Merchant Processing Services

The Process of accepting credit card payments:

To understand merchant services and how the credit card transaction and settlement process works, it must be broken down so that each participant and step is explained. The online merchant services provider (e.g. Elavon NOVA or Total Merchant Services) acts as a bridge between a business and the financial institutions that process and settle the electronic payment. The merchant account set up for a business (online and offline) receives funds from transactions processed via the internet.

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The acquiring bank is where the merchant account resides. Depending on which company you choose, you may or may not have a direct interaction with the acquiring bank. The processor refers to the payment processor, or financial institution, that verifies the transactions. On the customer side, the credit card is issued by bank, financing company, credit union, etc. At the center of this process is the Credit Card Interchange System which is maintained by the credit card associations to act as a clearing house for banks to submit transactions to the credit card issuing bank.

The basic steps of the credit card transaction process are:

• A customer chooses to pay a merchant with a credit card and the information of the transaction is submitted to the merchant services company.
• That information is then transmitted to the payment processor which securely registers the transaction with the Credit Card Interchange System.
• The CCIS sends the information to the issuing company of the credit card which, based upon the specific account status, will approve or decline the transaction.
• Once approved, the payment processor sends a confirmation back to the merchant services provider.
• The entire process is stored and the account is updated accordingly at the end of the cycle.

Amazingly, millions of these transactions occur every day and usually only take a few seconds to complete.

It is important to be aware that the major problem of fraud is still a concern. Sophisticated criminals have found ways to take advantage of the system. The merchant services account does not verify the account information related to the credit card. The verification process is handled by the card issuer. Many businesses maintain a website and will need to process transactions 24 hours a day, so security and fraud prevention is a necessity.

Businesses have several options when it comes to what type of processing equipment or software they want to use to accept credit cards, make authorization requests, and manage their account.

When choosing a provider there are several key items to consider. One of the first things most businesses will look at are the merchant services rates. While the charges incurred are indeed important there are other factors. For instance, will you need a mobile solution? Many businesses will take payments at a customer location and will require this type of service, increasingly using a wireless credit card terminal. Another decision will be whether your business is better suited for payment processing software or physical credit card machines (Wireless, contactless, stand-alone and receipt printer terminals). Software solutions (virtual terminal, ecommerce solutions) are flexible and allow multiple account log-ins via web browsers so that payments can be simultaneously taken from various locations.

• Virtual Merchant Account - Online businesses rely on virtual merchant accounts to process credit card payments from customers. The end-to-end platform handles the verification and processing of transactions. Small businesses can project a larger image by giving customers the ability to make purchases from anywhere at any time.
• Merchant Account Gateway -  It is crucial that merchants protect credit card details by encrypting personal customer information, such as names and credit card numbers so that information is passed securely from the customer to the merchant and then to the processing bank.
• MasterCard Merchant Account - Becoming a MasterCard merchant and accepting payments is simple. First applicants need to be registered in the Referral Program. Then a financial institution that is a licensed MasterCard member provides services such as card payment processing, terminal equipment, monthly statements, and management tools. This is a third-party contracted by member banks to handle transactions.
• ACH Merchant Account - ACH offers merchant accounts for processing transactions from all major credit card. Card processing is conducted over a secure network. ACH offers solutions for small businesses and large enterprises. Solutions available for online and offline businesses.
• Nova Credit Card Processing - Elavon (formerly known as Nova) provides end-to-end card processing to allow businesses to better serve customers with flexible payment options. Highly secure processing protects customer data. Supports transactions with Visa, MasterCard, American Express and Discover Card.
• Merchant Account Shopping Cart - Online customers are accustomed to seeing the online shopping cart symbol at the point of sale. One of the most secure ways to process transactions online is by using shopping cart software which is installed on the website server.
• High Risk Merchant Account - Businesses in high risk categories need to find a processing bank that offers services to high risk merchants if they want to be able to accept credit card payments. Typically there are higher fees associated with these accounts. Processing banks may also have reserve requirements especially for new accounts in certain industries.