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Accepting Credit Cards

Credit cards become a necessity if you are selling anything greater than newspapers and gums. If you are really interested to enroll in the ‘merchant acquiring’ world then here lies the details about how merchants accept credit cards.

During the initial stages of sale itself the processing of credit cards begins. In case your customer needs to purchase a widget she/he hands you their Visa card. Obtaining this the clerk in that store swipes it through an electronic terminal otherwise the clerk punches few figures and waits in order to get an “authorization”. After a few seconds, the clerk receives authorization and thereby a receipt comes out as a printed copy of which the customer approves.

Authorization works only after the card is swiped. After swiping, related data and card number goes through acquiring processor which directs the person’s transaction to his credit card corporation. Then, this credit card corporation demands for authorization from the bank which issued this card. After attaining approval this issued bank sends an approved code to credit card Corporation which is then sent to acquiring processor. From here, the approval code goes to the merchant.

This is indeed a long electronic journey but this takes just a few seconds. Yet the story is not complete till the merchant has not received the payment. This happens only after everything is settled fine.

Since, settling only happens at the day’s end when the merchant moves on to the bank with the sales receipts or by transmitting these receipts electronically in batch from a card terminal. These receipts go through Acquiring Processor which takes the initiative as the traffic cop which directs and finds which transaction is from which credit card corporations. These credit card corporations accept these transactions and send them to the issued banks where they are posted to the accounts of cardholders. During this time, processor credits the accounts of merchant and a discount rate of 1.75% to 3% is deducted.

Now let us consider e-commerce orders, mail orders, and phone orders. These are called as telephone order/mail order transactions or “MO/TO”. These orders do not require signature verification in order to make sure customer’s identity.

Precautionary and preventive techniques must be adopted for credit cards to be accepted in a proper manner. Ensure that you go by the rules that are specified by the bank. You require a schedule in order to process credit cards which the sales staff should follow. 

Surely there exists cost which is linked with the processing of credit cards. The costs which are related to credit cards processing are:

Application fee, setup fee, processor fee, terminal costs, account billing charge, statement fee, chargeback fee, authorization fee, transaction fee, close-out daily fee, and discount rate.   

Inspite of these costs the sales of credit cards are a customer-centered service. In addition to this, customers are liable to purchase more while using credit cards rather than while using cash.

While accepting cards it must be noted that different cards require several procedures.   

Contact one of our helpful account representatives to assist you in the setup of a high risk merchant account or offshore merchant account for a high risk merchant.