”) and IC card capable point of sale (POS) terminals and automated teller machines (ATMs), for authenticating credit and debit card transactions.

Meet or Beat Pricing
Is the processor flexible in providing you the best available rate for your business? Can you get the best rate without having to go through a lot of red-tape or meeting very strict conditions?

Ease of Integration
Do you need to change your existing setup? Does the processor integrate with your existing system or customized setup? Can you easily import/export your existing customer database files?

Real-time Reporting
Can you follow your business performance anytime, from anywhere? Can you export business reports in your preferred file formats (XML, Excel, PDF, etc.)?

Security and PCI Compliance
Does the processor use sophisticated fraud and security tools to protect your business and your clients? Do they meet all PCI standards, allowing your business to benefit from additional reliability?

Gateway with Recurring Billing, Re-billing and Customizable User Access Levels
Can you manage recurring payments to avoid potential errors? Can you immediately process transactions from repeat customers, without re-entering customer information?

Dedicated Merchant Support
Can the processor help you deal with any issue, including chargeback resolution, risk monitoring, etc.? Are they available 365 days/year?

Fully Redundant System
Does the processor have backup servers, to avoid downtime and keep your business up and running 365 days/year?