Worldwide, there are more than 2.8 billion active credit cards. The use of credit cards has increased noticeably since COVID-19. A study found that over 42% of consumers use credit cards to make online purchases, which is a significant percentage. Nowadays, it is nearly impossible to carry out a business without accepting credit cards, whether offline or online.
However, you’ll need to collaborate with a credit card processing company if you want to accept credit card payments and have a credit card merchant account.
What Is a Credit Card Processing Company?
Credit card processors, also known as merchant service providers, provide a credit card payment solution that allows you to accept credit card payments at your business.
A credit card merchant account company enables you to accept credit card payments by synchronizing the many services involved in the process. The credit card network, issuing banks, and your own merchant bank account are a few of these.
Who is involved in it?
Cardholder: The cardholder is also called a customer who swipes, inserts, taps, or enters a card number into a payment portal of a merchant.
Merchant: A merchant means a seller or store that provides goods and services, whether online or offline. Merchants provide a platform or POS machine to accept payment from the customer.
Acquiring Bank: The card and transaction information is transmitted to the card network by the acquiring bank (or merchant bank). Along with a merchant account to collect payments, an acquiring bank may also offer the retailer the gadgets needed to process credit cards.
Card Network: The card network, such as Visa or Mastercard, serves as a bridge between the issuing and acquiring banks. It communicates information between the acquiring bank, the issuing bank, and the merchant and determines any fees or rules.
Issuing Bank: The bank that issued the credit card to the cardholder is known as the issuing bank. It approves card details, pays the acquiring bank, and bills the cardholder for each transaction via a monthly statement.
Payment Gateway: It is the mechanism that links a retailer with a payment processor. A gateway often connects with both in-store and online payment environments, takes payment information for consumer transactions, delivers it to a payment processor or merchant bank, and notifies the merchant if the transaction was accepted or denied.
Credit Card Processor: A credit card processor, also referred to as a “payment processor,” is the entity that makes communication possible between the cardholder’s bank, the credit card network, and the retailer.
How does Credit Card Processing work?
In a few seconds, how a credit card processor works. Let’s understand it step-by-step.
- The customer uses their credit card to make a payment, and the payment information is shared with the merchant.
- The merchant receives and gathers the payment data before sending it over the phone or the internet to the acquiring bank.
- The credit card processor next sends the payment information to the card network.
- The card network then passes the payment information to the consumer (issuing) bank.
- The consumer bank is responsible for confirming that the cardholder has enough money or credit available to perform the transaction. The bank might carry out security checks to make sure the transaction is authentic. The transaction is then approved or declined, and the outcome is communicated to the credit card processor.
- If the transaction is approved by the consumer bank’s verification processes, the funds are transferred from the client bank to the vendor’s and then enter the settlement process.
- The settlement is the last step in the procedure, and depending on the card network used for the transaction, it may take several days. Settlement is the formal transfer of the transaction amount, excluding any applicable processing costs, from the consumer bank to the merchant bank.
How to Select the Best Credit Card Processing Company
It is not easy to choose a credit card processing provider as there are more than a thousand companies available. Many factors have to be considered before choosing the right payment processor. The ideal credit card processor for a business owner provides trustworthy, secure, and cost-effective service that you seldom have to worry about.
Before selecting a credit card processor, you must ensure the availability of a few key components. You need to check the following features, to name a few.
Pricing Method: There are two main pricing methods for credit card processing. One is fixed and the other is interchangeable.
With fixed pricing, the rate for each transaction is fixed, regardless of the credit card that the customer uses.
For interchange pricing, you have to pay the amount charged by the credit card company plus the fees of the processor.
Nowadays, the ideal credit card processor provides both these options to choose from. You may choose any payment method as per your business type or monthly volume.
Fraud prevention system: To prevent yourself and your customers from any fraud, you must ensure that your high-risk merchant account is secured with top-notch fraud prevention technology. To secure the transaction, it must comply with verifying addresses, CVV checker, PCI DSS compliance, fraud scoring, geolocation tracking, 3D Security, multi-factor authentication, and other fraud protection features.
Additionally, look into the fund withdrawals, chargeback row prevention, and resolution procedures, approval times, contract terms, 24*7 customer assistance, data exports, ease of use, innovative technology, easy integration, and POS solutions.
Top 10 Credit Card Processing Companies
We have discussed many aspects of the credit card processor: how it works, how to choose the best, and others. To help you pick, we have compiled a list of the Top 10 Credit Card Processing Companies Worldwide after comprehensive research so that you can easily choose one.
- Merchant One
- Payment Depot
- Helcim
- Stax
- WebPays
- Square
- PayPal
- National Processing
- Stipe
- Payment Cloud
Conclusion
Credit card processing comes in a variety of sizes and shapes. Each processor offers a different set of services, contract terms, and pricing structures. You must look around and compare prices to find the best price from these suggested providers.
Generally speaking, interchange plus pricing has the lowest costs. However, fixed-rate processing can still be useful for start-ups and small enterprises.
Here we’ve discussed ten major participants in the realm of credit card processing. All of our suggested high-risk merchant account providers provide lightning-quick transaction processing times and cutting-edge security measures. Due to their handling of sensitive data, sensitivity toward fraud, and anti-money laundering procedures, they have become the best in the category.
