Credit Card Processing: How Does it Work?

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Author: Kelly Brown

The internet is a wonderful thing and there is hardly a single process that isn't made easier because of it. Running a business is certainly no exception, particularly the processing of credit cards. Credit card processing in any form allows a merchant to accept payment via the ever-popular plastic simply, quickly, and securely.

You need a merchant account to accept credit cards, which is really just a special kind of bank account associated with the major credit card companies (Visa, Mastercard). A merchant account services company can provide with such an account along with the following types of credit card processing services:

Retail Processing. Given their overwhelming usage, accepting credit cards is essential for retail businesses of all shapes and sizes. Wireless Processing. Take care of business wherever business is taking place. Wireless processing is convenient, fast and more secure than managing cash and checks. Online Processing. Your customers can purchase 24 hours a day, with a simple click of the mouse.

Regardless of the method used to process credit cards, the process itself is essentially the same.

• A transaction begins when the credit card number is entered into a system manually or the magnetic strip at the back of credit cards passes through a credit card terminal. • Once the transaction information is entered into the system, an authorization request is generated. • The system’s processor links up with a network to transmit the authorization request to the issuing bank’s network. • Next, the issuing bank either approves or denies the request. If approved, an authorization code is sent to your computer or terminal. (This number is your guarantee to collect on the amount.) • The transaction amount is deducted from the customer’s account. • A receipt is generated and the customer signs, completing the transaction from their perspective. • Typically once a day, all transactions are submitted and compared to make sure what you are requesting matched what was authorized. • In about 24 to 48 hours, the funds are deposited in your account. Any fees you are paying are deducted at that end of the month.

The customer/merchant transaction is secure and quick, as technology allows for speedy communication between all invested parties. You will know immediately whether or not the credit card is “good.” There are a few reasons why a transaction won’t be approved. An invalid account number or expiration date may cause a decline, or the funds may not be available. Information can be gathered in a heartbeat and a decision can be made instantly by the issuing bank. Merchants can rest easy that if a transaction is approved, they will receive the funds.

The process is pretty easy to understand, and technology has made it very easy for merchant to accept credit cards as a payment method. The hard part then is selecting a merchant account services provider. Unfortunately, some credit card processing companies make you pay for the convenience of processing credit cards with a lot of fees. You’ll want to select a partner whose business practices are transparent and full disclosure is given. Since 2000, Veritrans, LLC, has offered customized service packages, guaranteed low rates, and no hidden fees. They take a full-service approach and can offer you a merchant services account, top-of-the-line credit card processing equipment, and 24-hour customer support.

Using the technology of the internet can help your business grow by expanding your payment options. Your transactions will be quick and secure and you can accept credit cards with confidence. Call Veritrans today for a free consultation.

Helen Walker. Get affordable and reliable credit card processing and merchant account services from Veritrans.