Credit card processing might be confusing, costly and overwhelming. The first step to getting a better positive experience is to know Credit Card Processing Charges and their benefits. This article is about how credit card processing companies offer services for small businesses and what they charge for their services. You will also learn some inside details, Credit Card Processing Charges, risks and more. Parties involved in the Credit Card Processing The information below would help you to understand the role of parties involved in processing. Merchant: Business account holder accepting payment. Cardholder (Customer): Owns the credit card and use it for purchase. Card Governing Bodies: MasterCard, VISA, American Express are examples of card governing bodies who decide transaction charges and arbitrate between account holders of customers and merchants. They are also responsible for maintaining and improving transaction services. Acquiring Bank: Merchant's bank. They hold the funds and acquire money from the sale of products or services. Issuing Bank: The cardholder’s bank. They issue credit cards to their customers through which they can purchase products. Cardholders are responsible for paying that amount back to their back according to their credit card agreement rule. Credit Card Processing Charges Now we know the parties involved in credit card processing and how all work together, we will look at different types of charges associated with a transaction. This is based on your merchant service provider and you have to check your monthly bill to ensure you are not overpaying for your credit card processing. Transaction Fees Transaction fees are taken every time on using a credit card and it can be broken down into interchange fees and cents per transaction. These charges are set by the credit card processing company for small businesses and they are mandatory charges. Interchange fees are based on the type of card you are using. Debit cards are more economical than credit cards. Recurring Fees Many credit card processing companies for small businesses make extra profits by charging non-compulsory merchant fees and these charges can be seen in the monthly statement of the merchant account. However, these fees are not required to accept card payments. Monthly Minimum Fees These charges are taken by the card provider if the number of transactions or transaction volume doesn't meet monthly minimum thresholds. Statement Fees To maintain your account and to get the statement of your transactions, these charges are taken. Batch Fees Batch fees are extra charges for batching your credit card transaction to be done for that day. So, instead of fund deposit for every single payment, merchants will get the deposit in batches. Annual or Monthly Fees These are additional fees on top of the payment processor’s other charges. Takeaway You have to keep an eye on a number of things for your credit card processing charges every month. Credit card processing companies for small businesses make huge profits by taking many changes every year. You should check your monthly statement carefully every time and you can call your card provider for any query about unknown charges. In a nutshell, Credit card offers enormous benefits to customers as well as a merchant but you should take care of the card providers company’s agreement policy and their hidden charges. Also Read: What is a High-Risk Merchant Account & Why it is Important for Your Business?
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These both terms are confusing and to understand the difference between them is more confusing. This blog will answer those questions in an easy way. Many online payment processing companies offer both services to merchants. Before we dive deeper, let's understand the four important players that are involved in the online payment process.
So, the online payment process for companies would typically look like this.
But, what is the role of payment gateway and payment processing offered by online payment processing companies in this transaction? And how to differentiate between them? Well, let's understand the basics first. What is Payment Processing? It is a service given by a payment processing company that handles transactions from your customers' account and your merchant account, and it also allows customers to buy your products and services. In addition to that, payment processing for the company follows security protocols for easy and safe transactions. What is a Payment Gateway? Many online payment processing companies provide a payment gateway that transfers the payment data to the processor. It acts just like a mediator who complete the transaction cycle. It connects the processor to the merchant’s bank account and card companies like MasterCard. Most eCommerce websites use a payment gateway from a reputed payment processing company for cardless transactions. A payment gateway authenticates before forwarding the payment details to the processor. What is the difference between Payment Gateway & Payment Processing? In simple words, many online credit card payment processing companies provide the service of payment processing which is a transaction between customers and a merchant, while a payment gateway given by a famous payment processing company collects payment details of customers and send them to the processor, and then allows transaction between them. Which one does a company need: Payment Processor or Payment Gateway? Companies that accept only in-person card payments just need a payment processor. Let's look into the payment cycle here for an example:
However, many companies choose to sell products and services online nowadays and require many payment methods including cardless transactions. A payment gateway becomes necessary here. Look into the payment cycle when both, the payment processor and payment gateway are used:
Conclusion The payment processor offered by the payment processing company has a limitation to accept payment in form of in-person card payments while payment gateway opens many doors of payment options for merchants. Also Read: 5 Key Points to Check When Selecting a Payment Processing Company One should understand how e-commerce payment processing services work and that is a crucial part of opening a website. If you’re not a financial pro or a very technical individual, you might find the entire concept of eCommerce credit card payment processing complex and hard to understand. We are here to help you understand those things. The ability to accept and credit card payment processing is very essential for an e-commerce website. There are some ways you can make that happen-First and most important is that the credit card order can process securely through your e-commerce site and the amount will be deposited directly into your bank account. Second, you can also configure your site so the credit card payment processing number is stored in your admin where you can run that manually if you have access to the same. You will definitely need a merchant account, for payment processing services. #1 Credit Cards have become one of the most popular ways to pay both offline and online. Also, these days direct Debit is also used by many eCommerce websites where customers can enter their bank account details thus making it similar to cash or check payments. A lot of online activities take place like buying a gift, paying bills, making donations, so customers begin by entering their numbers directly into to website of the app, thus reducing the hassle and also cash payments for online deliveries. Once the details are submitted, this data is sent to the payment processing services via the gateway. The payment processing services inform the bank about the funds present and in turn, approve or reject the transaction. This way the customers on your eCommerce website find an easy mode of payment. Once the payment is approved, the customer will then receive his receipt for the order, and eventually, funds will be deducted from his available credit or bank accounts and transferred to the merchant’s account. #2 The credit card payment processing is done by a company that handles such processes and in turn, acts as a secure broker between the client and banks. All eCommerce stores use payment processing services. Even though such services use other companies, most of the e-commerce applications are built to integrate them. With effective and seamless payment customers will never have to leave your website to process their transactions. #3 These transactions have created tokens to protect sensitive information. It is very important to save and secure your customer’s payment information especially if you are allowing your customers to save their information to use for frequent payments or recurrent bills, your credit card payment processing should use tokenization. How these things work is that the moment information has been entered there, payment processing services converts those account numbers into a token specific to an individual customer. This way you can make safe and secure payments from hackers and also these payments are very secure and safe. #4 This is the most important feature you can provide on your eCommerce website to your customers. This also allows customers to use the mode of payment of their choice. For example, while we know that Visa and MasterCard services are accepted all over the world, it is not the same for American Express and Discover cards. On top of it, if you are selling expensive stuff, some customers might prefer the option of buying now and paying for later services. You should probably give customers options and that will, in turn, ensure that most of the customers will complete their purchase and earn your profits. Also Read: 5 Key Points to Check When Selecting a Payment Processing Company |
Author365 Glacier Payments is a well known payment processing company which offer various payment processing solutions for small and large scale business. Archives
March 2022
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