One of the main reasons why a cashless economy is taking over is the credit card system—Purchasing goods and services have become far simpler with this system in place. The convenience, security, and accessibility have made it mandatory across all sectors.
With credit cards taking over, cash-based transactions are steadily declining in number. It is essential to be aware of all the steps in credit card processing. You have many advantages because of it too. Several banks provide offers to frequent users and give first-time discounts too.
Any business that goes from a cash based on to a credit/debit card accepting one will find that there is a significant boost in the firm. If you plan on doing the same for your business, then you should be aware of the upfront cost and the ongoing credit card processing fees. Each bank levies its set of rules and charges.
Steps To Be Aware Of In Credit Card Processing
Step 1: This is where the client submits his credit card to make the payment. The buyer ships it for that amount, and so the exchange happens.
Step 2: The net manages the complex data and routes it to the right location.
Step 3: With all the proper authorizations in place, the net passes the transaction information through a secured connection and sends it to a processor.
The seller’s bank submits this transaction to the credit card network which routes the transaction to the bank which issued the card to the customer.
Step 4: The bank that has issued the card now approves or declines this transaction depending on the funds that are available. This result is sent back to the network of the credit card. This result is also relayed to the merchant’s bank processor. This further goes on to the Authorize net.
Step 5: The authorize net now stores the results and relays it to the website for both the merchant and the customer to see.
Step 6: Now based on the result, the merchant delivers the goods or services to the customer.
Step 7: Now the funds that are to be transferred is processed by the issuing bank. These funds are then sent to the merchant’s bank. This final step is called the “settlement.” This transfer happens within 2 or 4 days.
There are many options that you can go for. But doing your research before you decide one is essential. Many factors must be taken into consideration, some of them include:
Fees and cost
There are many fees and costs that you will be running into. It is best to know what they are, well in advance.
- Interchange fees: This depends on the type of transaction, the amount, and type of card accepted. The fees are generally 2-3% of the total amount. This greatly varies depending on the bank too. In Store, transactions have fewer interchange fees.
- Monthly statement fees: Your credit card company might charge you for mailing your monthly statements. This will be a minimal amount.
- Application and setup fees: There is a price you will have to pay to get the system installed and working.
- Early termination fee: If you choose to terminate your contract early, you will have to pay this fee.
Your payment company may also include other charges. You must have a look at them before signing up.
Getting the system installed in time is crucial for your business. Get in touch with the credit card company and find out how long it will take to get it working. You can install other essential equipments and plan accordingly in the meantime.
Acceptable Payment Types
If you are in the e-commerce or the retail business, you will need a payment processing that will accept every card. Some even include gift cards or prepaid cards. It crucial to allow the customer to buy your products and so cards have to be accepted.
Find out if the customer support for your credit card processing system is active 24X7. Make sure that they answer all your queries and get back to you immediately. You should be given an explicit detail and why a certain fee is being charged to your account.
An efficient credit card processing system should be in place for you to run your business smoothly. You can get suggestions from experts at shopify.com regarding this as they have expertise in setting up a full-fledged e-commerce operation.