Currencies are similarly an issue. If for example you process in the us you tend to only be able to accept USD (there’s something called like for like settling, this means you can process in a particular currency and deposit into an account in that currency, which saves on foreign transaction fees either for you or your customers or both). If on the other hand you’re in Canada you can probably accept USD and CAD, possibly also EUR and GBP depending, though unlikely how to be a payment processor. If you’re in Europe you can probably accept a whole multitude of currencies. This might or might not be useful depending on the nature of your business location of customers, etc. but it’s another advantage of being flexible.
Then there’s payment types. In certain parts of the world Visa and Mastercard will cover pretty much all the possible customers throw American Express into the mix and you’re most likely good. If on the other hand you’re dealing with the German market it may be important to deal with Giro card or in Brazil you may need to deal with some of the local payment methods or perhaps elsewhere accept China Union Pay. There are literally dozens of payment methods around the world and depending on what markets you want to be able to sell to you may need to accept a different variety of them, in fact being able to accept more options may radically increase your sales.
Beyond this there is technology. A great deal of what takes place in processing is based not on the processor or acquiring bank but on the gateway technology you use. On an extreme end you’ve got technologies such as interchange optimization used by Amazon, which detect the type of transaction and route it to different acquiring banks based on the rates they are offering in order to save every penny (this can add up on high transaction volumes).
It might also include the ability to tokenize transactions to make for easy recurring transactions or sophisticated fraud protection technology to decrease chargebacks, fraud and also eliminate lost transactions due to imprecise fraud targeting. Depending on what processor you’re using you may be limited in what gateways connect or connect easily, this might affect the shopping carts you can use or use easily. The technology can offer major advantages over and above the cost of processing this is where companies like Stripe and Braintree have differentiated themselves making tools easy for developers.
With more and more people shopping online there is a need for more and more people to establish credit card payment processing so their customers have the convenience of online pay. Credit card payment processing online is handled through a secure server to protect the account information of the cardholder.
During the authorization process the customer clicks on the checkout button so they can start the payment process. At this time the customer will be asked to provide their credit card number. They will also need to provide the date that the card is set to expire on. The billing address where the issuer of the card sends the monthly statement to will need to be provided. The CVV number from the back of the card will be asked for, and the amount of the purchase being made.
This information is transmitted to the financial institution that issued the card and at this time they will validate the card number and the date on which it is supposed to expire. The issuer will check the amount of funding available for the account and then check the purchase total to determine if there is enough funds to pay for the purchase. The issuer then looks to make certain that the billing address they have on file is the same as the one entered for this transaction. They also check to make certain the three digit code CVV matches the one they have on file for this card. If everything matches up, and there are sufficient funds in the account, the issuer will authorize the purchase to be finalized.
If the issuer declines the transaction the cardholder will be informed and asked to choose another means of paying for their order. If approved the authorization information will be stored so that the merchant can complete the processing at a later time.
When the merchant is ready to do their bookkeeping they will sign into the account they have established with their card payment processing service. The merchant will carefully review the amounts that they need to collect from the different card issuing agencies. Once they have all of their information in order they will authorize the third party company that handles their credit card payments to request payment from the card issuers.
The merchant does not receive the money they charged the customer immediately when they engage in these types of transactions. They do receive their funds much quicker than when they had to wait for the customer to mail them a check and then deposit the out of town check into their accounts. Once deposited the merchant would have had to wait a period of ten additional days before the check would clear and the money would be placed into their account.
With the credit card machines the merchant will wait anywhere from two days to thirty days before they receive the money the card issuer agreed to pay. The time periods for accepting snail mail checks as payment and online credit card transactions works out about the same for the merchants involved.
