Understanding eCommerce Management Systems
Nothing is more exciting in the world of e-commerce than the moment when customers really discover your business and start placing orders. However, that excitement can quickly turn to panic, stress and even dread if your popularity grows out of control. It’s simple enough to manage your orders and inventory when you are only moving a few products a week. Imagine waking up to find 10,000 orders all waiting for prompt and correct fulfillment. Serious e-commerce businesses need order management systems that are strong and flexible enough to meet their needs without failing at a critical moment. more ...
Consumer's Guide To Credit Card Processing
Merchant credit card processing services offer the ability for businesses to accept credit cards as a form of payment by their customers. The majority of purchases made online and in person are made via credit or debit cards. Merchants that do not accept credit cards are likely to lose out on a significant amount of sales. Credit card processing websites have made accepting credit cards both simple and secure for the consumer and the merchant.
History of Credit Card Processing
In the early days of credit card processing, a merchant would be required to make an imprint of the card presented by the buyer during a transaction. The merchant would then mail in both the imprint and a form detailing the purchase to the bank for processing. The bank would then debit the amount of the sale from the purchaser's available credit line. The problem with this credit card processing system was that it was entirely possible that the buyer's credit line would not be sufficient to cover the cost of the sale and by the time this would be ascertained, it would be too late.
Today, credit cards can be accepted online without ever meeting your customer face-to-face. Reputable and secure credit card processing services help merchants avoid fraud and chargebacks by verifying the consumer's credit account, the identity of the consumer and the funds available on the card all in just a few seconds. A merchant can now verify that funds are available and capture those funds before handing the merchandise to the customer.
Online credit card processing services have made the buying and selling of goods possible for private individuals as well as small and fledgling businesses. In 1998, PayPal became the pioneer in this arena by allowing just about anyone with a bank account and credit card to accept or send payments online for a small fee, paid for by the receiving party. Many online businesses have chosen to use web-based credit card processing as an alternative, thus cutting the need for a traditional, and often costly, merchant account out of the equation of conducting business online.
Most traditional merchant account providers now offer credit card processing websites or access to an electronic gateway for real-time processing of transactions. The majority of these services allow the merchant to enter credit card payments directly by typing in the credit card number, swiping a card in person or through the merchant's website where the customer enters their credit card information during a secure checkout process.
How Credit Card Processing Works
The number of players (individuals, financial institutions, merchants and credit card processing services) involved in the payment process will vary depending on which merchant account service you choose. The following steps are simplified, assuming your credit card processing service is operated by the same company managing your merchant account.
Step 1: The buyer commits to a purchase, and either initiates payment by entering credit card information on the merchant's website, or provides a card in person for the merchant to swipe through an electronic reader.
Step 2: The total amount of the purchase and credit card information is included in an "Authorization Request."
Step 3: The credit card processing company connects with the credit card network, which sends the authorization request to the issuing financial institution's computer network.
Step 4: The issuing financial institution checks and verifies that the funds requested are available in the customer's bank account or credit line. This available fund amount is commonly referred to as the "Open to Buy" amount.
Step 5: If the open to buy amount is sufficient, the credit card processing service allows the financial institution to place a hold on the funds required to cover the transaction. This is commonly referred to as the capture of funds.
Step 6: The information acknowledging the availability of funds is transmitted back to the credit card processing server, which then responds back with a deposit transaction to finalize the payment.
Step 7: The amount of the transaction is transferred from the buyer's account to the merchant credit card processing company. The merchant card processing company deducts its fees, and deposits the remaining, or net, balance into the merchant's bank account.
What to Look for When Choosing a Credit Card Processing Service
All credit card processing companies charge a fee for their services. The type of fees will vary, depending on what services you are seeking. If the company you choose provides both your merchant account and your credit card processing gateway your fees will likely involve a monthly service fee plus a transaction fee that is incurred with each charge you process.
The rates for merchant card accounts and credit card processing gateways vary significantly. It is very important to always shop around and compare rates before choosing a provider. Each service you add on will increase your fee, so only sign up for the services that you will use frequently. For example, companies that offer a mobile application for your smart phone will charge extra for this service. If you do not plan to use your phone for credit card processing, be sure to request this feature to be disabled from your account to cut down your monthly fees.
When applying for service with a merchant credit card processing service, always read the fine print. Many of the online payment gateways have a clause in their contract which states that you will accept their offer of service if you are approved. In plain English, this clause means that they will begin charging you a monthly fee immediately upon approving your account. With this in mind, do you research first, choose the best provider for your needs, and apply with only the best credit card processing service for your needs.