What Is A Credit Card Processing Service?
Were you looking for the technical explanation? Well, here it is.
Imagine all this: when a credit card, debit card, gift card or rewards card is swiped through a credit card swiper (aka credit card machine) and then the sales price charged when it was swiped. That entire scenario creates what we call sales transaction data.
The service, provided by credit card processing companies (also called processors by the way) provide businesses with “merchant account services” which is another way of describing the same thing.
Well, credit card processing service is the transfer of all the transaction data between the credit card machines and the bank networks.
How Does The (Credit Card Processing) Work?
Credit card processing companies are authorized on behalf of bank networks, such as Visa, MasterCard, Discover, and American Express to generate new business clients by helping small business owners open merchant accounts to help process card transactions.
Again, small business owners open a merchant account in order to get the credit card processing service to operate in their equipment, and owners are also usually responsible for paying all processing fees. This similar to using a mobile phone. The owner operates the equipment but the service inside the device handles all the data.
To transmit the transaction sale data and complete a card sale, the credit card machine or pos system communicates with the processing company, and the originating card bank, even the associated bank networks and credit organizations to complete or deny the transaction of data and funds. All of that happens within seconds of swiping the card and the equipment connecting to the processing company. The connection is either by analog phone line or through an internet connection.
Need to know more? Or do you need a merchant account? Submit your request using the link below and I will help you get started.
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Different Types of Credit Card Processing Transactions:
- Online Credit Card Processing
- Recurring Payment Processing
- Wireless & Mobile Processing
- Swiped Face to Face Sales
- Phone Order Sales
- E-commerce Sales
- POS Systems
Contact me if you are currently looking for a credit card processing service provider for your small business. I help companies accept credit cards. And I do service companies all over the United States. Location is not a problem. All credit card processing today is handled by multiple bank networks that span all over the country, via telephone or online. My clients are in all 50 states by the way.
By the way, have you accepted credit cards in the past? If so, I might be able to get you better rates. Send me your most recent processing statements to get started.
GET STARTEDHow To Open A Credit Card Processing Account
Establishing a credit card processing account is pretty straight forward. These are the basic steps and a list of the usual pieces of information that will be requested within an application.
- Legal business name and sometimes the parent company’s name
- A physical business address and owner’s mailing address
- Bank account information along with a copy of a voided check
- Tax id information such as a social security number and ein number
- Sales tax number and certificate
- Age of business
- Average ticket price of products sold
- Business license or sometimes articles of incorporation
- Copy of a drivers license
- Copy of store or office lease contract
- Industry / vendor references
How Long Does It Take To Get Approved & Service
Depending on the time of day the application is submitted, an account can be approved and running in 24 hours. However, it can take longer to set up if your average ticket is high or your sales volume is unusually high. Otherwise, the approval process is pretty quick. Most accounts are approved and active faster, if an application is submitted before noon.
Credit Card Processing Rates
The current market rates for credit processing without a contract is around 2.69% for a swiped card sale with a $0.15 per transaction authorization fee. This rate is what companies like Stripe, Square and Paypal charge for their pay as you go program, without any monthly account or statement fees. However, the rate can go as high as 4% to 5% for a keyed in transactions. That might seem high. However, many business owners are okay with paying this rate because they don’t do very many sales per month.
Lower rates are very possible for businesses that have higher volumes in sales and average over $50,00 per month in credit card sales. Most small business with $5,000 and higher sales get a regular merchant account instead an online payment processor (like Paypal) to save money. If you have a past history of processing credit cards your rate could be lower.
GET STARTEDWhy Do They Call It Merchant Account Services?
Credit card processing rates are another way of saying merchant account rates, processing fees, merchant fees. As I wrote in a different article, there is no way to predict how much your business will be charged for processing fees ahead of time. Because, you cannot predict which types of credit cards customers will be presented by your shoppers or if additional fees will need to be added, or predict rate changes due to the card type and risk.
Types Of Merchant Accounts I Can Help You Establish
- Face-to-face swiped sales
- Online credit card processing, e-commerce payment processing, payment gateway
- Recurring payments, mail order payment processing
- Wireless processing, mobile sales merchant account
- Over the phone in-bound card sales
- Restaurant merchant accounts
- Retail merchant accounts
- Utility provider merchant accounts
- POS (point of sale) merchant accounts
If you are looking at opening a merchant account for your small business you’ve landed at the right place. Yes, I do set up companies with the ability to accept credit cards. I help companies all over the United States. Location is not a problem. All credit card processing today is handled by multiple bank networks that span all over the country, via telephone or online.
5 Ways To Lower Credit Card Processing Rates & Fees
You can easily lower how much you pay for credit card transactions by following some simple steps. Here is a list of good practices that will lower your fees.
- Get customers to physically swipe cards through a terminal
- If the terminal asks for an address, ask client to enter address number of where they receive their card statements.
- Avoid keying in credit card numbers and transactions.
- If a customer presents a debit card, run sale as a debit transaction and ask customer to enter their pin.
- When possible, avoid doing a forced credit card transaction when using a card terminal.
If you want to discover even more ways to lower your costs, you can always get a free merchant statement review by sending me your 3 most recent processing statements.
How to open a credit card processing service is pretty simple. Provide your business information. There is a application you fill out and submit. Depending on the time of day an account can be approved for you in about 30 minutes to an hour. Setting up a merchant account is pretty quick.
