How Does Credit Card Processing Work?

Have you heard of credit card processing? If you are a business owner who is thinking about ways to expand your company, then applying for a merchant account is definitely a significant step in the growth of your business.

credit card processingIn this article, let’s discuss the cycle of credit card merchant processing so you can have a better idea as to how it can help your business.

The cycle follows the same route whether your customers makes the purchase from your online store or in person. As long as credit card has been used for payment, it will undergo the following procedures.

Credit Card Authorization

If the customer pays in person, a seller must make sure that the person using the credit card is the real owner of the account. This can be done by asking for additional proof of Identification such as a driver’s license or other valid ID and by carefully comparing the signature on the purchase receipt and on the credit card. If payment is made online, authorization can be done by requiring the customer to enter identifying details using a secured webpage.

Transaction Begins

GoPaymentThe credit card is swiped in the credit card machine to begin the transaction. For online payments, the account details are entered into the gateway system and forwarded to the credit card processing company.

Next, the merchant account provider will verify authorization of the account from the credit card issuer (Visa, MasterCard, Discover, American Express). The credit card issuer will electronically send verification to the merchant account provider, whether the transaction is successful or declined.

Clearance of Payment

The credit card company credits payment to the seller’s account through the credit card merchant account provider. The credit card issuer sends monthly statement to the cardholder, who must then settle the charges.

Why Accept Credit Cards

QuickBooks Online  - Try it Free for 30 daysWhy should you consider applying for a merchant account? By offering your customers a more convenient way to pay their purchases, you can dramatically increase your marketing potential.

Furthermore, a lot of cardholders prefer credit card payment because they know that they will be protected by their credit card issuers if something goes wrong with the purchase or if they are not satisfied with the item they received. Indeed, many successful business owners have proven that accepting credit card payments is truly the way to enhance the business.

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Seller Responsibilities With Credit Card Merchant Processing
The Cost of Credit Card Payment Processing


About the Author:

Melanie James has spent the last 14 years working with businesses to implement quick, effective and inexpensive changes to their businesses to increase productivity and their bottom line.

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