When you own a business, there are numerous things to check off your list before successfully running a company. There are a variety of guidelines and notes helping you with your inventory and loans. Remember, no matter if your store is online or brick-and-mortar, finding a way for customers to buy and check out your products is easier said than done. Here is a list of things you want to help you start the primary credit card processing.
What is a Payment Processor
Payment processors are businesses that process transactions, enabling customers to purchase your goods. This transaction means the payment processing company sends data from the customer’s debit or credit card to their bank, then to your business’s bank. When the transaction goes through, as long as there is enough money on your customer’s card, the transaction becomes valid. Believe it or not, this process is done in just a few seconds.
The payment processor checks to ensure your customer’s card data is right. Therefore, if any fraudulent practices show up, it is up to the processor’s company should not allow the transaction to go through. However, if the customer proves that your company charged them incorrectly, the payment processor takes care of the unintentional transaction. But, this does not mean they take care of the problem for free. Your company receives a fee for their services. So, if you make an error or a customer returns an item, your business is responsible for paying the price.
What is a Merchant Account
A merchant account is a significant factor in business, mainly those who accept the use of credit cards online. When you have a merchant account, you are not allowed to receive money from a credit or debit card since you do not have anywhere to store the money. This type of account is a bank account enabling you to accept credit and debit card transactions. Without a merchant account, your company cannot accept payments from a debit or credit card. However, you can think of a payment processor for your business, like a home’s value estimator for your home.
Who is Involved with Payment Processors
A payment processor allows your company to conduct payment transactions with you and the customer. Even though there are many players involved, there are at least five main factors that make up any transactions. This is a list of those transactions:
- Your customers.
- Your business or merchant.
- The payment processor.
- The customer’s bank information.
- Your company’s bank.
These are several of the steps your system makes when it processes a transaction between the customer and merchant.
What Are Payment Gateways
A payment gateway is what connects a payment processing source with a merchant account to debit and credit card companies. Basically, it connects the customer’s financial information with your business account. Keep in mind that without the payment gateway, you miss a crucial part of completing any financial transactions, mainly because you are not able to receive customer payments.
Merchant and payment processors can combine themselves with a payment gateway. This all depends if they have an in-house department or a third-party processing source. When they use a third party, that party communicates with the credit card company and completes the payment.
What Payments can Processors Accept
Depending on the company, there may be limits to what the business accepts. However, the standard rule of thumb is that typically that Visa and Mastercard are the most accepted form of transactions for payment processors. Although, different cards create different fees and risks, your payment processor keeps an eye on those factors for you. You want to educate yourself as to which cards your processor accepts before you lock yourself into one that does not take the payment types you want.
Debit cards and other methods are usually accepted, but it depends on if the fees acquired are worth it to the company to take a certain form of payments. Therefore, the cheaper the card fee, the more likely it is accepted.
Keep your business up-to-date with a payment processor since it does all the work for you. Remember, you do not what to get stuck with a processor that does not handle your business payments. Know what the fees are and what payments you want to accept before you make your choice.