Credit Card Processing: How the System Works

Establishing a merchant account for your business enterprise is the wisest financial decision you will ever make for the growth, expansion and success of your business. Once you’ve set up a merchant account, you can accept credit and debit cards payments from your clients for your products and / or services. You can also arrange to accept online and mobile banking payments for your products and / or services.

A merchant account opens up new avenues for your business; therefore, giving your business many more opportunities to flourish. But, have you ever understood how the credit card processing system works? Have you tried to perceive the complexities of the players involved in the process and the intricacies of the system?

While it is not entirely essential for you to know the inside and outside of the card processing system because your Merchant Service Provider will do the needful for you; it is good for you to acquaint yourself with the system on a general basis.

The Participants Involved in a Card Transaction

A typical credit or debit card transaction involves the following players:

• The customer
• The merchant
• The payment gateway
• The customer’s credit card issuer
• The credit card interchange
• The processor at the acquiring bank
• The merchant’s acquiring bank

The Route the Money Takes from the Customer to the Merchant

Let’s take an example to understand how the card processing system works.

Suppose that a customer walks into a clothing store and she finds a bag that catches her eye. She immediately proceeds to the payment counter and makes a payment of $100 towards her purchase with her cards.

The cashier at the merchant’s store accepts the cards and uses a card swiping machine to set the process into motion.

• The $100 amount makes its first stop at the payment gateway where the payment is first authorized with a minor deduction in the amount.

• Now, $99 travels to the appropriate processor and after a minor deduction is submitted to the card interchange as $98.5.

• Once the transaction gets a clear at the interchange, it moves on to the issuing bank with a further deduction where the issuing bank verifies the availability of funds in the customer’s credit / debit card.

If the transaction is declined, it makes its journey back to the customer from here.

• If the transaction is approved, $98 reaches the processor at the acquiring bank, just one step closer to the merchant account.

• Once authorized, $97.5 gets deposited into the merchant’s account, which is now at the merchant’s disposal.

(The figures and fees involved in card processing are based on the number of players in the process, merchant type, card type and risk factors)

In the present age, quite a number of payments are made electronically, especially with the extensive use of credit and debit cards and online funds transfer. Although typical card processing takes seven participants, the entire transaction amazing takes a maximum of five seconds for approval.

Learn About Your Credit Report and Score

Maintaining a good credit record is a tough task. You have to be careful about paying all your bills on time and settling the mortgage installments. A late payment or a missed payment can affect your report and get you negative points. You have to be careful against identity theft in order to safeguard your credit scoring. Taking assistance from agencies offering credit reports can be very helpful. They can help you understand what exactly is going on with your goodwill statements and give you accurate evaluation based on that.

Importance of credit report
There is a lot of risk involved in lending money, and banks are very cautious with it. Before lending money the bank needs to make sure that you don’t have any unpaid bills or bad debts. So for that reason they check your credit ratings. Symbolically it’s like a green signal that enables them to go ahead. This is becoming important as lenders are checking credit scores rather than analyzing the actual goodwill statements for approving loans for their customers. In order to have good credit score, your goodwill statements needs to be flawless. You can get your report from goodwill statements agencies and check what score you have.

Correcting the discrepancies
Credit agencies maintain your data, and sometimes you face the misfortune of having incorrect data recorded under your name. Once you get your reports from all the three national credit agencies, look for errors. If you find any gaps, contact the respective agency and get it corrected. You can also get to know who is doing a credit search on you. If you find out that you are being credit checked, and you haven’t applied for a loan or a credit card, alert the agencies about it. You can get the contact numbers and working hours of the customer services online. There are numerous websites offering to provide free credit report. No credit card company would accept your application without doing a credit check on you.

Choosing the Right Firm
When you are trying to get help from a credit reporting agency you need to be careful not to fall for traps that promises to improve your score overnight. Bad scores just do not vanish like that. You need to curb your desire for spending and focus more on saving money. A good agency will give you access to your goodwill statements. An experienced company will provide all the necessary details and break it down for easy understanding when offering a goodwill statements. Make it a practice to check your report once before applying for a loan or credit card so that you won’t have to face the risk of your application being denied.

Managing Change Effectively

At some point or another, everyone must learn about managing change effectively. It is such a good feeling to have a solid plan in mind for your future. Maybe you are in school working toward a degree; maybe you are saving to buy your dream house. In any case, you weren’t planning for any major detours in your life. Effectively managing change can be the difference between thriving in spite of the change and falling apart because you can’t adapt to changes in your plans.

