What is Merchant Processing?
Merchant Processing is the process in which businesses accept credit cards as payment for goods and services, the network that handles the transactions, and the acquiring bank that extends the line of credit to the merchant. Simply said, it is the ability for companies to accept credit and debit cards as payment for their product or business services.
What are the Benefits?
Clients can now pay with Cash, Check or Credit and Debit Card.
Improve your Cash Flow:
Merchant Processing allows you to have cash in your account within a few days, and in some cases, the next day.
Convenience for Clients:
Many shoppers avoid stores that do not accept credit cards.
Simple and Easy:
The process to accept credit cards is quick and easy.
How Does It Work?
A Merchant or Business applies for credit with an Acquiring Bank. This is called a Merchant Account which is a line of credit offered to the business for the ability to accept credit and debit cards from clients. The Acquiring Bank assumes the risk on every transaction, which creates the need to underwrite all clients that wish to accept credit cards. Once a client has a Merchant Account, they select the appropriate terminal or gateway by which to transmit the various transactions. The actual transaction is a two step process, which starts with Authorization of a credit or debit card, and then Settlement and Funding, the process by which the banks accept the transaction and remit funds to the Merchant.
All Merchant Accounts require an underwriting process, which includes an application and credit check for the owners of the business. The Business can be a Start-up and must have a business bank account and proof of ownership documents (i.e. Business License, Articles of Incorporation, etc.). Some business types are considered high risk and may have difficulties qualifying for Merchant Accounts.
“Simply said, it is the ability for companies to accept credit and debit cards as payment for their product or business services.”
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