GET STARTEDCredit Card Processing Fees
The going rate for a credit transaction is around 2.69% and higher, along with a $0.15 per transaction fee. Yet, if you have a past history of processing credit cards your fees could possibly be lowered. Contact me for details.
About 80% of the people who have contacted me have been able to get their rates lowered significantly. So, give me a call. The statement review is free. To learn more about how to buy a credit card machine or open a merchant account correctly contact me.
Have you seen the ads for a 0.15% swiped rate for example? Do not believe the hype and you can avoid getting locked into a contract that will end up charging you an arm and a leg in high fees. Come closer and listen carefully. That 0.15% rate you are being promised is not for credit card processing fees. It’s a pin-based debit card fee. However, some companies are presenting these rates as if they really are for credit card sales. Do not get fooled.
Over the past 15 years I’ve seen all kinds of switch and bait scams to lure new customers in. Yet, one thing that has remained true is the cost of accepting credit cards. No matter what any one tells you today, rates for Visa and Mastercard will hover around 1.89% for most face-to-face sales. In other words $0.0189 per dollar.
Why? Because, some transactions can cost less. However, the key variable depends on the card customers use and how they pay. Some cards carry rewards points which are actually passed through to the merchant business owner. Some cards are corporate commercial cards which carry higher fees to process. In reality, there are over 100 different credit card processing fees that can occur.
If a customer pays by phone, the internet or the credit card machine uses a telephone line, that may add more costs to the transaction. This is why working with a very good experienced Merchant Account Agent can save you money. After years in the industry, I’ve learned the tricks they don’t teach the average sales agent.
For example, if your business generates over $30,000 per month, I most likely can get you a rate as low as 1.59% plus $0.20 per authorization, or lower.
Some businesses do get lower credit card processing fees. Yet, it depends on the type of card presented and they must have the right equipment and communication connection. Contact me and I can recommend the right equipment that will let you get lower processing fees.
Want To Learn More About Credit Card Processing Fees?
Look, I know that every business owner wants to save money on processing fees or even pay nothing at all. However, the fact is, accepting credit cards costs money and if your customer isn’t paying for credit then you must. The power of accepting credit cards is it gives you the benefit of allowing people the ability to afford your products or services. Listen, we are a nation based on credit. Many people could not afford the quality of life they enjoy without credit. That’s why using credit cards makes such a huge impact on a business.
Companies that don’t accept credit cards lose out on potential revenue. Think of it this way, a credit card holder can be profiled as someone who:
#1 Has a bank account
#2 Very likely has a stable job or income and a certain disposable income
#3 Very likely makes payments on time to their credit card company
#4 Very likely has a credit line of money they will spend somewhere
#5 Will make purchases based on what they can afford based on payments. Otherwise, they may not make a purchase.
What Are The Benefits Of Accepting Credit Cards?
The most important benefit the above description should help you realize is, understanding who your customer is and their value.
As a majority of customers who come into your door, which of them would you rather have?
A. Customers who can only pay in cash: People who very likely don’t have a bank account. Are unable to make large purchases without financing. Individuals, who if applied for a credit line with your company would be turned down.
B. Or would you rather have a fair portion of your customers be individuals who fit your criteria of ideal customers? For those of you who would consider arguing this point because you cater to children, keep in mind that it’s the parents who pay the bill.
Why Is It Important To Accept Credit Cards?
Fact: You should consider that the fee you pay for processing, pays for a service which you would otherwise need to operate yourself. It would truly be a lot of work to extend credit to customers for most companies and even corporations.
You’re not just paying a fee because Visa & Mastercard say so. Your paying a fee because someone else is incurring the risk of extending credit and distributing funds to different entities. Plus, a credit card processing company charges a fee in return for financial lending services which involves high risk.
Who you pick as your merchant account agent is important too. A merchant service provider’s representative should be able to confidently explain to you how you benefit from accepting credit cards. Plus, they should be able to show you how accepting credit cards results in attracting a certain clients to your business.
A merchant services representative should have enough knowledge to help you get educated on the relationship between credit card holders, debit card holders and how it effects your business. If your consultant can’t at least do this for you, you may be dealing with the wrong company. As the saying goes, “You get what you paid for.”
Don’t be swayed into believing the cheapest credit card fee is the best.
Fact: All merchant service providers get the same wholesale rates from the same sources (Visa, Mastercard, etc.). All credit card processors are basically the same when it comes to price.
One big difference is, how it is packaged for you.
For example: Today our standard rate for business owners who do less than $5000 per month in credit sales is 2.69% + .15 cents per transaction. If you find a company that is offering a much higher rate question why.
If a rate is extremely lower than this, it may likely mean there is another fee elsewhere. For example, an advertised rate like 0.39%. Although it may look cheap, there are usually fees you will only see once the contract is given to you. All too good to be true low rates have sales requirements.
Companies who have creatively named fees tend to offer extremely low fees as a marketing trick to sucker you in. Overall, you’ll find that cheap prices end up being higher than normal prices.
How do I know? Because, all processing companies get processing from the sale supplier, the bank networks. All processing companies must pay the interchange rates.
How Credit Card Processing Fees Are Packaged
Credit card processing fees are normally presented in two parts. The first being the discount rate or also called the processing rate and the second fee being the transaction rate or authorization fee.
Anytime your credit card machine or terminal connects to the merchant service company that is considered a transaction, even if connecting is just to perform an inquiry and that generates a fee.
If you need help saving more money while accepting credit cards, give me a call. To learn more about how to buy a credit card machines or open a credit card processing account contact me .
