Expand your company by accepting bank cards or credit cards
There are several very clear benefits to accepting credit and debit card payments in your company. You provide your customers the ease of paying by mobile phone, by tablet, online, or in person.
To obtain one of the most from accepting credit cards, spend some time to find out more about who you’ll deal with to process payments, how you can get set up, the best ways to eliminate problems, what to try to find in a processor, and tips on how to keep your fees low.
- Get to know the key players
- Get started with credit card processing
- Avoid usual issues
- Choose a service provider
- Reduce credit card processing fees
- Essential terms and definitions
Each time you accept a credit or debit card payment, several organizations cooperate to complete the transaction.
The key players include merchant banks, Issuing Banks, Card Payment Brands and payment processors.
The banks that supplies you with a merchant account. The merchant bank will handle credit card transactions to your financial account and charge a cost called a discount rate. They’re authorized to set up merchant accounts, quote you a discount rate, and route credit card transactions to the right networks. The advantages to you may include better customer service and integrated business solutions (beyond just accepting credit cards). Processors are paid on a for each transaction fee basis, which is included in your discount rate.
Issuing bank or issuer
The banks that provides the credit card to the end user.
Card payment brand
Associations such as Visa, MasterCard, and American Express. Some brands such as American Express and Discover issue cards straight to consumers, without a depository financial institution intermediary.
Get started with credit card processing
Here’s ways to learn more accepting credit and debit cards:
1. Choose your payment processing services carrier.
2. The processor will have you establish a merchant account based upon your sort of company.
3. Determine how you’ll accept credit cards: in QuickBooks, on mobile phones or tablets, or at the point of sale.
4. When you swipe the card, the info will be forwarded to your processor. You can either swipe the card or type card information into your payment processing system.
6. The card payment brand will send your request to the bank that issued the card to the customer.
7. The issuer will decline the transaction or approve and send this response to the payment brand.
8. The payment brand will send out the response to the processor.
9. The processor will forward the response to you (through the payment processing system, whether it’s mobile, website, online, or point of sale).
10. The card will be approved, declined, or referred for purchase. Every one of this takes merely a few secs to finish.
The issuing bank will send the money through the credit card network to your bank account (within 2-4 business days). Whether you use a credit card machine, QuickBooks, or a mobile credit card reader, every credit card transaction will follow these same basic steps.
Avoid common problems
You can save time and money and stay clear of costly blunders by following these best practices
1. Learn all the fees, charges, rules, and regulations in your merchant account agreement.
2. Check the identity and expiration date on any card you’re about to process.
3. Prevent duplicate transactions.
4. Don’t put minimum or maximum limits on your transactions. Regulations state that you must accept credit cards for any size of transaction.
5. Don’t offset the cost of accepting credit cards by charging a usage fee for credit card transactions.
6. Don’t display full account numbers on your receipts. Each state’s laws regulate how much information can appear.
7. Get to know the fraud screening products and services that can help you.
8. Use the right accounts for your business. You may face steep fines and lose your merchant account if you try to process Internet transactions with your retail merchant account.
9. Never run your personal credit card through your merchant account.
10. Don’t split a transaction into smaller transactions. This could put you at risk of a chargeback.
11. Prioritize customer issues above everything else.
Choose a payment processing service provider
Your payment processor can help you get much more out of accepting credit card payments. Here’s how to choose the right partner for your business
1. Learn about all the fees associated with accepting credit cards, and find out whether there’s a termination fee for switching providers.
2. Find a provider that will actively partner with you to get you started, support you when you run into problems, and help your business grow.
3. Be sure your payments solution will allow you to grow with use of point of sale, online credit card processing, and mobile credit card processing.
Credit card processing fees can be complicated to sort out. Be sure you understand all the fees and key factors involved when you’re shopping for a provider. Read this page on tips for reducing your credit card processing costs.
Important terms and definitions
Look for a payment processing system that’s integrated with your accounting software. It allows you to record a credit and process card transaction in one easy step.
Reducing credit card processing costs
Accepting credit cards will introduce you to many previously unfamiliar industry terms. To make sure you’re ready, get to know the following terms:
Authorization fee: For some transactions, the cardholder and card won’t be present. The fee may be listed separately or bundled with your rate.
2. Card association: For any credit card brand, the card association is the network of issuing and acquiring banks that process it.
Their complaint will go to their issuing bank. Respond promptly, or you could face an additional fee or lose the transaction completely. After a refund, you’ll often lose the interchange fee from the original transaction as well as the sale.
Interchange fees: Most major card associations charge an interchange fee for processing each transaction. You’ll pay different fees depending on how the transaction is sent and what type of merchant account you have.
Much of the cost of accepting credit cards comes from transactions that don’t qualify for a discount because they don’t meet certain regulations set by the card associations. Common reasons for a downgrade consist of not settling a transaction within 2 days of the initial authorization, missing or invalid data, corrupted swiped data, and the absence of address verification on manually keyed transactions.
6. Issuing bank: The issuing bank extends the line of credit to a consumer and offers you a payment card.
7. Merchant bank: Your merchant bank is the financial institution that provides you with a merchant account. It will also deal with payment of all your credit card transactions and credit card processing.
Merchant service provider: Your merchant service provider makes sure your account is set up to handle credit card transactions on the front and back end. They’ll also serve as the intermediary for your communication with card associations, processors, and your bank.
Mid-qualified rate: You’ll pay a mid-qualified rate when you accept and process a card that doesn’t qualify for the lowest rate. This may happen when you manually key a card into a terminal instead of swiping it, or when a rewards or business card is being used.
Non-qualified rate: You’ll pay a non-qualified rate any time you accept and process a card that doesn’t qualify for either of the lower rates. This may happen when you manually key a card into a terminal instead of swiping it.
11. Payment gateways: Your payment gateway transmits payment data from you to card associations and credit card processing companies. Payment gateways support most point-of-sale systems, banks, processors, and merchant types.
Payment gateways: Your payment gateway transmits payment data from you to card associations and credit card processing companies.
No matter if you use a credit card machine, QuickBooks, or a mobile credit card reader, every credit card transaction will follow these same basic steps.
Much of the expense of accepting credit cards comes from transactions that don’t qualify for a discount because they don’t fulfill certain regulations set by the card associations. It will also deal with payment of all your credit card transactions and credit card processing.
Swiping a card in person will often give you the lowest rate. See qualified rate, mid-qualified rate, non-qualified rate.
A front-end processor handles up-front card authorization, connectivity to card associations, and network authorization. A back-end processor receives and forwards settlement batches to the issuing banks on a regular schedule.
Rates: The rates you pay cover transaction processing and the depositing of funds into your account. This rate may bundle the fees of your merchant service provider, processor, issuing bank, and card association.
The card payment brand will send your request to the bank that issued the card to the customer.
Qualified rate: The qualified rate is typically the lowest rate you’ll receive. It’s the percentage that’s charged whenever you process a card transaction through an approved processing solution.