Accepting credit cards is a very wise decision in business, yet it does not always seem like a simple decision to make and activate. Choosing a credit card processing company can seem like a confusing undertaking, with so many to choose from and with so many different ways for credit card payments to be accepted. Put simply, the best credit card processing company will be one that is designed to suit small business needs, without stringent restrictions and requirements. It will be affordable and budget-friendly, and you will be able to choose the services that best suit your needs.
Moolah is proud to offer the very best mobile credit card processing for your business, no matter what industry you work in, or whether you’re a sole trader or part of a larger company. We offer a fast, simple, and seamless way for you to accept credit card payments anytime, anywhere.
Modern consumers expect to have flexible payment choices that are simple to use, 100% secure, and extremely accurate. Moolah is the best credit card processing company offering real time payment solutions through Poynt Smart Terminals to clients in the United States, Canada, United Kingdom, European Union, and Australia, accepting Visa, MasterCard, American Express, Diner’s Club, Discover and JCB.
When you are able to accept credit card payments, you are guaranteed of being paid promptly every time you complete a transaction. All payments with Moolah are completely secure, delivered with a single merchant account that allows you to accept credit card payments as long as you have access to Wi-Fi, 3G, or USB connectivity. In collaboration with Authorize.net, we securely connect your merchant account to networks for processing credit cards. Moolah clients sign no contracts with us and there are no set up fees. All of our retail and restaurant clients also receive a free iPad POS application, available for download from the App Store.
Contact us at Moolah today to explore your options for the best mobile credit card processing for your needs.
Despite taking just seconds to complete, credit card processing is an incredibly complex process that involves multiple steps to complete. This is how it works: information is passed from the cardholder and flows through a merchant’s processing company and credit card networks to the cardholder’s bank. Once that bank approves or denies the transaction, it flows in reverse back through the same chain to the merchant to let them know if the payment went through.
Most businesses rely on credit card processors to handle the details of accepting credit and debit cards. Credit card processing is a critical service—it ensures that customers can simply and quickly checkout.
This quick overview will help you understand the basics of credit card processing.
How does credit card processing work?
First, a customer presents their credit card information for payment. In store, consumers swipe magnetic stripe cards, dip EMV chip cards, tap contactless cards, and use digital wallets like Apple Pay mobile payments solution with their smartphones. Online, consumers present credit and debit cards through websites and apps via payment gateways. For phone orders, a virtual terminal offers secure credit card processing with a personal computer.
The payment information is then sent to the processor, who communicates with the customer’s bank via the appropriate card networks (such as Visa or Mastercard). The customer’s bank approves or denies the transaction. Approval is dependent on detailed verification including card number validity, sufficient available funds, and other factors.
That approval is sent back through to your payment processor and then finally back to your terminal or credit card reader. Approved transactions are batched for settlement typically at the end of each business day. Your customers’ accounts are charged for the transactions, with deposits then made into your merchant bank account.
How to evaluate credit card processors
Credit card processing is a complex service involving multiple moving parts, emerging technologies, payment networks, regulatory bodies and financial institutions. Like any service involving that level of complexity, credit card processors often vary in quality.
When evaluating potential credit card processors and merchant acquirers, ask questions about these four critical areas where the quality of payment processing matters most to your business:
How is your transaction speed?
Customers appreciate the ability to pay with debit and credit cards and expect payment to be fast. Even short delays can cause big annoyances. You’ll want to choose a processor that’s proven to processes a large volume of transactions safely, accurately, and quickly.
What counts as “fast enough” is a bar that’s always on the rise. Today, credit card processors commonly complete transactions in under two-seconds.
Speed is important, though it isn’t everything. Some “friction” is good, like when it means keeping your business and your customers safe from fraud. Consumers are as concerned about security as they are about convenience. Your credit card processor should deliver both.
Look for proof of reliable uptime
Payment system outages are tough on businesses. A credit card processing outage means your business as good as shut down. It’s not just the downtime itself that hurts. Customers turned away during an outage may view your business as untrustworthy and/or inconvenient. That’s not the brand association business owners are looking for.
Credit card processing outages are rare, but all complicated interdependent systems are vulnerable to downtime. Ask about a credit card processor’s uptime history and the steps they’ve taken to minimize service interruptions. Reliable processors have solutions to help merchants stay operational during a network outage, as well as redundant servers to reduce their own risk of going down.
Transparent rate structures
Credit card processing can be complex, but the cost of that service should be clear and straightforward. The rates and fees you’ll pay depend on many factors, starting with the interchange category applicable to your business.
