Credit Card Processing Technology Made Simple

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Author: Zabel1

Accepting credit cards as a form of payment is a great way to boost your profits and increase the number of customers who use your business on a regular basis. Whether you accept credit cards at a retail store, by telephone or over the Internet, the increase in your business can be significant. It’s simple to learn how to process a credit card â€" in the case of a retail establishment, you or your customer simply swipes the credit card through a slot in a special card reader machine and the software takes care of the rest. Similarly, when a phone or Internet order is placed, software accepts the credit card information, authorizes and verifies the information on the card, and determines whether or not the card can be accepted or denied for payment. But even though the average credit card transaction takes only a few seconds to complete, what really happens during the transaction is much more complicated than it may at first appear. Regardless of the type of purchase â€" retail, mail order, telephone or Internet â€" the underlying mechanisms of the credit card transaction process are essentially the same. There may be slight variations based on the provider you choose; but overall, the steps used to process a credit card will be very similar among the merchant account services providers. The following is a quick, basic explanation of the steps involved in processing a credit card transaction. First, the credit card information must be entered into the processing system. In a retail location, the card is swiped through the credit card terminal by the merchant or the customer; in am automated telephone or wireless transaction, the credit card information is entered through a touch-tome phone or cell phone; and in an Internet transaction, the credit card information is entered into the merchant’s website. Mail order transactions and some phone transactions may also be completed manually by the merchant or his or her employees. Once entered into the system, the information is transmitted to the credit card issuer via a virtual terminal or a gateway provider. A virtual terminal is usually used for low-volume or in-person transactions as well as mail order transactions, and may also be used in telephone transactions where an operator is involved in entering the credit card information. A gateway provider is entirely automated, and is used in most online and high-volume transactions. Some merchant account providers offer their own proprietary gateway system, while other merchant account providers rely on third-party gateway services to conduct transactions. It’s important to note that online transactions are completed using a secure server, which reads and transmits information in an encrypted form to prevent an unauthorized user from picking up the credit card information via another phone or internet connection Where provided, an address verification system (or AVS) may be called upon by the virtual terminal or gateway provider to ensure the address offered during the order matches the address on the credit card being used for the transaction. If the transaction is approved by the credit card issuer, an authorization code is transmitted to the processor, or to the gateway provider. The code is encrypted by the gateway provider or processor and transmitted back to the merchant’s terminal or website, allowing the order to be fulfilled. For in-person transactions, a receipt is issued, while for online transactions, a confirmation receipt will be issued or emailed to the customer’s email account. At a specified time during the day, the merchant account provider will tally up the day’s total receipts for each credit card, subtract transaction and discount fees as well as any other applicable fees, and then transmit the total amount remaining to the bank account associated with the merchant account. In some cases, the actual transfer may take up to three business days from the date of purchase. These basic steps are carried out during each and every credit card transaction, whether that transaction occurs in person, or via telephone, cell phone, mail order or Internet. While chances are slim that you, as a merchant, will ever be involved in any of these processes directly, by understanding the intricate series of events involved in every credit card transaction, you can develop a better understanding and appreciation of the breadth of the services being offered by your merchant account provider. Your merchant account provider is skilled in offering credit card processing services, and your experience processing credit card payments with them should be so seamless, you and your customers will be unaware of all of the mechanisms required in approving a single transaction. Instead, you’ll be able to focus on the growth of your business, and on providing excellent customer service.

Karen Zabel is a freelance writer who writes about Credit Card .