If you have a business that accepts credit card payments, you will need a payment processor. So, what is the payment processor about? A credit card payment processor is a tool used to process transactions by merchants.
The processor provides a secure way to accept credit card payments and transmit bank details. It acts as a third party between your business and your customer’s credit card company. This payment processor is sometimes referred to as a payment service provider, and it is needed to accept payments.
Credit Card Payment Processor
A credit card payment processor is a must for any business that accepts credit cards, this is because it manages credit card transaction processes by acting as a mediator between the bank and the merchant. It analyzes and transmits transactions, sends the information to the issuing bank, and authorizes the transfer of funds between a buyer and seller. This payment processor also communicates information from your customer’s card to your bank and the customer’s bank.
How Does Credit Card Payment Processor Work
Below are ways it works:
- The customer or consumer starts a transaction by providing their card details at checkout.
- Their card information will be sent through a payment gateway from the merchant which encrypts and transmits payment data to the processor.
- Then the payment processor will send the card information to the card network like a Visa or MasterCard.
- The card network then confirms with the issuing bank if the customer has sufficient funds in his or her account to make the purchase. After sufficient funds are available, the transaction will be approved.
The payment processor sends authorized payment data to the merchant through the payment gateway. Allowing the merchant to accept the payment and receive the purchase funds while debiting the customer’s account
Parties Involved in Credit Card Payment Processing
A Payment Gateway
Although it helps start the payment, this does not quickly aid in the money flow.
A Payment Processor
The payment processor receives information from a payment gateway and it communicates between the credit card scheme, issuer and acquirer.
Credit Card Scheme
The credit card scheme is the brand of the card that gives out rules and creates the infrastructure for the customer’s card.
The bank that provides consumers with their cards is known as the issuer. The issuer may also be known as the cardholder’s bank at times.
Top Credit Card Payment Processor Companies
There are different credit card payment processors available today, but we are going to outline the best payment processor here for you.
Square is one of the most popular payment processors as it provides free POS software, a free online store, a free mobile card reader, and flat-rate pricing. Its free POS software enables you to accept in-person payments when necessary. It also is one of the most affordable credit card processing options for smaller businesses and startups.
Stripe is a payment processor and software platform for receiving customer payments. Its flat-rate pricing is very good for many small business owners. And it includes a group of features, like invoicing, billing, and tax collection.
- Subscription businesses
- eCommerce companies
- Retailers with POS and online sales
Merchants can also add Stripe Terminal card readers to POS equipment.
PayPal is a top-rated payment processor. It is easy to set up and good for medium businesses. PayPal accepts credit card payments from all major credit card companies. You can make payments through PayPal, Venmo, and digital wallets like Apple Pay. It also works with several POS systems, Constant Contact, Shopify, and QuickBooks.
Helcim is a credit card payment processing platform that prides itself on transparency and honesty. They accept all major credit cards, including Google and Apple Pay and their customer service has live representatives. Helcim is a great choice for small businesses that want a low rate and no subscription fees. On the platform, you can also get a customized rate based on your volume of credit card transactions. The average rate for Helcim online transactions is 2.38% plus 25 cents per transaction.
Clover offers credit card processing services that are ideal for small businesses and it offers month-to-month contracts. And it also has flat-rate pricing. Therefore, if you are searching for good pricing and an all-in-one platform to start processing card payments, you should try using Clover.
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