It is the series of operations which are required to complete the payments made through credit card. Payments can be made in person, online, over the phone or by mail.

It is a critical service which ensures that customer can check out conveniently. It is the most popular payment method. It is widely used in retail operations or in e commerce. As competition this sector has become more complex in processing and fraught. They have hidden fees and limitations as well.

How does it work?

At the very beginning, when a customer presents his information for payment purposes. Then the consumer uses this info through a magnetic stripe card and swipes it on POS1 Machine or EMV chips. Apple Pay, digital wallets, and mobile apps are modern gateways of payment.

This payment information of a particular customer sent to the processor, responsible for all the communication to the customer’s bank. The communication with the customer’s bank will be Mastercard or VISA card network. The approval of the transaction is dependent on card number verifications, availability of funds, or validity of the card.

When all the verifications are successfully done, then approval is sent back to the payment processor and then back to the terminal where your credit card information is used. At the end of each business day, all the transactions are batched for settlement at the consumer end. The customer is charged for that particular amount instantly.

Credit Card Processors:

The ability to accept debit and credit card payments is necessity for most of the businesses. It requires a credit card processing company. They act as an intermediary between customers credit card company and the business. It does not matter that whether the business is physically established or entirely online you need a payment processor who accept payments through credit card. With so many different fees, requirements and limitations it can be pain in your head to choose a right payment processor.

Here, we have compiled a list of some top Credit Card Processing Companies of 20212:

  • Stax by Fattmerchant
  • Helcim
  • Dharma Merchant Services
  • Payment Depot
  • National Processing
  • Square
  • Intuit QuickBooks
  • PayPal
  • Stripe
  • Flagship Merchant Services
  • Clover

There are some of the key points you should note before going for a credit card processor:

Processing Fees:

Usually, the credit card processors charge a processing fee, depending on your processor, it can vary. The transaction fee can be broken down into two categories depending on the either its wholesale or markup. Whole sale fees or you can say interchange fees are charged by the bank and the network of the card. On the other hand, markup fees are charged by the credit card processor which you have chosen and the payment gateway they are using. Markup fess are negotiable.

You should aware of three types of processing fees given below:

  • Interchange Fee: It is the wholesale fee as mentioned above. It is a non negotiable standard fee which covers the costs of processing the transactions, all the risk factors like bad debt, fraud and payment approvals.
  • Assessment or Service Fee: It is another type of nonnegotiable fee. In this type of fee, the card network charges the fee depending on which type of network you are using. Typically, they charge a small percentage and can be affected by the volume of the overall transactions. Card networks are the risk bearer.

Processor Pricing Models:

At this moment, you need to have a quick overview of the pricing models of the processors you are looking for. As every business is unique, you should wisely evaluate the pricing models of the credit card processors and it should work for your business model as well. Here are few of them:

  • Flat Rate Pricing Model: For businesses who have low transactions volume, it can be a good solution. You will be paying a flat rate or fixed amount of fee per transaction which includes the interchange fee as well. It will keep the things clear and simple. You will always know how much you are paying for per transaction. But sometimes, in this type of models you will get the higher rates. They usually do not charge higher monthly fee. This model includes Square, PayPal and Stripe.
  • Cost Plus Pricing Model: It is also called interchange-plus. It is a transparent type of model in which you will see an itemized breakdown of all the transaction fee. It includes the markup or margin of the processor.
  • Tiered Pricing Model: It is the most confusing type of pricing models. They classify the credit card transactions like qualified, mid-qualified and non-qualified. The transaction fee is different from each other. It will be difficult for you to figure out why some transactions are classified and hence they are not transparent.

Customer Support:

It is the most important point you should consider. As a business owner you are stake holder of everything around. Difficulties and problems arise in real life and what if things go wrong you need to be able to count on customer support, provided by the processors. It is your sole right that you can count on people who know that how payments work and how they can go wrong at any time and how to resolve them in given time.

Usually, not all credit card processing companies provide customer support 24 hours a day and 7 days a week. If your business is mission-critical, then you should consider the processing company which supports at the level of what your company demands.

It is necessary to keep the track of transaction payments, call-waiting times and complain resolution score so that you can avoid the hurdles in your business. Whether it is day or night or the middle of the night, you have to make sure that you will be facilitated by the credit card payment processors. The bottom line is to keep these things in your mind before choosing a right processor you can avoid many problems in your business which will make sure the smooth flow of your business.

 

1 https://www.investopedia.com/terms/p/point-of-sale.asp

2 https://www.usnews.com/360-reviews/credit-card-processing