Understanding Transactions Involved in a Merchant Account

If you want to use non-cash forms of payment in your business on your website, you need to use merchant services and payment processing accounts.
The merchant account along with the processing services will help you take the money your customers want to give you and place it into your account.

Understanding Transactions

When a customer shows you a debit card or a credit card, there are several stages that will take place when the merchant swipes the card.

Authorization -- The authorization process takes place after the computers conducting the transaction connect to one another.  The cash register or retail terminal will receive word about whether the credit card was declined or approved.  When a transaction is approved, the computer used by the clerk will contact the bank issuing the cart to start the transfer of funds. No money has changed hands yet.

Merchant Stage -- This part of the process, also called merchant balancing, has the computer add up the amount of the sales.

Data  Capture -- The computer that handles the transmission sends the information back to the point of sale terminal. After this stage, the transaction goes into the clearing stage. When it's all done, the two systems agree to disconnect.

How Debit Card Transactions Work

Debit card transactions go through all of the same steps that the credit card will go through. There are several preliminary stages.  As the reader knows, he will swipe his card at the terminal. If the cashier selects a debit card option, the point of sale terminal will the user for his pin. The payment processing service will check the users account, if there is money in the account, it will be deducted automatically. If the funds are not there, it will be declined rather than overdrawn.

Why Use Credit Card Processing

Not every business uses a credit card processing company. Small businesses may find that it does not benefit them greatly and that the cost may be higher than they expected.  A business owner is within his rights to have a minimum transaction for credit cards, but he should not go without a credit card processor. The trick is finding the right service for a business of any size.

Almost any bank will offer this service to a customer who is willing to pay the fees. Some banks will charge a per transaction fee while others will charge a service fee. What a business owner wants to look for in this type of service is customer service that is good as what he offers to his customers. Many people will find that the banks offer better customer service than what they can offer to their customers, but this has to do with size rather than an individual's level of dedication.