Processing Credit Cards
Learning about processing credit cards can sometimes seem overwhelming and challenging. It’s therefore important to learn all those “insider secrets” to avoid fees, understand percentages, and s
What Does a Credit Card Transaction Entail?While it’s hardly common knowledge, there’s actually four parties involved with processing a credit card! There’s the customer and the merchant or sales clerk, as well as both parties’ banks. The “cash flow” begins with the customer’s bank, who provides the loan. This cash is moved into the merchant’s bank account, and eventually into the merchant’s hands. Due to the number of parties involved, fees may be added at numerous points during the transaction. Fees can therefore be quite high.Why So Many Fees?The number of fees involved when processing credit cards is due to banks seeking to protect their investments. Fees equal minimal risk should the product end up in the “return” bin. However, fees are generally lower for businesses that aren’t considered a “risk,” and for those that perform a high number of quick, small transactions, such as restaurants. Therefore the less “risky” your business, the less you’ll have to pay in fees. The more unstable your company, the more you’ll have to pay. If you keep getting slammed with credit card transaction fees, it may be time to review why that is, and how to present your business as less of a risk.How Do I Get Started Processing Credit Cards?