What Is Credit Card Payment Processing and How Does It Work?

What Is Credit Card Payment Processing and How Does It Work?

In 2016, the total amount spent via credit card transactions in the U.S. was 111.1 billion dollars. That is a lot of money for one payment type.

Almost every company that accepts payments, accepts credit cards as a payment option. But how many owners of those same companies can claim a firm understanding of how they get their money?

Credit card payment processing is enigmatic, but it is still important to understand how the process works. How else can you make an informed decision about which credit card processing solution will work best for you and your company?

To learn more about what you should look for in a merchant service solution, read on!

What is Credit Card Processing

In the simplest of terms, Credit Card Processing is the act of accepting payment from a consumer for goods or services via a credit card. The card is run through one of several terminal types and the terminal, in turn, spits out a decision about whether the payment method was accepted or declined.

But how does it do that?

To find the answer, we will follow a transaction on its journey from purchase to settlement. We will look at the key features of the process and discuss items you should be aware of when choosing which payment card processing solution is the best one for your company.

The Purchase

A consumer enters your store and comes to the counter with several items to purchase. Your customer has multiple payment options available with which to pay.

  • A standard Swipe Magnetic Stripe card – While these cards are all but obsolete, the time they take to process is only about two seconds on average. This speeds up the time it takes to process your transactions. No one likes to wait.
  • AN EMV Chip Card – The EMV chips provide customers with an extra layer of security. The EMV chips generate a unique transaction code to further validate cardholders. They also take extra steps to hide sensitive information from identity pirates. The downside is, processing takes an average of 15 seconds.
  • NFC Enabled Card – The customer sets up their virtual wallet so all of the contact information is on a smartphone or other compatible device. This device can then be held up to the credit card processor to establish a wireless connection that does not require pairing. This is the ultimate in frictionless, secure credit card processing.

When deciding which processing solution is best for you, make sure your processing company supports the payment option your clientele are most likely to use.

Obtaining the Credit Card Details

Your customer has chosen their mode of payment and it is time to capture the customer’s credit card information and pass it on to the acquiring bank. The acquiring bank is the merchant bank that provides your credit card processing equipment.

Merchant banks are members of the card associations like Visa, AMEX, and Mastercard. It is important to note that these are the people ultimately responsible for your sales payouts.

Acquiring banks can issue many different types of terminals to extract and send credit card and transaction details.

  • Swipe Terminal – This type of terminal is for swiping magnetic stripe cards. They can usually be used to key information in as well.
  • Dip Terminal – The dip terminal is used with EMV chip cards. They almost always have a swipe and key function as well.
  • NFC Enabled Terminal – Most terminals can sync with most mobile devices for NFC, or Near Field Communication, processing. A separate terminal type is not usually needed.
  • Website or App via a Payment Gateway – This is a one size fits all type of solution. They are great for online stores where you will not be swiping credit cards. If you do have a storefront, payment gateways often provide a terminal. This is a very flexible alternative but may not have some of the reporting features other options offer.
  • Mobile Card Reader or Mobile Point of Sale – For those who go to their customers and for some other small businesses, a mobile card reader may be the perfect solution. They are both convenient and easy to use.
  • Virtual Terminal – A virtual terminal does not require additional hardware to use. You only need access to a browser and from there, you can manually key in the information. This is another great choice for online marketplaces or for small businesses who do not have much capital to work with.

Once you decide which terminal will work best for you, your merchant service provider will link your merchant account to the device or gateway. While we support each of these options, some payments processors are limited in their product offerings.

Get Approval

Once you have obtained all the necessary transaction and card details, it is time to transfer the data to the processor or acquiring bank to get approval.

The important thing to take away from this step is processing time. While the merchant bank may not always be responsible for downtime, they are the one element you can control once the data leaves your terminal.

Any good merchant service provider will be able to tell you:

  • Their uptime history
  • Preventative steps they have taken to mitigate downtime
  • Alternative options when downtime occurs

After the data reaches the acquiring bank, the information is sent to the cardholder’s bank, or issuing bank via the card associations (Visa or Amex) network.

