A single swipe or tap is often all consumers need to process payments. But business owners may find payment processing confusing and difficult to understand.
Electronic payments are necessary for businesses of all sizes today, as two-thirds of adults worldwide now make or receive them. And working with a payment processor is crucial to enable electronic payments. The purpose of this article is to explain what a payment processor is and how to choose one for your SME.
What is a payment processor?
A payment processor is a company that facilitates electronic payments between a merchant and their customers. They help securely process transactions and ensure that funds are transferred from the customer’s account to the merchant’s account. Payment processors are crucial in enabling businesses to accept electronic payments, whether online or in-store.
How are online, credit and debit card payments processed?
Online payments are processed by a payment gateway – an eCommerce service that authorises credit card or direct payments. Payment gateways securely process credit and debit card payments by encrypting sensitive data such as card numbers and ensuring that transactions are authorised before they are completed. Payment gateways are necessary for online businesses because they help prevent fraud, protect sensitive customer data, and ensure that transactions are processed quickly and accurately.
Credit and debit card payments are processed by the issuing bank, acquiring bank, and merchant services provider.
What is an issuing bank?
An issuing bank is a financial institution that issues a credit or debit card to a customer. When a customer makes a purchase using their card, the issuing bank is responsible for authorising the transaction and transferring funds to the acquiring bank.
What is an acquiring bank?
An acquiring bank is a financial institution that processes credit and debit card transactions on behalf of the merchant. The acquiring bank is responsible for ensuring that the transaction is authorised by the issuing bank and for transferring funds to the merchant’s account.
What is a merchant services provider?
A merchant services provider is a company that helps businesses accept electronic payments. They provide businesses with the necessary tools and infrastructure to accept credit and debit card payments, including payment terminals, payment gateways, and merchant accounts. Merchant services providers also provide businesses with customer support and help manage chargebacks and disputes.
What is a payments gateway?
A payments gateway is an eCommerce service that authorises credit and debit card payments. Payment gateways securely process transactions by encrypting sensitive data such as card numbers and ensuring that transactions are authorised before they are completed. Payment gateways are essential for online businesses because they help prevent fraud, protect sensitive customer data, and ensure that transactions are processed quickly and accurately.
Payment terminals for credit card processing
Payment terminals are essential for businesses that accept credit and debit card payments. There are two main types of payment terminals: mobile and POS. Mobile payment terminals allow businesses to accept payments on the go using a mobile device, while POS terminals are used at checkout counters. Payment terminals can also accept contactless payments, such as Apple Pay or Google Wallet.
When a customer swipes or inserts their card, the payment terminal reads the data and encrypts it before transmitting it to the acquiring bank. The acquiring bank then verifies the transaction and transfers the funds to the merchant’s account. This process ensures that sensitive customer data is protected throughout the transaction.
How to set up credit card processing for an SME
Setting up credit card processing for an SME can be a daunting task – here are 4 key steps to make it easy:
Get started with a payment processor
Our mission at Trust Payments is to help SMEs enhance their business with the latest payment and customer loyalty technologies. We will first gather information about your SME, including expected transaction volume, products and services you offer, and preferred payment methods. Then, we’ll recommend a payment gateway that suits your business perfectly. Lastly, we will help you set up your merchant account and install your payment terminals.
Contact us today to learn more!