Credit Card Processing: What's up with That?
A Credit Article Contributed by Ann Hull
Two Kinds of Credit Card Processing
Credit Card processing takes place if you are either, 1. applying for a credit card, or 2. taking credit card payments for merchant services or goods. First, in order to understand these procedures, you should have a good idea about what a credit card really is.
Well, credit cards are a part of the credit system, but their use is somewhat different than your debit card. When you use a debit card rather than a credit card, the money is immediately deducted from your checking account. Now, credit cards have been around for almost fifty years; the first charge cards were used in restaurants, allowing regular customers a carte blanche when dining, like the Diners Card. Yet, unlike the present day credit cards, the earlier charge cards, such as American Express, needed to have the balance to be paid off in full, every month.
Just How Does This Credit Card Processing Work?
If you want a credit card, you've got to apply for it. Then, the particular credit card company will check your credit history, electronically, so that they first deny or approve you; then, if approved, they can then assign you your optimal credit limit and interest rate, based on your credit-worthiness and any possible risk. Credit card processing takes into account, usually, your credit history on record at the three primary credit-reporting agencies, which are Experian, Equifax, and TransUnion
Credit card processing can be done via mail or the internet, and sometimes on the phone. Of course, the mail is slower. In all cases, there are specific security issues to think about. Probably the easiest and quickest way to apply for a credit card, and often very secure, is to apply online. Also, it's not hard, if you are in business, and you have a credit card, to get a merchant account, which will permit you to take credit card payments yourself.
What's the Deal with Accepting Credit Cards?
Many companies out there offer products designed to handle such details for you, so selecting the most workable solution for you, is not necessarily an easy process.
Next, whomever you go with, there will still be three primary steps in the process: a. you'll need to be able to obtain customers' credit card numbers from their browsers to yours, in a completely secure fashion; b. you'll have to be able to get their credit card data processed and the transfer of funds authorized to your merchant bank account; c. and then, there's your merchant bank account-you need an institution with a solid reputation, that's underwriting the risk involved in such transactions.
In the first step above, credit card information is usually most securely transmitted online via secure sockets layer (SSL) protocol. In other words, this process has to be done on a secure server, with a digital certificate, showing you are a reputable business and that all information transferred is encrypted for web commerce. . Whether you gather customer credit card information from a form or a shopping cart, you will want it to happen on a secure server.
In order to make a server secure using SSL, a digital certificate is required. Normally, this is a service offered by many legitimate web-hosting businesses, which will take care of this for you, automatically, when you sign up and pay for their services. providers can help you with this.
Your Merchant Account and Credit Card Processing
In order to obtain your merchant account, you will likely have to have an in-country business checking account in good standing, and a reasonable credit record. You'll want to select an account that offers you the best price, often a percentage of each credit card order submitted to them, by you. If you have some blemishes on your credit, you'll probably have to pay more for a merchant account.
Also some banks charge more for accounts that they think will accumulate a higher level of fraudulent charges or charge-backs. Additionally, some processors will have deals with ISPs that will give you everything needed to aid you in building an online store. But-take care, and prior to signing any contractual agreements, you'll want to ensure that your processor is compatible with both your shopping cart software and your merchant bank account, if you will be doing any real-time processing.