Interchange pricing varies based on the risk factors of different types of businesses. Though payment processors charge their own rates and fees on top of interchange, the cost of interchange is set by the card brands and is the same for all processors.
Rate structures are especially relevant if most of your transactions qualify as “small tickets” or “convenience purchases” according to the card brands. Quick service restaurants, convenience stores, and movie theatres are examples of businesses that may benefit from being placed on an interchange level that will charge a high-volume, low-ticket business differently.
When it comes to your money, transparency is essential. Ask for clear, concise and complete explanations of rates and fees from any credit card processor you may consider.
Customer support can make or break your day
As a business owner, you know that troubleshooting and maintenance is part of dealing with almost any complex system. Dealing with technology and managing complex systems is part of modern life. How essential service providers respond to those difficulties can make a big difference to you, and your bottom line.
When things go wrong you need to be able to count on support from real people who know how payments work, how they can go wrong and how to resolve them. You need to be able to speak to someone right away when you call—whether it’s in the middle of the night, or even on a busy holiday.
Not all credit card processors offer 24/7 live customer support. If your point of sale is mission critical, make sure that any processing company you consider offers the level of service your business demands. Leading payment processors keep track of their call waiting times and resolution scores, so be sure to ask about those as well.
We can help connect your business to payment solutions that work for you. To learn more about credit card and other payment processing, connect with one of our payment experts. First, we’ll take the time to learn about the way you do business. Then we’ll customize a solution that enables every payment: anywhere, anytime and anyway your customers want to pay
How Credit Card Processing Works: Step By Step
Credit card processing can be reduced to one of six steps. For the most part, each of these steps is involved with transferring a cardholder’s payment information and authorization from one party to another. The primary job of the credit card processing cycle is to determine whether a purchase has the necessary funds to be completed. Transactions with an EMV chip credit card take on average 15 seconds to complete.
1. Consumer: The first step in credit card processing happens on the consumer level, when a cardholder swipes, dips their card, or hands over their payment information to the merchant.
2. Merchant: Next, the merchant accepts and collects the payment information. This can be done in one of two ways. The payment can be accepted physically in so-called card present transactions. This usually happens at a storefront, with some a credit card reader. The merchant step can also happen online for card not present transactions. Instead of a card reader, merchants use an online gateway to collect the payment from their customer.
3. Processor: The credit card processor collects that information and is responsible for routing that data across to the other stages, and facilitating communications between various parties. Initially, however, their primary role is to send the payment information to the card network.
4. Card Networks: Your customer’s card will operate one of the major credit card networks — the most common ones are Visa and Mastercard. Once the networks receive the payment information from the processor, they pass it to your customer’s bank.
5. Consumer Bank: The cardholder’s bank then receives the payment request, and they verify whether the cardholder has the appropriate funds or credit to complete the purchase. The bank may also run through additional security measures to verify whether they purchase is legitimate, and not fraudulent. Once they establish that the customer has the funds needed and that the purchase is not fraudulent, they send a message back through the networks and through the credit card processor, allowing the transaction to go through. Common reasons why the cardholder bank denies a transaction include: insufficient funds in the account, a credit limit has been reached, or the bank suspects the purchase is being made by a non-authorized user.
6. Back To The Merchant: Lastly, the message that the payment has been requested or denied flows back through the same channels it did to get to the cardholder’s bank. When the transaction is handled in-person, this usually corresponds with a message on the card reader like “Approved” or “Declined”. Assuming a transaction is cleared, the merchant is expected to provide the customer with whatever goods or services were promised in return for the payment.
It’s important to note that at this point no funds are released yet, meaning the transaction is not completely settled. That is a separate process that can take up to several days to complete, depending on the card networks involved. Generally speaking, Visa and Mastercard transactions tend to settle faster than American Express. The process of settling a transaction and releasing the funds from the cardholder bank to the merchant bank involves the same players described above, with the flow of communication being very similar.
What Are The Parties Involved In Credit Card Processing?
Credit cards can be processed and settled thanks to the interplay between four key players — the merchant bank (sometimes called the acquiring bank), the credit card processor, the card networks (sometimes called the card associations), and the consumer bank (sometimes called the issuing bank). Below we outline the exact responsibilities and roles each of these institutions play in settling and processing credit card payments.
Merchant Bank/Acquiring Bank. This is the bank with which a business or merchant holds their funds. Sometimes the acquiring bank also serves as a processor, though an increasing number of small business owners turn to third party nonbank processors, like Square and PayPal. Merchant banks can outfit business owners with card readers and equipment to accept cards, and they are responsible with depositing funds into the merchant’s account once a credit card sale goes through. However, their role is increasingly shrinking, as more business owners are choosing to use third-party independent sales organizations (ISOs). Examples of acquiring banks include: Wells Fargo and Chase.
