Business Credit Card Processing Overview
Any company, whether it be a home-based business or a large chain of
retail stores, will need business credit card processing services if it
wants to survive in today’s market. To remain competitive, it’s
imperative that your business be able to accept credit card payments and
other forms of electronic payments, so it’s imperative that you
understand the world of credit card processing. This overview will
provide you with some basic information about processing credit card
payments and what you need to make it a part of your business.
Merchant Account Provider
To be able to process any credit card payments, the first thing you
will need is a merchant account provider. These are often referred to as
an ISO/MSP (Independent Sales Organization/Merchant Service Provider).
The ISO/MSP is the company that is sponsored by a bank (which is a
member of the Visa and MasterCard networks) to sell credit card processing
services and to handle the processing of those payments or outsource
the processing of those payments. When you need a merchant account for
your business, you will typically have to apply for it and be approved.
Once approved, the ISO/MSP usually handles customer service and
technical support as well.
Point of Sale and On-Site Card Processing
people think of credit card processing, they typically think of
accepting a credit card and swiping it through a point of sale terminal.
If your business is a retail store or a restaurant, then chances are
you will need to process credit cards on-site. This will require the
purchase or lease of a point of sale terminal (also know as a POS
system), in addition to the processing itself, so you can accept and
swipe a variety of cards. If your merchant account provider doesn’t
offer the terminals, they should be able to refer you to a company that
does. If you also need electronic check verification or want to accept
gift cards, your merchant account provider should be able to offer those
services as well.
Not all businesses that accept credit cards do so in only one
location. If you need to process payments no matter where you go,
wireless terminals allow you to do that. In an increasingly mobile
world, the wireless terminal is a perfect solution. Process cards
on-site wherever you happen to be.
Card-Not-Present Processing Services
Gone are the
days when credit cards were used only in person. Now your business may
be taking payments by mail, over the phone, or more commonly, via the
internet. In these cases, you’ll never actually take the credit card in
hand and swipe it, which means you may need additional computer software
or a different kind of merchant account that allows for these types of
payments. If you are taking payments over the internet, you will also
need a payment gateway. A payment gateway is what the customer uses to
enter their credit card information and it usually supplies security
features for protecting that information. Typically, the payment gateway
is provided by a third party and not your merchant account provider,
though the merchant account provider should be able to recommend one to
Common Credit Card Processing Fees
other services, there is never just one fee when it comes to credit card
processing and the various fees can become confusing. However, if you
know what the common fees are before you start looking for an ISO/MSP,
you can decrease the confusion. First of all, some merchant account
providers may charge a one-time setup fee and/or an application fee,
though keep in mind that not every provider does. The other fees you
will encounter include:
- Monthly Account Maintenance – Almost every merchant account provider does charge a monthly fee to cover the costs of handling your account.
- Discount Rate – Another common fee is the discount
rate. This rate is charged by the credit card company and is actually a
percentage that is charged per each transaction. Since it is a
percentage, this one can add up over time, so you need to be aware of
what that percentage is.
- Per Transaction Fee – The per transaction fee is
not a percentage, but a monetary value that is charged for each
transaction (usually in cents). This charge is for the processing of the
- Monthly Minimum Fee – Not to be confused with the
monthly account maintenance fee, this fee is only charged if you do not
reach the minimum set by the merchant account provider for your per
As you can see, there’s a lot you need to know when you when you
decide to accept credit card payments. However, don’t let that deter you
from taking that step - accepting credit card payments can increase
your sales and bring greater success to your business. Get started now!