What you need to know about payment processing

What you need to know about payment processing
The Siliconreview
23 November, 2021

Taking card payments can be crucial for keeping up your business with the speed of technology. Card payments are known for improving productivity of your employees and customer experience. However, it can be hard to find the right card payment system. As a result, there are good chances that you can be paying high rates on a contract to leave your business with a lot of bills. It’s important to find a good deal when it comes to card payments so that you can reduce the costs of your business. This post explains what you need to know about payment processing.

Understanding payment processing

When a customer buys a service or product using a card, it means the payment has to be processed via a series of stages. These stages can involve verifying and accepting that the payment is genuine before the money is transferred into your account. This process is called payment processing.

There are usually payment processors which are companies that are responsible for managing debit and credit card transactions. Therefore, a payment processor transfers cash from the customer’s account to your account.

It’s worth noting that there are several parties that are involved in this payment processing. This include a customer who buys a product or service from you, the merchant who sells the product or service to a customer, the payment processor that processes the transaction, the acquirer of your card who verifies the transaction and gets the money from the issuing bank, and the card network that handles payments between the issuer and acquirer.

The payment process can also involve several stages. One of these stages is called the authorization stage that can take just a few seconds. Once your customer offers their card at your card terminal or a payment gateway, the information of the transaction is sent to their card issuer via a payment processor.

The card issuer then can approve or disapprove the transaction after doing verification and authentication checks. The issuing bank also sends the approval status via the merchant bank and card association to reach you as a merchant.

Another stage is called the clearing stage that happens at the same time the authorization occurs. Therefore, for every transaction, sales information is sent  from a merchant to the acquirer. And, the acquirer then formats this data to become a clearing message that is transmitted to the card association, such as MasterCard and Visa. This message is sent to the card issuer and then they calculate the settlement obligation.

Lastly, there is the settlement stage that usually happens at the end of each day. The transaction information that occurs during the day is transmitted to the acquirer from your business. The acquirer then separates the transactions and sends them to the right card association. When card associations receive the transactions, they separate them and send them to each card issuer. Lastly, the issuer can charge the account of the cardholder and send the money to the merchant. Keep in mind that this settlement process can take at least one to three days.

Why you should accept card payments

Today, few customers carry cash and they are now preferring card payments because they are convenient. Card payments have become popular and they are expected to become a good alternative payment method. No wonder, many customers look forward to using card payments when they are visiting shops. By accepting card payments, you can make life easier for the customers. Also, you can rest assured that you are increasing your customer base so you need to get the Eposnow.

Another benefit of accepting card payments is that it assists to give credibility to your business. It can also provide a sense of professionalism to your business regardless of whether you are operating a small and medium business or a large business.

Card machines also offer a good level of security because you don’t handle a lot of cash on site to make your premises safer. You can also monitor intake well so that you can spend less time handling paperwork. Therefore, you can focus on other important areas of your business. Remember that card payments can also minimize the theft risks from your business. It means there is less risk for your employees or robbers from accessing your money.

By now you may be wondering how a point of sale terminal works. Well, you should remember that a point of sale terminal refers to a cash register that can read debit cards and credit cards. Ideally, it’s simply a computer that is designed to read, store, and even process card information. This allows you to complete sales or offer services to your customers.

When a customer uses either a debit card or a credit card to make a payment, a point of sale terminal can read the magnetic stripe on the card using a card reader. It checks this information to determine if there is adequate money in the account of the customer to send to the merchant.

The point of sale system can save information from transactions, such as the account number of customers, amount paid, and date and time. It can maintain this data so that you can use it to analyze and process a variety of business reports.

Also, the point of sale system can send the information to the receipt printer so that it can print a receipt or even send a text or email to the customer. You should remember that you can decide to rent or purchase a point of sale terminal. Purchasing a point of sale system can involve high upfront costs while renting it can involve monthly payments.

Above all, you can find different point of sale systems that vary in their functions. Therefore, depending on the needs of your business, it’s important to choose the system that works well for your business. And, because there are many point of sale system suppliers on the market, you need to make sure that you get the one that has the right features for your business. The choice of payment methods, technology, and components can have a huge impact on your business.