12 Days of Payments: Merchant Credit Card Processing

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On the fifth day of payments, my processor gave to me: merchant credit card processing services.

Familiar and quality merchant credit card processing services are likely important to both you and your customers. From seamless transaction capabilities to secure payment processing solutions, the merchant services employed by your business can make or break your customers’ experience with your brand.

“Merchant credit card processing services” – also referred to as credit card processing – is a term that encompasses everything involved in the payment process – from the terminal or hardware used by a merchant to the software, services and issuing banks that process a single transaction.

There are several moving parts of every payment transaction that fall under this umbrella of merchant credit card processing. Every time a business accepts a credit or debit card in-store or online, the following components of credit card processing are involved:

A Merchant Account

Every business owner that intends to accept credit cards as a form of payment will need to establish a merchant account. This indicates a business relationship with a payment processor like Payline or a bank relationship and allows a business to accept credit card payments for goods or services offered.

A Payment Processor

This provider of merchant credit card processing services is selected by you, the merchant, to handle transactions for a merchant acquiring bank. In a process that takes mere seconds to occur, the payment processor certifies the details from the consumer initiating the transaction and sends them to the cardholder’s issuing bank for verification. During this process, anti-fraud measures are also taken to ensure that the cardholder is who they say they are, verifying that the transaction is not fraudulent.

An Issuing Bank

As mentioned above, during the transaction process, the payment processor communicates with an issuing bank, which is the bank that offers the card being used by the consumer. The issuing bank is the organization that issues the line of credit to the consumer.

An Acquiring Bank

Different from the issuing bank, the acquiring bankor simply, “the acquirer” – is the financial institution that processes the payment on behalf of the merchant. The acquirer allows a transaction to occur from the issuing bank within a card association, such as Visa, MasterCard, and Discover.

Sometimes, the terms acquirer and processor are used interchangeably but these terms have two unique definitions. While the acquirer is the institution that processes the transaction, the payment processor is the company that communicates with the issuing bank, acting as a mediator between the merchant and the financial institutions.

There are many types of merchant credit card processing providers on the market, and business owners are left to make the tough decision on which provider is best for their business. Payline encourages business owners to do their research in securing a payment processor that will support them with the right solution to see their business through times of growth and success.

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