With the lengthy advancements in technology over the recent years, wonderful additions have been made available to merchants that allow any business to thrive in-store and online. You can easily expand your business by bringing it into the present and taking advantage of mobile and online payment processing. These services allow your customers to purchase directly from you or your website using a credit or debit card.
What Does a Payment Processing Company Do?
When a customer swipes their credit card or enters their payment information onto your eCommerce website, you need a system in place to get the funds from the shopper to your company's account. Payment processing companies take that payment information and follow specific procedures to complete the transaction on your behalf.
You will need to have a credit card machine or a capable website gateway to retrieve the account information. Once the information is transmitted, the transaction looks as follows:
- Authorization. The processing company connects to the necessary brands and banks to confirm whether or not the cardholder's account is qualified to cover the purchase amount. If it is, you will receive an approval message. If not, you will receive a denial message. Transactions are declined for reasons such as insufficient funds, an invalid card, or a suspended account but it is not likely that you will be given the reason behind a denial. Either way, the customer’s portion of the transaction is over at this point.
- Settlement. Depending on the processing company's specific procedures and your demands, you will send your credit card transaction list periodically (possibly daily or weekly) to be settled in order to actually receive the funds. They contact those brands and banks again to initiate a transfer of funds, which gets sent to the processing company.
- Payment. Once the processing company receives the funds, it will transfer the payment to your account. The transaction is officially complete on your end.
Considerations When Choosing a Payment Processing Company
While there are many options to choose from, you will need to pay attention to certain aspects when choosing a payment processing company to create an account with for your business. The biggest concerns will be the list of fees that are associated with this kind of agreement and security features to protect accounts and credit cards.
Fees range regarding the exact figures per company but are generally broken down into scheduled/flat fees, incidental fees (in instances of chargebacks), percentage per transaction fees, and/or per-item dollar amount fees. It is critical that you consider these varying charges in relation to your business and demands as they can quickly add up.
Unfortunately, credit card and bank account fraud incidents occur daily around the world. Protecting customer privacy and financial information should be a top priority when considering a company to trust with their transactions. You also want to ensure that your business account information is secure. Payment processing companies deal with a lot of sensitive material and should be held to the highest standards when doing so.
Ultimately, payment processing services are a necessity for any thriving business. Be sure to evaluate each to determine which one is the right fit for your needs.