The issuing bank validates the transaction card details and then sends its approval or denial back to the merchant provider via the card associations network.

Again, there isn’t a lot you have the ability to control in this part of the process, but you should still consider the types of transactions you process.

Interchange fees are charged by the card network your customer uses. As a rule interchange fees favor big ticket, non-convenience transactions. You can’t change this.

But if you own a company like a fast food restaurant, cafe’, or gas station, you can look for a credit card payment processing company with a fee structure that works with convenience based companies that usually have a high volume of small transactions to minimize cost. This is why we offer our flat rate pricing structure to tailor to your needs.

Ready to Fill Your Credit Card Processing Needs?

Now that you understand more about the process behind credit card based commerce, you should be ready to make an informed decision about which credit card payment processing company you will use.

Wholesale Payment Partners offers a wide array of payment solutions to fit every niche and budget. Plus, our pricing is both competitive and transparent.

If you still have any questions about which options will work best for your needs, feel free to Contact Us.

Back to Home Page

  1. […] Among the different merchant services you can choose for your business, business credit card processing is one of the best. It is a form of payment that will be secure, and it will use the customer’s credit and debit card among other things. You will have other things that will be involved in this such as the point of sale systems, the payment gateway among many others. You should get to choose the right merchant services to use in your business. The business credit processing systems is one of the forms of merchant services that you will need to have for your business. The info in the section that follows will thus guide you when you need the best business credit card processing system. Here’s a good post to read about credit cards, check it out!  […]

  2. I wanted to thank you for this fantastic read!! I definitely
    loved every bit of it. I have got you book-marked to check out new
    things you post…

  3. I’ve read some good stuff here. Certainly worth bookmarking for revisiting. I surprise how much effort you put to create such a fantastic informative website.

  4. I have been checking out a few of your posts and i can claim pretty clever stuff. I will surely bookmark your site.

  5. I was pretty pleased to uncover this page. I want to to thank you for ones time for this particularly fantastic read!! I definitely savored every part of it and i also have you book-marked to check out new stuff in your website.

  6. Hey there I am so grateful I found your website,
    I really found you by mistake, while I was searching on Bing for something else,
    Anyways I am here now andd would just like to say thanks for a fantastic
    post and a all round exciting blog (I also love the theme/design),
    I don’t have time to read through it all at the moment but I have bookmarked itt and also added in your RSS feeds, so when I
    have time I will be back to read more, Please do keep up the excellent
    job. https://Www.Nlrbfcu.org/the-bill-bonner-letter-review/

  7. Quality articles or reviews is the crucial to be a focus for the users to visit the web site, that’s what this web site is providing.

  8. Superb, what a blog it is! This web site presents useful data to us,
    keep it up.

  9. As the admin of this web page is working, no uncertainty very rapidly it will be renowned, due to its quality contents.

  10. Excellent way of telling, and fastidious piece of writing to get facts concerning my presentation focus, which i am going to deliver in university.

  11. Hi I am so happy I found your webpage, I really found you by mistake, while I was
    researching on Bing for something else, Anyways I
    am here now and would just like to say thanks a lot for a fantastic
    post and a all round enjoyable blog (I also love the theme/design),
    I don’t have time to browse it all at the minute but I have bookmarked it and
    also included your RSS feeds, so when I have time I
    will be back to read more, Please do keep up the great work.

  12. Your web site has superb material. I bookmarked the website

  13. It’s hard to come by knowledgeable people in this particular subject, however, you sound like you know what you’re talking about! Thanks

  14. Hi there! I just want to give you a big thumbs up for the excellent info you’ve got right here on this post. I will be returning to your website for more soon.

  15. We stumbled over here different web address and thought I might check
    things out. I like what I see so now i am following you.
    Look forward to looking over your web page for a second time.

  16. I savour, lead to I discovered exactly what I was taking a look for.
    You have ended my 4 day lengthy hunt! God Bless you man. Have a great day.

