The process of taking a card payment is called “processing” and involves a third party company that handles the transaction. This company will provide a merchant with an account number, which they then give to the customer. The customer can then type their debit card pin into the machine in order to complete the transaction.
There are several types of processing services that merchants can take advantage of, all working in different ways. One service, called pay-as-you-go is best for small businesses who don’t process many transactions each day but still need to accept card payments from customers. Another option is called “Merchant Processing”. This is a service that enables merchants to process transactions in any amount, and is best for businesses that have regular clients as this takes the risk out of selling products or services.
The transaction value of the card is not known until a merchant processes their ecommerce orders. They will then pay their processing company with the total value that they’ve made from the orders they have processed. This payment will include a processing fee, which varies between payment providers. Some merchants will offer discounts to customers if they pay by cash.
Today, there are a number of companies you can use to process your credit card transactions and each one offers different benefits. Here are a few of the common companies that you will come across in ecommerce:
PayPal is the most common and popular option for processing transactions as it enables real-time payments and doesn’t require your customers to type their pin into a machine or sign a paper copy of their transaction. Bitcoin is also accepted through PayPal.
Stripe was built with developers in mind allowing programmers to create applications using Stripe’s API and accepting card payments online.
Visa and Mastercard:
Visa and Mastercard are two of the most popular credit card companies around today, with both having strong reputations for security and reliability. More than 90% of American adults have a Visa or Mastercard credit card and these two cards are commonly accepted worldwide.
The major players in the market:
There are several major players in the credit card processing industry including:
- Intuit (formerly known as “QuickBooks”): This company, who are based out of California, offers online tools for online stores, like PayPal-compatible accounting software. They also provide an online merchant account that can be used for accepting payments within Quickbooks. They also offer free online tools for customers to manage accounts, which includes an invoice and receipt system.
- First Data (formerly called “Merchant One”): A Texas based company who state that they are the “leading provider of technology solutions for payment processing in the US”. Their services include secure online card processing and contactless payment acceptance. They offer a range of other services from virtual terminals to mobile payments and loyalty schemes.
- Jumio: This is a UK based company, who claim to be one of the most trusted providers of biometrics and contactless solutions for online chip & PIN card transactions, along with providing B2B integration solutions. They offer white label solutions for banks, merchants and ecommerce sites to accept credit cards with fingerprint and facial scanners.
Their advantages come down to their differentiating feature compared to the other companies. Visa and Mastercard have the largest market share, making it harder for any competitor to be successful. They also have a range of online products and services including free systems for merchants to process payments online.
First Data is the largest player in the credit card processing industry but they are not as well known as some of their competitors, like Intuit or PayPal. Their services can be slightly more expensive than some companies, but their white label solutions make up for this with banks and ecommerce sites choosing them over other companies due to their competitive pricing and excellent customer service.
Credit Card Processing Costs
Processing a credit card payment is a very expensive way for a merchant to accept payments online. This payment provider will charge quite high rates in order to make money from processing the transaction. The rates vary between providers, based on what kind of package you want. A larger number of transactions also costs more, as it makes them more nervous and they charge a higher processing fee for each transaction.
Another thing to consider is how long the merchant will keep the customer on their account. Some providers allow you to leave your customer after seven days and then have them put another card through the machine in order to continue selling their products or services again.
Credit card processing costs are a difficult part of running an online business. If you want to make money from instance transactions then you will need to accept card payments online, therefore having to pay credit card processing fees. These fees can be quite expensive and should definitely be considered before accepting any credit cards on your ecommerce store. It is also worth considering offering discounts to cash paying customers who are happy with paying with a card in the future, as this will save you money on credit card processing costs.
There are lots of different companies that provide online credit card processing solutions for merchants across the UK and internationally, offering a wide range of services and products, such as virtual terminals or skimmers for chip & PIN payments, depending on your needs and budget.