Credit Card Processor. Processors can be best understood as the messenger that facilitates communication between the merchant and the cardholder’s bank. They are responsible for securing payment data, and making sure all transactions adhere to rules set out by the Payment Card Industry Data Security Standard (PCI DSS). Credit card processors collect a fee from merchants for providing this service. The fee can be either fixed or some sort of percentage markup on top of the interchange fees they pass on to the merchant at cost. Examples of credit card processors include: Square, Stripe and Authorize.net.
Card Network/Card Associations. The card networks work with the credit card processors to transport data between the issuing bank and the merchant. The networks are also responsible for setting interchange and assessment fees by the networks. While the networks set these fees, they do not collect all of them. The interchange fees, which are the largest cost involved in credit card processing, are passed onto the issuing bank. Networks collect the much more nominal assessment fees that, which are usually just a fraction of what the interchange fees are. In the United States, the most common card networks are Visa, Mastercard, American Express and Discover.
Consumer Bank/Issuing Bank. This is your customer’s bank, which gave him or her the credit card they’re using at your store. The most important function of the issuing bank is to first determine whether the cardholder has the appropriate funds to complete a transaction, and then to release the funds so that the transaction can settle. Depending on the type of card the consumer bank has issued (premium, rewards, etc.) the interchange fees on these cards that are set by the networks will be higher or lower. Generally, the more rewards a card gives the consumer, the more expensive its interchange fee will be.
I’ll be the first to admit, credit card processing can be overwhelming, expensive, and confusing. It gets a bad reputation as that “necessary evil” for your business, but it doesn’t have to be all that bad. The first step to creating a more positive payment processing experience is to gain a better understanding of exactly what’s going on, what you’re being charged for, and what your options look like.
If you’re in a hurry to get to the bottom of it, you can watch the video below on unnecessary fees or head over to this article on the key credit card processing companies providing payment processing services. Stick around, though, and you’ll learn about the players, the process, the credit card processing fees, the risks, and everything in between.
Credit Card Processing: The Parties Involved
There are a number of parties that jump into action when your customer swipes their card.
Merchant: The business owner who is accepting the payment and is in need of credit card processing.
Cardholder: The customer who owns the credit card being used for purchase.
Card Association: VISA, Mastercard, American Express, and Discover. These are not banks, but rather governing bodies that set interchange rates, arbitrate between acquiring and issuing banks and maintain and improve their networks.
Acquiring Bank: The merchant’s bank. They hold the merchant’s funds and acquire the money from a sale. In this context, they accept the funds from the sale once a card is authorized and deposit them into the merchant’s bank account.
Issuing Bank: The cardholder’s bank. They issue cards to consumers and are a part of card associations. Issuing banks pay acquiring banks for the purchases their cardholders make. The cardholder then has the responsibility to pay back that amount in accordance with their credit card agreement.
Payment Processor: The credit card processing company handles the processing and batching of purchases made with credit, debit, or gift card payments. They typically assist with technology needs and customer service as well, acting as middle-men to the card associations and banks.
The Payment Process
Whenever one of your customers uses a credit card to make a payment, each of the above parties is involved. Here’s a quick breakdown of the payment process and where each party plays a role.
Step 1: The customer purchases an item with a credit card.
Step 2: The credit card is swiped through a processing terminal and that terminal recognizes the card and contacts the credit card processing company.
Step 3: The card is authorized.
Step 4: The credit card processing company sends the payment to the merchant’s bank through a certified merchant services provider. *
Step 5: The merchant’s bank deposits the payment into the merchant’s bank account.
Step 6: At the end of the month, the statement is sent to the merchant that details the interchange for all transactions that month – which is the fee set by credit card companies for merchants to accept their cards as payment.
Credit Card Processing Service Fees
Now that we have a pretty good understanding of the parties involved and how they all work together, we can take a look at what types of fees can be associated with a transaction. These vary based on your merchant services provider, so pay attention to your monthly bill to ensure you aren’t overpaying for your credit card processing.
Transactional Fees
These are fees that are associated with each transaction you run. They can be broken down into interchange and cents per transaction. Both of these are the only mandatory fees associated with credit card processing since they are set by the credit card companies themselves. You are essentially paying Visa, Mastercard, Amex, and Discover for the ability to accept their cards.
Interchange rates vary based on the type of card you are running. The more expensive it is for the credit card company to maintain the card – rewards, cash back, perks – the more expensive the interchange. This means that debit cards are typically the lowest and business credit cards are typically the most expensive.
