At a glimpse, credit card processing looks like it can not be more straightforward. The credit card goes in the slot, the terminal performs some behind-the-scene steps with the credit card service, and the customer scratches a rough assumption of their signature on the screen, and a transaction has occurred.

For the layman, this explanation may be enough, but the merchants require a better understanding of the technical information of credit card payment solutions to save themselves from fraud and chargebacks. What do merchants require to know about how credit card processing works, and how can this operate the best moves to accept credit card payments online.

What Is a Credit Card Payment Processing Solution?

A credit card payment processing solution implies a business bank account that simplifies businesses to accept credit card payments online via debit and credit cards. The credit card payment processing solution serves as the mediator between the swiping of the credit card and transmitting the funds into a business bank account. It enables online businesses to receive the payments for transactions immediately rather than waiting for the customer to pay their credit card bills online.

Accept Card Payments Online Without a Machine

The ease of credit card payment solution for the customer ends highly relies on the choices made by the merchant. Which payment service provider to prefer, what protocols to analyze, and how to construct the payment terminal to maintain ease of use security.

Creating a smooth, frictionless experience for online customers can come at the cost of increasing the fraud risk. This is basically true in a card-not-present atmosphere, where merchants cannot depend on physical security features such as EMV chips. Almost every security standard a merchant sets in place comes with some drawbacks. Even that’s the periodic refusal of a legal transaction or some further move you are need of all your customers.

The selections merchants opt about things like how to manage several authorization notifications, or when to resume a denied transaction. It may have a huge effect on the result of disputes that includes these online transactions.

To make the best and most tempted decisions concerning credit card payment solutions. So, let’s have a deeper look at all the moves included in them.

How To Accept Credit Card Payments Online?

Most steps perform between the initial of an online transaction and the moment when the customer’s funds actually fall into the merchant’s bank account.

The payment processor initiates when the customer offers their payment card details to the merchant. In a card-present transaction, this refers to putting the credit card into a chip reader or swiping it. For card-not-present transactions, the credentials should be submitted online. The merchant may get this detail directly such as receiving an order via phone or it may be processed through a secure payment gateway.

You will have to provide the below-mentioned details to accept credit card payments online solution services:

  • The full account number
  • The expiration date
  • The transaction amount
  • The cardholder’s billing address
  • The Card Verification Value (CVV) code

The terminal or payment gateway then forwards this detail to the merchant’s payment processor. That departs it to the credit card network under the customer’s card brand. In reverse, the card network contacts the cardholder’s issuing bank to ask for payment approval.

The issuing bank will process the transaction by confirming that the account number is valid. That the billing address and CVV match, and that the customer has enough funds or credit in their account. On the basis of given factors, they will then deliver an Approve or denial response by providing an approval code back through the same channels. Additionally, implying that the transaction has been approved or denied, the approval code can also offer more specific details. Like the reason behind the decline or instructions for the merchants to notify the bank or manage possession of the card if possible.

How Do Clearing And Settlement Systems Work?

Similarly, every merchant understands, that a completed transaction doesn’t refer to the money in the account yet. Clearing and settlement have to occur before the money is actually there, even also some banks offer instant credit to the account at this level in the process to accelerate things.

Merchants add completely processed online transactions to collections that are sent to their payment processor. Generally once at the end of each business day. Repeatedly, the payment processor will give these off to the credit card networks. That will transmit every transaction to the issuing bank to which it relates.

The issuers deposit the money for these online transactions back to the credit card networks on their way to the merchant’s account. This is the settlement stage. That should take only one or two business days. Diligent currency conversion, if required will also happen during this stage.

The credit card networks forward the funds to the acquiring bank. Hence the appropriate fees are diverse among the issuing bank, credit card network, and payment processor. When the remaining funds are in the merchant account, settlement is done.

Wrapping Up

The best eCommerce credit card processing payment solution seems to be simple on the surface. But it is really a very complicated multi-step procedure. That includes various members except for the merchant and the customer.

Opting for a reputed and dedicated payment service provider and following the guidelines. And best moves for transaction procedures can save your funds and safeguards you from fraud, chargebacks, and customer friction.

Just remember that a robust chargeback prevention strategy is important. If you want to be able to select from the best payment service providers. You can prefer InstantCharge for the best credit card payment services and let your chargeback prevention ratio get higher. And you could end up perforated paying excessive charges to a payment service provider.