Business owners (or “merchants”) who want to receive credit card payments for their goods or services must apply for a merchant account.  A merchant account allows a business to accept credit cards, debit cards, gift cards and other forms of payment cards. This is widely known as payment processing or credit card processing, and the company that powers the credit card transactions is known as a payment processor, credit card processor or merchant accounts provider.

A Look at a Credit Card Transaction

When a customer walks into a store and purchases a product with a credit card, a number of things are happening behind the scenes.

1. First, the merchant swipes the card through a piece of credit card processing equipment (typically a credit card terminal, or in the case of an integrated point of sale system, directly through the POS).

2. Using the internet or a phone line, the processing equipment accesses an electronic payment gateway and communicates with the merchant’s processing bank.

3. The processing bank communicates with the credit card network (ie. Visa and MasterCard),

4. and the credit card network communicates with the bank that issued the customer’s credit card to verify that the credit card can be charged.

5. The merchant receives a message that the credit card purchase has been approved or declined.

All of these communications take place in the blink of an eye!

If the transaction is authorized, the credit card processor handles the electronic transfer of funds between the bank that issued the customer’s credit card and the merchant’s local business bank.

Rates and Fees

Merchants often complain that about the costs of processing credit cards. It’s true that there are a variety of fees associated with taking credit card payments, but most of these are Interchange fees passed along directly by Visa and MasterCard to cover the risk they assume by issuing credit. (After all, the credit card-issuing banks have no guarantees that their credit cardholders will actually pay them for the products they have purchased!) Certain types of transactions incur greater fees than others because they are associated with a higher risk of fraud (for this reason, card-not-present transactions, such as those processed by mail or telephone-order companies, are typically charged higher rates than transactions where a merchant has physically swiped a credit card).

Merchant Account Services

A good merchant account provider offers merchants much more than payment processing. They should provide business management tools, answers to questions about your point of sale system, educational resources and more.

Find out what A-AAccess Merchant Services can do for you. Call 800.317.1819 to speak to one of our dedicated account managers today!