Recurring Fees
On top of interchange, a lot of providers like to make an extra profit by charging merchants fees for anything under the sun. These are typically seen on your monthly statement, time and again, and are never actually required in order to accept credit card payments.
Keep an eye out for monthly minimum fees, statement fees, batch fees, next day funding fees, annual fees, IRS report fees, and others on your statement each month.
One-Off Fees
Believe it or not, there are even more fees that can be triggered by individual actions. These can include terminal fees, early termination fees, setup fees, reprogramming fees, PCI compliance fees, address verification fees, charge back and retrieval fees, and payment gateway fees.
Needless to say, there are a number of things you need to keep an eye out for on your credit card processing statement every month. Merchant services providers make huge profits off of the fact that most merchants aren’t even aware of what they’re paying and why. With Moolah Payment Processor, your payment processing statement is simple. All you pay is a monthly membership in exchange for the direct cost of interchange and cents per transaction. We take pride in never adding hidden charges or online credit card processing fees just for the sake of profit.
Credit Card Processing: Pricing Models
Percentage Markup
This pricing model is just how it sounds – providers will charge an additional percentage on top of interchange for each transaction run. Since interchange varies based on card type, there is no good way to predict what you’ll be paying each month with this pricing model. The more you process, the more in markups you’ll have to pay.
Flat Rate
Flat rate is a variation on percentage markup models. Instead of charging a percentage extra on top of the interchange (which means each card’s final cost will be different), flat-rate models make each card the same percentage. The most popular example of this is Square. No matter what card is being used, you’ll always pay 2.9% with Square. This might seem like a good system at first, but the more you process, the more expensive it gets. This is especially true if you process a lot of cards with low interchange rates, like debit cards. These cards average around .5% interchange – so 2.9% is a very significant markup.
Tiered Rate
By far one of the most expensive pricing models, tiered rates put different cards in different tiers and charge based on those qualifications. The important thing to remember with this model is that the tiers are arbitrary and determined by the provider. They can take a look at the most popular card types, and then make sure they are in the most expensive tier or tack on extra fees for various and vague online credit card processing services.
These models are rarely questioned since merchants often believe there is some sort of reasoning behind the groupings. Since there isn’t, it pays to have a frank conversation with your provider if you see any terms like “qualified”, “mid-qualified” or “non-qualified” on your statement.
Simple Flat Rate Subscription
Our bread and butter, subscription-based pricing models are very often the best choice for merchants. A monthly membership is paid in exchange for the direct cost of interchange. This means that no matter how much you process, you only ever have to worry about the direct cost of the cards you’ve processed and a flat membership.
There are a handful of other companies that use subscription-based pricing, but Moolah payment Processor is the only provider that can guarantee unlimited credit card processing with absolutely no hidden fees.
Payment Processing Technology
Every business is unique, especially when it comes to accepting payments. The technology that you use to run your business is vital to your success, so it pays to really understand your needs and get the best payment technology solution possible.
Online Invoicing
Invoices are an essential part of billing for a large number of businesses. Many business owners still rely on very manual processes in order to create invoices, like templates in Excel. While this might seem like a cost-effective solution, the time wasted in creating your invoices and lack of connectivity between your data can be highly detrimental.
EMV Smart Terminal
Physical credit card processing terminals are great for businesses with brick and mortar locations. If your customers are physically coming to you and swiping (or dipping) their cards, this is the solution for you. An important thing to remember is to make sure whatever machine you decide to purchase comes with full EMV and NFC technology-enabled. This means you’ll be able to accept chip cards as well as contactless payments like Apple Pay.
Mobile Payment Solutions
Perfect for the on-the-go business owner, mobile payment technology can be a game-changer for your business. Some businesses can get by with just a mobile solution, but a large majority use their mobile card swipers and apps for trade shows and field reps to be able to take payments on the spot.
Online Shopping Cart
Online shopping carts are powered by payment gateways and are essential for any eCommerce business. Even if you operate a mainly brick-and-mortar location, having an online store is a great way to reach more people and get your product out there! Processing payments through an online shopping cart couldn’t be easier, and typically involves a quick phone call with your provider to activate the payment gateway.
Point-of-Sale
Point-of-Sale solutions are huge for restaurant and retail locations. These are large, integrated machines with a computer monitor, cash register, and an online credit card processing solution. POS’s come in a wide variety of shapes and sizes, so make sure you do your research and choose one with all of the right features for your unique business.
API
If you’re needing a very specific payment solution for your website or app, a payment processing API is probably the way to go. Some merchant services providers offer their API technology to developers to integrate into their proprietary applications, making it the perfect online credit card processing solution for companies needing something a little more customizable.
