Credit and Debit Card Processing Basics: What you need to know about accepting credit and debit cards
Grow your business by accepting debit and credit card payments
Whether you are operating a new or established business, at some point you’ll need to think about taking credit and debit card payments. This gives your customer the convenience of paying by mobile phone, tablet, online and without cash in-store.
This is really going to help your business grow. Just think of all that extra money coming in, new sales channels and where your business could be in 12-18 months?
But how do you get started? You need to learn credit card processing basics. Here is a quick guide to the basics to set you off on your way.
Get to know the different organisations
- A merchant account company/merchant service provider is an organisation that provides you with a merchant account. This can be a bank, or an independent company. They handle payment transactions to your bank account. Without this, you can’t process payments and your customers can’t buy products that way.
- A processor is a third party company that partners with merchant account companies. They manage the relationship between you and the other organisations.
- An issuer, or issuing bank is the company who provides the credit or debit card to your customer.
- A card payment brand is a company such as Visa, Mastercard or American Express. They charge an interchange fee, which they share with the issuing bank/issuer. Without these, there would be no credit or debit card payment systems.
- To get started taking credit or debit card payments, you need a merchant account company/merchant service provider. They will open an account for you and provide you with a credit/debit card machine.
- You also need to decide how to accept payments. This could be online, in-store or over the phone. This will very much depend on the type of business you own.
Avoid common problems
- Learn all the fees, charges, rules and regulations to your merchant account agreement.
- Check the identity and expiration date on any card you’re about to process.
- Prevent duplicate transactions
- Don’t put minimum or maximum limits on your transactions. Regulations state that you must accept credit cards for any size of transaction.
- Don’t offset the cost of accepting credit cards by charging a usage fee for credit card transactions.
- Don’t display full account numbers on your receipts.
- Get to know the fraud screening products and services that can help you.
- Never run your personal credit card through your merchant account.
- Don’t split a transaction into smaller transactions. This could put you at risk of a chargeback.
- Prioritise customer issues above everything else.
Now that you know the basics, you’re on your way to being able to accept payments. You know what an issuing bank is, why a merchant account is important, what a processor is and some tips to avoid common problems.
You’re ready to start taking those credit and debit card payments now!