The key players involved in credit card processing are:
The Cardholder:
Accepting credit card payments allows you to reach more customers and, therefore, make more money! And while the process may seem confusing at first, it’s quite simple. Let’s break it down to the key players involved. The Cardholder, also referred to as the customer, begins the credit card process. After obtaining a credit card, they can then use the card to make purchases. Basically, the cardholder uses their card for payment to a merchant for products or services.
The Merchant:
The Merchant essentially refers to a business that accepts credit cards as payment from customers (or cardholders) through the use of physical terminals (in-store) or virtual terminals (online).
The Banks:
There are two important banks in credit card processing. The first is the Acquiring Bank. This is sometimes referred to as the Merchant’s Bank. This bank receives the transaction requests when your customer attempts to pay you through a terminal. Then, the Acquiring Bank sends this information to the Issuing Bank, through the network (which refers to the credit card companies).
The Issuing Bank is the second bank involved in credit card processing. This bank approves or denies the payment request based on the customer’s funds. If the customer can pay for the transaction, it is authorized and sent back to the Acquiring Bank through the network.
The Network:
These are the credit card companies. MasterCard, Visa, Discover, American Express – all the big guys. During a transaction, these companies receive the payment details from the Acquiring Bank. Then, they forward that payment along to the Issuing Bank for them to check the customer’s funds. Once those funds have been cleared to go, the payment is sent back to the network again, who finally forwards it to the Acquiring Bank.
Essentially, the network communicates with both banks so that they don’t have to communicate directly. The network is also in charge of setting the Interchange fees for payment processing. Feel free to read more about Interchange Fees here. Without the network, businesses wouldn’t be able to accept any credit cards for payment!
Work with Bank of Merchant
Bank of Merchant makes credit card processing simple! Let our team help set you up with a merchant account and the appropriate terminals you need to accept credit or debit cards from customers. This will expand the reach of your business and generate more customers.
Contact our agents today to discuss your payment processing needs!