Payment Processing Technology
Every business is unique, especially when it comes to accepting payments. The technology that you use to run your business is vital to your success, so it pays to really understand your needs and get the best payment technology solution possible.
Online Invoicing
Invoices are an essential part of billing for a large number of businesses. Many business owners still rely on very manual processes in order to create invoices, like templates in Excel. While this might seem like a cost-effective solution, the time wasted in creating your invoices and lack of connectivity between your data can be highly detrimental.
EMV Smart Terminal
Physical credit card processing terminals are great for businesses with brick and mortar locations. If your customers are physically coming to you and swiping (or dipping) their cards, this is the solution for you. An important thing to remember is to make sure whatever machine you decide to purchase comes with full EMV and NFC technology-enabled. This means you’ll be able to accept chip cards as well as contactless payments like Apple Pay.
Mobile Payment Solutions
Perfect for the on-the-go business owner, mobile payment technology can be a game-changer for your business. Some businesses can get by with just a mobile solution, but a large majority use their mobile card swipers and apps for trade shows and field reps to be able to take payments on the spot.
Online Shopping Cart
Online shopping carts are powered by payment gateways and are essential for any eCommerce business. Even if you operate a mainly brick-and-mortar location, having an online store is a great way to reach more people and get your product out there! Processing payments through an online shopping cart couldn’t be easier, and typically involves a quick phone call with your provider to activate the payment gateway.
Point-of-Sale
Point-of-Sale solutions are huge for restaurant and retail locations. These are large, integrated machines with a computer monitor, cash register, and an online credit card processing solution. POS’s come in a wide variety of shapes and sizes, so make sure you do your research and choose one with all of the right features for your unique business.
API
If you’re needing a very specific payment solution for your website or app, a payment processing API is probably the way to go. Some merchant services providers offer their API technology to developers to integrate into their proprietary applications, making it the perfect online credit card processing solution for companies needing something a little more customizable.
Chargebacks and Risk Holds
No one likes it when things don’t go according to plan, especially when it comes to your business’s finances. That’s why it’s so important to understand the possibilities and what to do in case of a chargeback or risk hold. Step one in both cases is not to panic. Read on for more specifics.
Chargebacks
Chargebacks were created in order to protect consumers from fraudulent activity. They occur when a consumer disputes a certain charge to their account. If a chargeback is issued for a lost or stolen card, the bank will issue a reversal of funds. This means that your business is responsible for the cost of the chargeback.
If your business is not EMV compliant, meaning you do not have a chip reader, you’ll be held responsible for all chargeback liability. If you are EMV compliant, that liability typically falls on the cardholder.
Once you receive notice of a chargeback, it is important to remember that the process can take weeks to complete – during which time the funds from the transaction are held by the bank. The bank will typically ask for proof of purchase from the merchant and use this proof to make an ultimate ruling on the chargeback.
Here are some ways to avoid chargebacks at your business, or at the very least, avoid excessive penalties from chargebacks:
Follow proper credit card processing procedures.
Make sure to use an online credit card processing company with strong security standards and clear payment descriptors.
If your business provides a service rather than a product, it’s always a good idea to have a contract in place that details exactly what the payment is for, minimizing the risk of confusion over delivery and payment.
Always provide exceptional customer service and encourage your customers to try and resolve any issues with you directly before escalating it to the banks.
Train your employees to look for signs of fraudulent activity at your business to try and prevent chargebacks before they happen.
Risk Holds
A risk holds is a routine procedure that most merchants experience within the first few weeks of processing with a new merchant services account. It might sound scary, but they are put in place to ensure that fraudulent activity is not being conducted – ultimately protecting you and your customers.
When you sign up for a new merchant services account, your provider will typically ask what your average ticket size is, as well as your highest possible ticket size. Your account will then be approved by the underwriters for a certain amount of money per transaction based on your business type, processing history, and ticket size.
If you process sales that are outside of that approved range, the underwriters will issue a risk hold. This means the funds from the transaction are held until proper documentation can be provided for the sale. Once the sale is confirmed, the funds are released and your merchant services provider will work to re-establish your maximum ticket size with the risk department if necessary in order to avoid a repeat occurrence. In order to try and minimize the risk of this happening at your business, it is very important to be as accurate as possible on your merchant services application.
That’s It!
Congratulations on making it to the end and learning more about credit card processing! As you continue to learn and search for the perfect credit card processing company for your business, I encourage you to let us help! Contact Moolah payment Processor today to learn how our leading technology, award-winning customer service, and money-saving subscription model will bring your business to the next level!
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