What’s is credit card processing?
The quality of your credit card processing service can make a big impact in three key areas:
- The speed and reliability of your transactions
- The rate structure your business is placed in
- The availability of knowledgeable support
As a merchant, you rely on your credit card processor to handle all of the smallest details of accepting electronic payments. And being dependent on a third party to perform such a crucial service that you only partially understand can make anyone anxious. Follow along here and we’ll help you identify some of the most important aspects of credit card processing so you’ll have a better idea about what to pay close attention to.
Here’s a brief refresher on how credit card processing works:
The customer presents a payment card in your store.
The card is swiped (magnetic stripe card) or inserted (EMV chip card) into your terminal.
The transaction information is then sent off to the processor, who communicates with the customer’s bank and the card networks (such as Visa and MasterCard).
Your processor transmits the processing data to the customer’s bank, so the charge can be either approved or denied—depending on if the card number is valid, whether the customer has the funds available and other factors.
You’ll send a batch of approved transactions for settlement (for example, at the end of each business day). At that point, your customers’ accounts will be charged and the transaction amounts (less processing, interchange and other fees) will be sent to your bank account.
Fast, easy transactions make customers happy
Customers take credit card payments for granted, so even short delays can cause big annoyances. It’s important to choose a processor capable of processing thousands of transactions, quickly and safely.
What counts as “fast?” Well, in the early 1990s, merchants were connecting to the payments network via dial up internet which took up to a minute per transaction, could tie up the businesses phone line, and was subject to constant internet outages and connection problems.
A decade later when IP processing via broadband Ethernet became the new standard, a tech savvy processor could boast about delivering 2-second transactions, a speed that modern customers have come to expect.
Though the introduction of chip cards has slowed transactions down once again, since the card must be left in the terminal until the approval clears, customers seem willing to exchange better fraud and identity protection for slightly longer transaction times.
With the right processor, you can help keep things moving by accepting mobile transactions where the customer taps their phone to the terminal to complete a payment, and by adding a terminal or two that can be moved from the counter to enable line-busting and pay-at-table transactions.
Outages are bad for business
A credit card processing outage can cost merchants hundreds, if not thousands of dollars, depending on the length of the outage and the average ticket volume they process. Customers turned away during an outage may view the business as untrustworthy and/or inconvenient which is not the brand association small business owners are looking for.
Outages aren’t always the payment processor’s fault. Outages can occur in multiple places in the transaction flow such as the card brands and bank networks that processors don’t have control over. But reliable processors like Vantiv have solutions to help merchants stay operational during a network outage, as well as redundant servers to reduce their own risk of going down.
Ask about a credit card processor’s outage history and the steps they’ve taken to minimize downtime when you’re doing your research before selecting a provider.
Rate structures are not one size fits all
The rates and fees you’ll pay for a given transaction depends on a lot of dynamic factors, starting with the interchange category applicable to your business. Though payment processors charge their own rates and fees on top of interchange, the cost of interchange is set by the card brands and is the same for all processors. But interchange itself isn’t one straightforward cost. It is a set of various pricing models that apply to different types of businesses.
This is particularly relevant if most of your transactions qualify as “small tickets” or “convenience purchases” according to the various card brands and their interchange models. Quick service restaurants, convenience stores, and movie theaters are examples of businesses that may benefit from being placed on an interchange level that will charge a high-volume, low-ticket business more fairly.
Make sure you’re quoted and charged appropriately by your processor if your business qualifies for a lower rate structure.
Customer support can make or break your day
Dealing with technology and managing systems is a part of modern life and every business owner expects a degree of troubleshooting and maintenance to be necessary. However, the way that your payment solutions provider responds to those difficulties can make a big difference to your sanity and your bottom line.
When things go wrong, you need to be able to count on support from real people who know how payments work, know what your terminal or POS system’s common failures are, and how to resolve them. You need to be able to speak to someone right away when you call—whether it’s in the middle of the night, or on a busy holiday.
Reputable payment processors keep track of their call waiting times and resolution scores. Ask about them when you’re making a decision about which provider to use. Some, like Vantiv, may even have a list of customer service award to brag about. See ours.