Merchant services are usually known by business owners as merely the transactions using credit or debit cards. On the other hand, that’s not really wrong, but people are missing the big picture here; about how merchant services can help your business be more progressive.
Any establishment that accepts debit card or credit card payments need to use merchant services. Most especially when they also want to accept different modes of payment like online or mobile. To have this realized, they need to get a reliable merchant services provider to create new platforms and technology.
Let’s start by comparing an ecommerce-based business to a body shop, pretty sure you can tell that both of these establishments has different need. An eCommerce business will need a more complex security system than a body shop. Body shops required a physical interaction for payment processing unlike ecommerce businesses that needs a virtual-based payment.
So here’s how payment processing work: First the merchant needs to have an account with the merchant services provider. After they get the account, that’s the time wherein they can process the payments.
The payment processor will serve as the clearing house for the credit card networks, banks, merchant and the customers. The swiped card will now let the payment processor send a message to the bank to determine if the bank will accept the transaction or not. This is done in order to check that the cardholder has sufficient fund in their account to pay for the transaction. If the bank decides to approve the transaction then the processor will pass the message through the merchant and give the receipt to the customer which they may sign (optional).
But if the bank declined the transaction, then the processor will need to notify the merchant so that they can inform the customer. So that the merchant can let the customer use a different form of payment.
After the transactions in the entire day has been done, the merchant will forward all the approval codes to the payment processor. All of the authorization codes on that business day will then be sent to the banks. Doing this is very essential, it is known as batch settlement.
Fraudulent activities must be prevented especially because the merchants are responsible for these confidential information about people’s finances. These merchants needs to be compliant in maintaining these security protocols to prevent having to penalty. Not to mention they could lose their account for the merchant services which means they will no longer be able to process credit card or debit card payments. This has a big effect on the reputation of their business.