  17. After checking out a few of the blog posts on your website, I really
    like your technique of blogging. I added it to
    my bookmark website list and will be checking back soon. Please
    visit my website as well and tell me your opinion.

  18. Howdy! I simply would like to give you a big thumbs up for the excellent information you have got
    here on this post. I will be coming back to your
    website for more soon.

  19. Excellent goods from you, man. I have understand your stuff previous to and you’re just too
    wonderful. I really like what you’ve acquired here,
    certainly like what you’re stating and the way in which you say
    it. You make it enjoyable and you still care for to keep it smart.
    I can not wait to read much more from you. This is actually a great web site.

  20. Thanks for sharing your info. I really appreciate your efforts
    and I will be waiting for your further write ups
    thank you once again.

  21. Very energetic article, I enjoyed that bit. Will there be a part

  22. We are a group of volunteers and opening a new scheme in our community.
    Your site provided us with valuable information to work on.
    You have performed a formidable activity and
    our entire community shall be thankful to you.

  23. This is really interesting, You’re a very skilled blogger.
    I have joined your feed and look forward to seeking more of your fantastic post.

    Also, I’ve shared your website in my social networks!

  24. Your style is really unique compared to other people I’ve read stuff from.
    Thanks for posting when you’ve got the opportunity, Guess I
    will just book mark this page.

    1. Give us a call, or shoot us an email. Would be happy to go over your questions with you.

  25. I just want to say I am very new to blogs and truly savored you’re web site. More than likely I’m likely to bookmark your website . You amazingly come with superb articles and reviews. Regards for sharing your webpage.

  26. If some one wishes to be updated with latest technologies
    after that he must be visit this site and be up to date every day.

  27. Your style is unique in comparison to other folks I have read stuff from. Thank you for posting when you have the opportunity, Guess I will just bookmark this blog.

  28. Good post. I learn something totally new and challenging on websites I stumbleupon everyday. It will always be exciting to read articles from other authors and practice something from their web sites.

  29. Can I just say what a relief to find someone who actually knows what theyre talking about on the internet. You definitely know how to bring an issue to light and make it important. More people need to read this and understand this side of the story. I cant believe youre not more popular because you definitely have the gift.

  30. Only wanna tell that this is extremely helpful, Thanks for taking your time to write this.

  31. I am not very superb with English but I find this very easygoing to translate.

  32. Your positions continually have got a lot of really up to date info. Where do you come up with this? Just saying you are very resourceful. Thanks again

  33. Thanks-a-mundo for the blog.Really looking forward to read more. Awesome.

  34. You are my intake, I have few blogs and infrequently run out from brand :). “To die for a religion is easier than to live it absolutely.” by Jorge Luis Borges.

  35. Appreciating the hard work you put into your blog and in depth information you provide. It’s good to come across a blog every once in a while that isn’t the same out of date rehashed material. Excellent read! I’ve saved your site and I’m adding your RSS feeds to my Google account.

  36. I think this is among the most significant information for me. And i’m glad reading your article. But wanna remark on few general things, The site style is great, the articles is really excellent : D. Good job, cheers

  37. I was just seeking this information for a while. After six hours of continuous Googleing, at last I got it in your website. I wonder what is the lack of Google strategy that do not rank this kind of informative websites in top of the list. Usually the top web sites are full of garbage.

  38. I have recently started a site, the information you offer on this website has helped me greatly. Thank you for all of your time & work.

  39. Hi there! Quick question that’s entirely off topic.
    Do you know how to make your site mobile friendly? My blog looks weird when browsing
    from my iphone 4. I’m trying to find a template or plugin that might be able to correct this issue.
    If you have any recommendations, please share. Many thanks!

    1. Just keep it simple, and get rid of unused CSS, and JS. You can try the AMP plugin, but I didn’t care for it.

  40. F*ckin¦ awesome things here. I am very glad to see your article. Thanks a lot and i’m taking a look forward to contact you. Will you please drop me a mail?

