Credit card processing is the backbone of high-risk industries. It is the primary source of earnings for merchants because, today, most customers make payments through credit cards. Above all, the high-risk industries also include some business types where people invest money in bulk or take subscription-based services. Both demand a regular and hefty payment that has a lot to do with efficient credit card processing because a business cannot run without that. Also, for the comfort of the customers, it is vital to provide a good customer experience.
The buyers never stay long with a brand that gives them a bad experience while paying for a product or service. To implement proficient high-risk credit card processing, knowing it better and in detail is essential. Here is a crisp encyclopedia explaining the processing and all other necessary aspects of it.
Key Actors In Credit Card Transactions And Thus Processing
Every side included in the credit card transaction naturally becomes part of credit card processing. Understanding the key actors will be one step ahead of understanding a significant aspect of how things work.
Cardholder – Of course, how can the credit card process even start without a cardholder that is the customer? He owns the card issued by an issuing bank, and the payer uses the account to make a payment for any product.
Issuing bank(s)- A bank, a card union, or any other financial institution that issues a credit or debit card to the cardholder.
Card associations – Mastercard, Visa, American Express, and Discover- are decisive in deciding the qualification guidelines and interchange rates and act as an arbitrator between the acquiring bank and the issuing bank.
Merchant – The merchant is the ultimate receiver of the money sent through a payment. He is the brand owner who sells the service or product that the customer has paid for.
Payment processor – A company that processes credit and debit card transactions. It connects all the ends included in the payment procedure.
Payment gateway – A payment solution providing a company and a common bridge between the merchant, customer, merchant bank, processor, and card networks. Its work is to send the encrypted customer data to the payment processor.
It is essential to mention here that in the case of high-risk merchants, payment gateway, acquirer, and payment processors are generally preferred if they provide offshore services. The risky businesses hardly get permission for international credit card processing from the conventional banking system in a country.
Credit Card Processing Step-By-Step
Let us delve into the rational process of credit card processing and gain more clarity on how money travels through the network.
Authorization process – Authorization is the first step in the processing. At this stage, the identity of the customer is verified to prevent fraud and avoid the chances of chargeback issues later.
The authorization includes four steps –
- The cardholder enters the card details while making a payment. The payment gateways encrypt the data and forward it to the acquirer.
- The encrypted or tokenized data is sent to the payment processor, then the details are sent to the issuing bank through the card association’s network.
- The bank verifies the customer’s identity and confirms whether his account has an ample amount.
After the verification, the issuing bank accepts or declines a payment, which shows immediately in the payment gateway. After this, the customer is redirected to the fresh
After authorization comes the final stage of fund settlement, which is when the money reaches the merchant account.
4 Steps are included in the settlement process –
- The payment gateway sends a request for payment reconciliation to the payment processor.
- After the successful reconciliation, the payment processing company deducts the applicable fees. This fee is deducted from the transaction amount; then, finally, the amount is sent to the merchant account. The whole process is known as settlement, which takes one or two days to complete.
- The Card network debits the transaction amount from the customer’s issuing bank. The amount is forwarded to the payment processor to send the money to the merchant account.
- The customer’s issuing bank deducts the payment money from the customer’s account. The bank sends credit card statements to the customer. The customer is responsible for settling the outstanding amount according to the billing cycle.
What Factors Affect Credit Card Processing?
Credit card processing is prone to several adverse effects caused by some factors that may be known or unknown to the merchants. If you want to play safe in your business, it is advisable to pay attention to the following points to know about them.
Uptime – UPTIME IS THE TOTAL TIME ANNUALLY WHEN A BUSINESS REMAINS ONLINE. IF IT GOES OFFLINE DUE TO ANY INTERNET MALFUNCTION, IT CAN CAUSE CREDIT CARD PAYMENT DECLINES. The total amount of time when a business remains offline is subtracted from the time when it remains online to get the actual uptime record. If customers find your website not working recurringly, they can certainly move to another brand. Your uptime duration is a significant factor that can affect not only credit card processing but also the goodwill of a business.
Transaction speed – People pay through credit cards because they happen quickly and are convenient as well as handy. You should choose a credit card processing system that can support you with speedy transactions. An idol system takes only two seconds to complete a payment cycle. The payment gateway also has a significant role because if he transfers the customer’s details quickly, the payment completes swiftly. Eskaypay credit card processing for high-risk merchants has only offered satisfaction to the merchants and has supported them with the quickest transactions in their industries.
Timeless customer support – Credit card processing occurs through a complex system, and its payment gateway must always be available for any support for a business. Technical and operational issues keep happening now and then; thus, immediate help is always required. Peak hours of business are most crucial in this regard. Imagine your customers suddenly find that the payment gateway is not responding, and you have to solve it instantly. But that is possible only when your business gets round-the-clock support. It is an indirect way to respect your customers and not let them face any issues; this is what makes them happy and inspires them to stay loyal to your brand. Isn’t it true?
Transparent rate structure – Of course, when the merchants are not backed up with any hidden fee that comes into notice later, the credit card processing will remain smooth. Find a credit card processor that clearly describes the fee and cost structure and has nothing to hide. Usually, reading the reviews of an online credit card payment processing company can help a lot to know the experience of other merchants. Fee types include interchange fees, fixed transaction fees, and a concise pricing structure. Most merchants get stuck on costs because they are either ignorant about the whole fee structure, clueless about pricing, or don’t notice all the factors. But caution is in mindfulness.
Conclusion
You must have gained essential as well as detailed knowledge about credit card processing for high-risk merchants. The process is not complicated; the only need is to understand the steps clearly and carefully understand the fee structure because that directly affects your business finances. Time, experience, and daily practical interaction with the circumstances give an insight into the troubleshooting skill. Make sure you make the right choice while selecting a credit card processor because that can change the whole cost calculation of your business.
