Business Credit Card Processing Overview


Any company, whether it be a home-based business or a large chain of retail stores, will need business credit card processing services if it wants to survive in today’s market. To remain competitive, it’s imperative that your business be able to accept credit card payments and other forms of electronic payments, so it’s imperative that you understand the world of credit card processing. This overview will provide you with some basic information about processing credit card payments and what you need to make it a part of your business.

Merchant Account Provider

To be able to process any credit card payments, the first thing you will need is a merchant account provider. These are often referred to as an ISO/MSP (Independent Sales Organization/Merchant Service Provider). The ISO/MSP is the company that is sponsored by a bank (which is a member of the Visa and MasterCard networks) to sell credit card processing services and to handle the processing of those payments or outsource the processing of those payments. When you need a merchant account for your business, you will typically have to apply for it and be approved. Once approved, the ISO/MSP usually handles customer service and technical support as well.

Point of Sale and On-Site Card Processing
When people think of credit card processing, they typically think of accepting a credit card and swiping it through a point of sale terminal. If your business is a retail store or a restaurant, then chances are you will need to process credit cards on-site. This will require the purchase or lease of a point of sale terminal (also know as a POS system), in addition to the processing itself, so you can accept and swipe a variety of cards. If your merchant account provider doesn’t offer the terminals, they should be able to refer you to a company that does. If you also need electronic check verification or want to accept gift cards, your merchant account provider should be able to offer those services as well.

Not all businesses that accept credit cards do so in only one location. If you need to process payments no matter where you go, wireless terminals allow you to do that. In an increasingly mobile world, the wireless terminal is a perfect solution. Process cards on-site wherever you happen to be.

Card-Not-Present Processing Services
Gone are the days when credit cards were used only in person. Now your business may be taking payments by mail, over the phone, or more commonly, via the internet. In these cases, you’ll never actually take the credit card in hand and swipe it, which means you may need additional computer software or a different kind of merchant account that allows for these types of payments. If you are taking payments over the internet, you will also need a payment gateway. A payment gateway is what the customer uses to enter their credit card information and it usually supplies security features for protecting that information. Typically, the payment gateway is provided by a third party and not your merchant account provider, though the merchant account provider should be able to recommend one to you.

Common Credit Card Processing Fees
Unlike many other services, there is never just one fee when it comes to credit card processing and the various fees can become confusing. However, if you know what the common fees are before you start looking for an ISO/MSP, you can decrease the confusion. First of all, some merchant account providers may charge a one-time setup fee and/or an application fee, though keep in mind that not every provider does. The other fees you will encounter include:

  • Monthly Account Maintenance – Almost every merchant account provider does charge a monthly fee to cover the costs of handling your account.
  • Discount Rate – Another common fee is the discount rate. This rate is charged by the credit card company and is actually a percentage that is charged per each transaction. Since it is a percentage, this one can add up over time, so you need to be aware of what that percentage is.
  • Per Transaction Fee – The per transaction fee is not a percentage, but a monetary value that is charged for each transaction (usually in cents). This charge is for the processing of the transaction.
  • Monthly Minimum Fee – Not to be confused with the monthly account maintenance fee, this fee is only charged if you do not reach the minimum set by the merchant account provider for your per transaction fees.

As you can see, there’s a lot you need to know when you when you decide to accept credit card payments. However, don’t let that deter you from taking that step - accepting credit card payments can increase your sales and bring greater success to your business.  Get started now!