  41. Deference to article author, some wonderful selective information.

  42. Only wanna tell that this is extremely helpful, Thanks for taking your time to write this.

  43. Way cool! Some very valid points! I appreciate you writing this write-up plus the rest of the site is really good.

  44. Greetings from Carolina! I’m bored to death at work so I decided to browse your site on my iphone during lunch break. I love the knowledge you provide here and can’t wait to take a look when I get home. I’m surprised at how quick your blog loaded on my phone .. I’m not even using WIFI, just 3G .. Anyways, great blog!

  45. My spouse and I absolutely love your blog and find almost all of your post’s to be exactly I’m looking for. Do you offer guest writers to write content in your case? I wouldn’t mind producing a post or elaborating on many of the subjects you write regarding here. Again, awesome web site!

  46. I’ve read some good stuff here. Certainly worth bookmarking for revisiting. I surprise how much effort you put to create such a magnificent informative site.

  47. Thanks for sharing excellent informations. Your web-site is very cool. I’m impressed by the details that you have on this site. It reveals how nicely you understand this subject. Bookmarked this website page, will come back for more articles. You, my friend, ROCK! I found just the info I already searched everywhere and simply could not come across. What an ideal web site.

  48. I really enjoy reading on this web site, it has wonderful blog posts. “You should pray for a sound mind in a sound body.” by Juvenal.

  49. Wonderful site you have here but I was curious about if you knew of any user discussion forums that cover the same topics talked about in this article? I’d really like to be a part of community where I can get feed-back from other knowledgeable people that share the same interest. If you have any suggestions, please let me know. Appreciate it!

    1. LinkedIn is probably where you’ll find the most information in one spot for card processing.

  50. I have been surfing online greater than three hours lately, but I never discovered any fascinating article like yours. It’s beautiful worth enough for me. In my opinion, if all site owners and bloggers made excellent content as you did, the net will probably be a lot more useful than ever before.

  51. hi!,I really like your writing very so much! proportion we communicate extra about your article on AOL? I need a specialist in this house to resolve my problem. May be that is you! Taking a look ahead to see you.

  52. Great post. I am facing a couple of these problems.

  53. Hello! Do you know if they make any plugins to assist with Search Engine Optimization? I’m trying to get my blog to rank for some targeted keywords but I’m not seeing very good results. If you know of any please share. Kudos!

  54. Just wish to say your article is as astonishing. The clearness in your post is simply spectacular and i can assume you are an expert on this subject. Well with your permission let me to grab your feed to keep up to date with forthcoming post. Thanks a million and please carry on the rewarding work.

  55. fantastic post, very informative. I’m wondering why the other experts of this sector don’t realize this. You must continue your writing. I’m sure, you’ve a great readers’ base already!

  56. What’s Happening i am new to this, I stumbled upon this I’ve found It absolutely useful and it has helped me out loads. I hope to contribute & assist other users like its aided me. Good job.

  57. Wohh just what I was searching for, thankyou for posting.

  58. Neat blog! Is your theme custom made or did you download it from somewhere? A design like yours with a few simple tweeks would really make my blog shine. Please let me know where you got your design. Cheers

  59. Thanks for sharing superb information. Your web site is so cool. I am impressed by the info that you’ve on this site. It reveals how nicely you understand this subject. Bookmarked this web page, will come back for more articles.

  60. I’ve recently started a website, the information you offer on this web site has helped me greatly. Thank you for all of your time & work.

  61. I’m usually to blogging and i really respect your content. The article has actually peaks my interest. I am going to bookmark your website and keep checking for brand new information.

  62. I have recently started a website, the information you offer on this web site has helped me tremendously. Thanks for all of your time & work. “So full of artless jealousy is guilt, It spills itself in fearing to be spilt.” by William Shakespeare.

  63. Hey very nice site!! Man .. Excellent .. Amazing .. I’ll bookmark your website and take the feeds also…I’m happy to find numerous useful information here in the post, we need develop more strategies in this regard, thanks for sharing. . . . . .

Leave a reply

Your email address will not be published. Required fields are marked *