How Does Credit Card Processing Work?
The way credit card processing companies make money for themselves can sometimes be a confusing labyrinth where fees are hidden, percentages are tied to things not listed on statements and the deal you think you are getting isn’t the best deal you can actually get. Host Merchant Services is dedicated to giving its merchants the lowest price guaranteed, and the company strives to maintain transparency with no hidden fees. So take a walk with us and see behind the curtain as you learn exactly where the money is being made when you swipe a customer’s credit card.
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For start-ups, very small businesses, or home-based businesses, it is not always a given that your business will be granted a merchant account. It may be best to apply for merchant account status with the bank with which you already do business. Banks view granting a merchant account as an extension of credit and will evaluate your business as such. Your business generally has to have been in business for up to 2 years.
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How does credit card processing work?
Here's how the process works. Your customer pays with their credit or debit card. CardConnect, as your payment processor, receives the payment details and reviews them for potential fraud, before forwarding them to the card association or bank that issued your customer's card. Once we are able to verify your customer's credit card details, we relay that information back to you the merchant via one of our secure, online payment gateways, who may then complete the transaction. If verification is denied by the card association/issuing bank, we will relay that information to you (the merchant) who can then decline the transaction. All of this happens in a matter of just a few seconds.
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- Remember to choose a secure merchant services provider that offers a PCI compliant payment gateway, along with integrated payment services to optimize your processing solutions. Also, ensure that your processor offers flat rate pricing and in-house customer support.
- The four big card networks – Visa, Mastercard, Discover and American Express – make their money from assessment fees, which they charge on every transaction made by their cards.