A merchant appoints a company to process its payments and manage transactions from different channels such as debit or credit cards. It is usually done by a third party company and is called a payment processor. They work with merchant acquiring banks.
Types of Processors
- Front-end Processors:
These processors are connected to various channels and card associations. They provide banks’ merchants with authorization and settlement services.
- Back-end Processors:
These processors take payments from the front-end processors as well as the Federal Reserve Bank such as transferring the money from issuing to merchant bank.
In order to check for verification, the payment processing system carries out fraud checks with the transactions as well as confirms the validity of the transactions with the issuing bank of the card or with the card associations. This process is very quick and highly flexible. For the verification of the card, the country in which it was issued and the payment history related to it is a parameter for checking the appropriateness of the card.
As soon as the credit card details are approved, it will be notified to the merchant through the payment gateway and the merchant will then complete the transaction. In case of declination by the card association, the merchant will decline the transaction.
With an increase in the modern technology and the introduction of software-as-a-service (SaaS), providing checks has become easy though a regulatory compliant electronic portal as well as the processing of single and recurring payments without the storage of card data has become possible. With their cloud based features, they enhance the quality of processed transactions as well as give rise to reduced costs and increased time-to-market. Also, they enable the processing of ACH and cash related transactions.
Mentioned below are three basic steps for the processing of credit card payments:
When goods or services are traded, payment details are provided by the card holder to the merchant. With the increasing complexities in the payment system and the rising ecommerce platforms, there are now a number of methods and options available for making payments. The merchant after receiving the card details, forwards them to their payment processor who then verifies the details through the issuing bank or card association. After verifying the details, the merchant is notified of the verification or non-verification after which they accept or decline the transaction respectively. There are various channels for initiating the request such as the point of sale system, credit card terminal or any ecommerce website.
Settlement and Funding
Once the payments are authorized, scheduled batches of them are transferred to their payment processors by the merchants. This is an automatic process. Then these are passed on to the relevant association which in turn pass them on to the issuing bank. The issuing bank then deducts the amount of transaction from the account of the card holder. That amount is then forwarded to the merchants account with any interchange charges deducted from it.
This entire process occurs within less time. Authorization is a process of seconds and settlement and funding which used to take days, now occurs overnight making payments easily available.
Shopify is a powerful platform that provides its services to more than 600,000 business all over the world. When it comes to doing online business, Shopify is your best choice. The payment processing system of Shopify is the perfect example of a credit payment processing system. You can save a lot of money by accepting credit cards by Shopify. Interestingly, Shopify offers a 14 days free trial as well. Considering that you’re using Shopify for accepting credit cards, you can get clear data regarding your receivables, allowing you to handle your expenses and payments efficiently. You can easily deposit the quick payouts to your bank account in minimum 3 days.
With the credit card reader, you can expect to receive payments without any delays. Additionally, you will not have to return to your store or office in order to process the payment. You can capture your transactions on spot, with Shopify’s iPhone credit card reader.
Furthermore, with Shopify’s mobile application, you can easily track all the credit card payments, turning your mobile into a quick cash register. The POS system of Shopify, allows you to handle your inventory, payments and orders efficiently. The payment system is secure and PCI compliant, hence, you don’t have to worry about any security issues.
You can set up your store in 3 simple steps, and start receiving payments. The reason why Shopify is the most recommended platform is, its user-friendly interface. Shopify offers different price plans, such as:
Shopify Basic: you need to pay $29.9 for this.
Shopify Plan: you need to pay $79 for this.
Shopify Advanced: you need to pay $299 for this.
Once you create your Shopify store, the payment gateway is approved automatically. Therefore, this provides you the ability to accept all the major credit cards, without having to wait for them. You can manage the entire operations of your business right from your mobile.
Shopify merchants can accept instant payments through the Shopify Card reader which is free of cost. For processing an order, you need to attach the card reader to your mobile, swipe your credit card, ask your customers to do a signature on the phone with their finger. They will receive the receipt through email. Lastly, an advantage of using a credit card swiper include:
- An increase in cash flow and quick inventory flow
- The transaction fee of credit card is low
- With the credit card scanner, you can accept payments easily and quickly.
- Keep your customers updated with the latest launched products and other company updates.
- It consist of the best security rating for credit card processing
Thus, when it comes to credit card processing system, Shopify is one of the leading ecommerce solution provider available in the market. It is reliable and credible and comes with a lot of benefits. Therefore, make your choice wisely.