Credit card transaction processing is the process of submitting credit card transactions to a Credit Card Processor for payment. Credit Card Transaction Processing is the lifeblood of many companies providing their service or selling their goods through Credit Cards. Credit cards are used in over 80% of all US transactions today and Credit card transaction processing, when done correctly can make your company stronger by bringing in more sales and greater efficiencies.
There are a few Credit Card Processing Basics you need to understand before we get into the Credit Card Transaction Processing steps:
- Credit Card Processor – This is the company that will actually be processing your credit card transactions. In order to accept Credit Cards as a payment option, you will need to have a Credit Card Processor.
- Credit Card – a credit card is a plastic card that allows you to borrow money from a lender up to a certain limit in order to purchase goods or services. Credit cards have been around for over 50 years and are now used in over 80% of all transactions in the United States.
- Credit Card Transaction – a Credit Card Transaction is the purchase of goods or services by a customer using a Credit Card. Credit Card Transactions are usually processed in real-time, meaning the credit card company will immediately transfer the funds from the customer’s account to the merchant’s account.
Now that we have Credit Card Processing Basics out of the way, let’s take a look at Credit Card Transaction Processing steps:
- The first step in Credit Card Transaction Processing is to create a Credit Card Transaction. This can be done in a few ways, but the most common way is through an online shopping cart or e-commerce system. When a customer adds items to their shopping cart and clicks on the checkout button, they are taken to a Credit Card Processing page.
- The second step in Credit Card Transaction Processing is for the Credit Card Processor to accept the Credit Card Transaction. This is done by the Credit Card Processor’s payment gateway, which is the software that accepts and processes Credit Card Transactions.
- The third step in Credit Card Transaction Processing is to send the Credit Card Transaction to the Credit Card Processor’s bank for payment authorization.
- The fourth step in Credit Card Transaction Processing is to receive an approval or decline notification from the Credit Card Processor. If approved, then you will credit the customer’s account and mark it as paid. If declined, then you will send an e-mail to the customer explaining why it was declined and take steps to correct any problems.
- There are Credit Card Transaction Processing Fees that can be incurred during Credit Card Transaction Processing, but these fees vary from Credit Card Processor to Credit Card Processor. Most Credit Cards have a flat rate for all transactions as well as a percentage fee per transaction. Credit Card Transaction Processing Fees are usually 3% to 4% of the Credit Card Transaction amount plus a flat rate fee.
Now that you know Credit Card Transaction Processing, it’s time to look at Credit Card Transactions and Credit Card Fraud.
- Credit card transactions can be monitored for fraud through your Credit Card Processor by setting up fraud thresholds. Credit Card Processor’s use algorithms and other technologies to help reduce the risk of fraud.
- Credit card processors also offer a chargeback service in order to dispute unauthorized or fraudulent credit card transactions. This is done by the Credit Card Processor’s bank, which will work with the customer’s bank to try and get the money back from the merchant.
- Credit card processors also offer a fraud protection service, which is a service that helps protect the merchant from fraudulent credit card transactions. This service usually costs around $10 to $15 per month and can be a great way to help reduce the risk of fraud.
- Now that you understand Credit Card Transaction Processing, Credit Card Transactions, Credit Card Fraud, Credit Card Processor’s and Credit Card Fraud Protection Services, you can make a decision on which Credit Card Processor is right for your business.
- Credit card processors come in many different forms including Virtual Credit Card Processors or Merchant Account Providers.
- Credit cards are very safe to use due to the technology that has been put in place to reduce the risk of fraud. Credit Card Transaction Processing is a safe and easy way to process Credit Card Transactions.
- Credit card processors are not just for online businesses, but can also be used by brick and mortar businesses as well. In fact, most businesses that accept Credit Cards also use a Credit Card Processor.