What is Credit Card Processing and How does it work?

Credit Card Processing is the process of accepting credit cards as a form of payment. A merchant account provides you with an interface between your business and your customers' credit card accounts. This allows you to charge customers for products or services at the time they are being delivered, or in advance. There are three parts to using a credit card machine:

1. Acquisition: The process of signing up and getting a merchant account from a credit card processing company.

2. Authorization: Charging the customer's card for the purchase amount when the order is taken, clearing, or settled. This ensures that funds are available at time of order capture, which reduces your risk for fraudulent transactions.

3. Settlement: Sending sales transactions to the card associations for payment. The process of sending settlement files that record all credit, debit, or electronic check transactions that occurred during a specified time period. Once aggregated and processed by the Associations, the merchant's account is credited for the total dollar amount of cleared sales/transactions minus any fees or assessments.

Credit Card Processing is a processing service that enables the business to accept credit cards as a form of payment for goods and services. Once signed up, companies can either use their own equipment (terminal) provided by the merchant account provider or they can pay an additional fee to use/lease dedicated equipment from the provider. If a business decides to have their own equipment, they can either use a mobile card reader or purchase a standard credit card terminal.

The merchant account provider will process all credit/debit card transactions and at the time of transaction, will ensure that funds are available in your business' checking account. They also provide you with many reports such as daily totals, detailed transactions, etc.

Businesses need to ensure that they are using a reputable merchant account provider when processing credit cards. The providers listed on this site have all been tested and reviewed by the business community in addition to our staff for stability, reliability and customer service. We hope you find the right merchant account option for your specific needs.