Credit card processing is a wide term that is used to encompass all of the various steps and procedures involved in facilitating the use of credit cards as a method of payment. Credit card processing can be divided into four main categories: authorization, capture, clearance, and settlement.
Authorization is the process of verifying that a credit card holder has the funds available to cover the cost of a purchase. This can be done either by contacting the cardholder’s bank directly, or by using an automated system such as an authorization network.
Capture is the process of submitting transaction information to the credit card issuer for approval. This step is usually performed by the merchant’s bank, but may also be done by the credit card processor.
Clearance is the process of ensuring that all funds have been received from the cardholder’s bank and that the transaction is valid. This step is usually performed by the credit card processor.
Settlement is the process of transferring funds from the merchant’s account to the cardholder’s bank. This step is usually performed by the credit card processor.
Credit card processing is a complex and ever-changing industry. However, understanding the basics of how it works can help you to make informed decisions about accepting credit cards at your business.
If you’re thinking about accepting credit cards, there are a few things you should keep in mind. First, you’ll need to choose a credit card processor. There are many different processors out there, so it’s important to do your research and find one that best suits your needs.
Second, you’ll need to set up a merchant account. This is an account with a bank that allows you to accept credit card payments.
Third, you’ll need to get a merchant ID (MID). This is a unique number that identifies your business to the credit card processor.
Fourth, you’ll need to choose a payment gateway. This is a software system that connects your merchant account to the credit card processor.
Fifth, you’ll need to get a security certificate. This is a digital certificate that helps to ensure that your website is secure.
Sixth, you’ll need to set up fraud prevention measures. This can include things like setting up AVS (address verification system) and CVV (card verification value) codes.
Seventh, you’ll need to decide which credit cards you want to accept. Most businesses accept Visa, MasterCard, Discover, and American Express. However, there are many other options available, so it’s important to do your research and choose the right ones for your business.
Eighth, you’ll need to set up your website to accept credit card payments. This can be done using a shopping cart system, or by integrating your website with a payment gateway.
Ninth, you’ll need to promote your business and let people know that you accept credit cards. This can be done through marketing and advertising, as well as by providing customer service that is friendly and efficient.
Tenth, you’ll need to keep your credit card processing rates low. This can be done by shopping around for the best rates, and by negotiating with your processor.
Credit card processing is a complex and ever-changing industry. However, understanding the basics of how it works can help you to make informed decisions about accepting credit cards at your business. If you’re thinking about accepting credit cards, keep these ten things in mind and you’ll be on your way to success.
