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The ABCs of Credit Card Processing

Setting up a credit card merchant processing account can allow your business to accept credit cards as payment from customers. Not all credit card processing services are equal- the service you choose makes a difference in determining how much you'll pay, how fast you'll be able to receive funds from credit card transactions, and how charges to the account will be processed.

You have a few different options when it comes to credit card processing for small business:

  • Banks: Banks usually don't process transactions themselves. They refer transaction business credit card processing to a third party, who they recommend.
  • Credit card companies: Credit card companies can set up accounts for accepting credit cards, but the accounts usually only process a certain kind of card, such as American Express. Some credit card companies require merchants to use a third party processor.
  • Brokers: Brokers create an multiple accounts for credit card acceptance. Brokers can be more expensive than other providers.

No matter which type of provider you choose, you'll need to qualify for the account. A provider will probably look at the following to see if you qualify:

  • Business financial history
  • Industry
  • Type of business (online or physical store)
  • Past merchant account history
  • Sales volume
  • Level of risk for returns or chargebacks

A provider will look for indications that your business is a safe bet for an account. Once you're qualified, you'll need to purchase or lease a credit card terminal. If your current POS system has this capacity or if you already own a machine, make sure it's compatible with the merchant account.

You can process transactions using a magnetic swipe machine, or by keying in card numbers using the keypad on the terminal. The terminal you choose will determine the method by which transaction information is transferred. Online credit card processing terminals use an internet connection to transmit information. This means that a business can process transactions at any time, without relying on a phone line for information transfers. If you choose to use a phone line to transmit information when you accept credit card transactions, you can devote a specific extension to the terminal in order to avoid delays or service interruptions.

Ultimately, the credit card processing service you choose will be able to offer options that are convenient for your business. Whether you choose to use a magnetic terminal or enter transactions remotely, use a wireless machine or process transactions using a phone connection, a vendor should be able to offer you solutions that meet your business needs.