Make Sure You Understand How Bankcard Services and Credit Card Processing Work

Make Sure You Understand How Bankcard Services and Credit Card Processing Work

Credit processing can be a complicated process, but it’s important for store owners to understand bankcard services and how to choose the right processor for their needs.

By taking the time to understand what fees might be assessed and how it can impact the amount they receive for any purchases, the business owner can figure out the best way for them to accept credit card payments.

How The Fees Are Determined

The bank that issues the credit card lends money to the customer, which the customer uses to purchase a product. When they purchase something from a retailer, the retailer’s processor accepts the payment.

The bank issuing the card typically has a fee, as does the bank acquiring the payment. These fees are taken out of the amount that’s given to the store owner and the amount of the fees depends on the banks involved in the transaction and their fee schedule.

The amount of the fees may also depend on the risk that’s taken when a payment is processed. For example, it’s typically riskier to accept payments online and over the phone compared to processing them in a storefront, so the fees might be higher for those transactions.

The retailer usually only deals with the acquiring bank, also called the processor. This can be a large bank, a smaller subset of the bank, or an independent company.

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Ways To Process Payments

There are a few different ways to process payments, and doing it different ways can be more or less expensive for the business owner. They’ll need to consider the ways they can process payments and how much business they do to find the right solution.

The three main ways to process payments are in store, online, and mobile. Depending on the type of business, they may require or prefer a certain way of processing the payments.

For example, if most of the sales are done through an online store, they’ll need to consider an online processor to accept payments for them. If they offer services at a person’s home, they might want to look into a mobile processor.

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Choosing a Processor

Once the business owner has decided how they want to process payments, they’ll need to choose a processor. This could be their bank, but it doesn’t have to be. Those who have a small number of sales each month may prefer to go with a low-volume processor like PayPal.

If the business transactions are not done in store, like when the employee goes to a customer’s home to perform a service, the business owner may prefer a mobile processor like Square. For inside a storefront, the business owner might prefer a processor like Flagship Merchant Services.

If you’re a store owner, you could be spending way too much to accept credit card payments. Take a look at the information above and use it to determine if you’re using the right processor for your bankcard services.

If you’re not, there are many options that might allow you to save quite a bit of money on transaction fees so you can see more revenue from your business.