Credit card processing: the contemporary choice for trade and commerce

In a very simple term, a web merchant account is a bank account that let your e-biz acknowledge e-checks and online credits. Each day at a definite time, your web merchant bank account receives that particular day’s accomplished transactions. Their role is to hold the cash for many days, in order to ensure that all the parties concerned are satisfied. This is what an internet credit card processing is all about.

Consumers increasingly are turning to plastic over paper when they open their wallets. Plastic money has become much user friendly and prevents theft risk mainly, which is the most common risk while in case of paper money. In reality, credit card transactions involve coordination between multiple high-speed computer networks. The entire transaction process involves; swipe a card, input some numbers and money then automatically get debited from the customer’s account to the merchant’s account.

There are mainly 5 parties involved for a credit card processing:

• VISA and Master that gives franchise to the bank.

• Issuing Bank

• The customer

• Merchant: who accepts card as a mode of payment

• Acquiring Bank / credit card processor: Bank whose network is used by the merchant.

There is a charge which the Acquiring Bank charges on the Merchant. When a merchant makes a sale and swipes a customer's credit card, the card number, the amount, and the merchant ID travel over the credit card processor's computer network. The credit card processor can either be a bank or a company that provide credit card processing services.

Merchant services are a broad category of financial services intended for use by businesses/ commercials. More specifically, it refers to the authorized financial services that enable a business to accept a transaction payment by use of the customer's credit or debit card. This happens both in case of online or point of sales system.

To use merchant services, a business needs to obtain a merchant account to accept customer credit card and electronic payments through an electronic commerce Web site. A commonly associated term is Merchant Service Provider the name used to describe a company or organization that will provide transaction processing solutions to merchants. There is a fee which the Acquiring Bank charges on the Merchant, which is also said to be a Merchant Discount.

In today’s world any kind of major or minor payments are made through the credits card commonly known as ‘plastic money’. As this is the most effortless and handy way to make payments, people from all walks of life get attracted to avail this user-friendly facility. As the name simply suggests, it is the payments which is made by the credit card user against the card usage. This is after all money taken in credit from the bank, which needs to be paid back within the specified period once the card has been used and transactions made.

Such payments can be made in various modes- either cash/ debit card, cheque, demand draft. Every bank has its own due dates and billing dates within which such payments needs to be cleared. Payments should be ideally made within the due date to avoid any kind of charges.

There are two modes of credit card payments mainly:

• Transactor / Charge mode: full payment as per usage made by the customer.

• Revolver/ Partial Mode: Partial payment made. Interest gets charged on the full amount in such case.

A Credit card terminal is a device that does transactions with a credit card or a debit card. Several types of credit card terminals are available to merchants. They mostly have the common function. They allow the merchant to swipe in required credit card information and transmit such data to the merchant service provider. This is a very important required for credit card processing.