When your path towards the future changes, clinging to what you had can be one of the biggest detriments to moving on. You must search for a new goal or a new way to achieve it. Failing to accept the change, will also hinder your ability to see what the future will truly look like.

Cut out Negativity

Another roadblock people face when they are trying to manage change is negative people. Combating the influences of people around you that can’t accept change, is almost as difficult as fighting those feelings in yourself. Change management sometimes involves limiting your interaction with these people or cutting them out of your life entirely. This can be difficult, especially if these people are your family or close friends, but if they can’t support your new outlook on life, then they are holding you back.

Prepare for Changes

Some changes come suddenly, like an illness or accident, but you can prepare yourself for other changes by continually reassessing your situation and being proactive when you discover signs of change. If you start seeing the signs of change coming, try to change it. If you can’t change it, then you can prepare for it or at least understand how proper change managementcan affect the outcome of a situation.

Channel Your Energy

Being bogged down with feelings of how unfair it is prevents you from using your energy to formulate a new goal. The change probably is unfair; good people die, get sick, and lose their jobs. Unfortunately, the relative unfairness of a situation does not ease its effects; but the way you manage change and accept it, can turn an unfair event into a blessing. Many people see unplanned negative events as unfair because they feel a sense of entitlement; that they deserve a perfect life; but the fact is that almost everyone faces situations that derail their perfect plans. Your method of managing change dictates how you let the situation change your life.

Instead of focusing on what you have lost and hoping for things to change back to the way they were, focus on your goal, attaining it, and the new way you’re going to get there. Imagine yourself achieving your goals and keep your mind occupied with the rewards of the future, rather than wishing that the change never happened. It won’t be easy, planning for the future wasn’t easy the first time, and this time will surely be harder. is the first step to re-calibrating your goals and methods in a direction that suits the current situation.

Change Management Includes Overcoming Fear

The fear of the unknown is yet another barrier to effectively managing change and re-designing your plans for life. You may fail! Part of the joy of achieving a goal is the uncertainty felt on the journey. Re-formulating your plans may be a scary decision because there is no guarantee you will succeed, but you will almost certainly fail if you do not acknowledge the change and start working on alternative ways to get what you want.

Here are some tips that can help you in managing change:

  • Anticipate change-be ready for anything!
  • Monitor change-keep assessing your situation, so you aren’t suddenly surprised by a change
  • Adapt quickly to change-time spent wishing things didn’t change is time you could have spent working towards a new goal
  • Remember these tips for managing change because things can change again!

Change management can be difficult; but realizing the daunting task ahead of you may be the most difficult part. Once you throw yourself knowingly into your new reality, and stop being afraid of the change and how to handle it, you will feel good. Effectively managing change will offer you a better chance to enjoy your life!

Choose an Efficient Merchant Provider to Apply for Merchant Account

When a business owner wants to apply for merchant account, they may figure that they need to go to a local bank just to be able to open this type of fund. This account enables just about anyone to quickly and easily get paid on the Internet in a more secure manner. The account will be able to detect credit cards and enable the business owner to get paid by this form of payment. This is why a lot of individuals have been making the switch to using this type of fund and they are trying to apply for vendor account funds right away to see the benefits that they have.

Being able to apply for merchant account funds is actually easier than most business owners know. The truth is that these funds can be found and applied for right on the Internet. In fact, most people are able to open their own account within a matter of minutes and have it linked to their own business. This ensures that they will be able to easily get their money when they need it and provide the customer service that they require. When customers are able to pay by credit card, they may make better use of a particular business because of this simple fact.

For most people, having a high risk merchant account will enable them to easily make use of the payment options that they need in order to run an online store. All online stores need to accept credit cards as a form of payment because this is how most people are going to be paying for the items that they are buying. This is definitely a problem for stores that do not have this option, so it is definitely a consideration to keep in mind for companies that do not currently have their own high risk merchant account for themselves to use.

There are a lot of companies out there that offer this account facility, so it is a good idea to research a variety of them thoroughly and to decide what the business owner wants without any issues revolving around costs. It is true that a lot of vendor accounts have high rates, but this is something that can be avoided as long as the business owner researches the companies before doing anything else. There are so many businesses out there that have the right types of accounts for them to use, so this is a consideration to think before planning to apply for merchant account. Having a merchant account can be beneficial to any company that based itself online and is trying to sell items to the general public and receive payment right on the Internet.