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How card processing works

When a customer pays for products or services with a credit card, the card information is recorded—either by manual entry, a card imprinter, point-of-sale (POS) terminal, or virtual terminal—and then verified so that the merchant can receive payment for the transaction.

This process involves the following parties:

Cardholder: the owner of the card used to make a purchase

Merchant: the business accepting credit card payments for products or services sold to the cardholder

Acquirer: the financial institution or other organization that provides card processing services to the merchant. An example of an acquiring bank or processor is the Entrust Bankcard Merchant Platform.

Card association: a network such as VISA® or MasterCard® (and others) that acts as a gateway between the acquirer and issuer for authorizing and funding transactions

Issuer: the financial institution or other organization that issued the credit card to the cardholder

The flow of information and money between these parties—always through the card associations—is known as the interchange plus pricing, and it consists of a few steps:

1. Authorization
The cardholder pays for the purchase and the merchant submits the transaction to the acquirer. The acquirer verifies with the issuer—almost instantly—that the card number and transaction amount are both valid, and then processes the transaction for the cardholder.

2. Batching
After the transaction is authorized it is then stored in a batch, which the merchant sends to the acquirer later to receive payment (usually at the end of the day).

3. Clearing and settlement
The acquirer sends the transactions in the batch through the card association, which debits the issuers for payment and credits the acquirer. In effect, the issuers pay the acquirer for the transactions.

4. Funding
Once the acquirer has been paid, the merchant receives payment. The amount the merchant receives is equal to the transaction amount minus the discount rate, which is the fee the merchant pays the acquirer for processing the transaction.

The entire process, from authorization to funding, usually takes about 3 days. However, Merchant Card Processing from Bank of America offers next-day deposits to customers with a Bank of America business checking account.

In the event of a chargeback (when there's an error in processing the transaction or the cardholder disputes the transaction), the issuer returns the transaction to the acquirer for resolution. The acquirer then forwards the chargeback to the merchant, who must either accept the chargeback or contest it.

With cash less commonly carried, and checks gradually becoming obsolete, credit and debit cards have completely revolutionized the industry, becoming the most common forms of payment. The majority of merchants world-wide are now accepting these cards because of the benefits of a merchant account, and to maintain your business’ competitive edge, you should accept plastic too.

After all, you could be missing out on more than just sales.

Important Facts to Consider

• Increased Sales: Statistics show that credit card consumers spend 2 1/2 times more than customers who only pay with cash. It pays to have your own Merchant Account.

• Impulse Buying: Credit cards give customers the ability to spend more freely on previously unplanned purchases. Be prepared for these impulsive buyers with your Merchant Account.

• More Expensive Merchandise: Credit cards allow customers to purchase more expensive merchandise than they may be able to afford, or planned on buying. Offer Credit Card processing on your website today!

• Competitive Weapon: Credit card customers will often seek out the businesses with Merchant Account that accept credit cards, rather than the businesses just offering the slightly lower prices. It's just more professional!

• Enhanced Advertising: Showcasing your credit card processing ability and acceptance will attract many customers who look for and read the ads displaying that option first. With's Merchant Account you can accept all major credit cards!

• Steadier Sales: Credit cards allow your customers to shop all the time, not just on paydays or before holidays. With a Merchant Account you will get more and better customers!

Studies show that accepting credit cards increases sales by 15 to 50 percent. Today’s consumer expects to be able to pay using a credit card and enabling customers to make spur of the moment buying decisions is smart business. Larger purchase amounts, increased credibility, and a more secure payment method than checks are some additional reasons to accept credit cards.

We provide complete credit and debit card processing for retail, mail order/telephone order and Internet businesses including corporate/government purchasing cards, stored value and gift cards, and check cards. Our one stop solution that includes merchant account origination and underwriting, terminal equipment for sale or lease, 24-hour customer service, training and supplies, voice authorization, online and paper statements, loss prevention specialists and recurring payments that automatically process transactions and make billing and collections easier and more efficient.

We give you a comprehensive, state-of-the-art credit card processing services at the lowest possible cost. Let us provide a FREE analysis of your current credit card processing costs and show you how to save money.

Setup and Applying is free for accepting Visa, Master Card, American Express and Discover Card with Corporate Merchant Solutions Merchant Account. You'll also be able to accept all debit cards and electronic checks, if you choose to do so. Start Your Application Now