Small Business Merchant Credit Card Processing

Small Business Merchant Credit Card Processing – You don’t need to know the ins and outs of credit card processing to get a business up and running. But it definitely helps to get grounded. In this guide, we walk you through everything you need to know about credit card processing – and how to choose the best option for your business.

Credit card processing is a multi-party process. This includes issuing banks, acquiring banks, and merchant service providers.

Small Business Merchant Credit Card Processing

Square’s fee is 2.6% + 10¢ for magstripe card transactions, chip card transactions, and contactless payments (NFC). The fee for manually entered transactions is 3.5% + 15¢.

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To accept credit card payments, you need a credit card reader. Square’s latest and greatest reader is $49 and accepts EMV chip cards and NFC payments.

Taking credit card payments may seem easy enough. The customer presents the card, processes it, and with Square, the money is usually in your account within one to two days. (With Square Instant Deposit, it comes faster. The cost is 1% per deposit). But under the hood, there’s a lot going on. From the time you swipe or swipe the card to the time the money is deposited into your bank account, there are many different parties involved. And each of them takes an important step in the chain of events. A thorough understanding of how credit card processing works can help you understand where you may incur fees—and inform your decision about which credit card processing system makes the most sense for your business. keeps

Let’s say you go to a place called Joe’s Cup Coffee and order a latte. The official names of the players involved in the transaction are:

Now let’s zoom in for a moment. There are some additional parties involved in credit cards and what happens during the transaction itself. they are:

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The issuing bank is the financial institution that issues your credit card and line of credit. This is basically your credit card company. Issuing banks act as intermediaries between you and the credit card network by issuing contracts with cardholders on payment terms for transactions. For example, your issuing bank may be Capital One.

An acquiring bank (also called a merchant bank or acquirer) is the bank that sends transactions to the network, which then sends them to the issuing bank.

A merchant service provider is an entity that allows businesses to accept payments using credit cards, debit cards, and NFC mobile wallets (such as Apple Pay, Samsung Pay, and Android Pay). A merchant services account is established with an organization that has relationships with both issuing and receiving banks. Your merchant service provider allows electronic payment processing when your customers want to pay for items.

Say Joe’s Cup of Coffee was an online store that sold products like t-shirts and mugs. A so-called payment gateway will be involved in online processing of these credit card transactions. A payment gateway facilitates the transfer of information between a payment portal (such as a business website) and the receiving bank. It hides sensitive information such as card numbers to ensure that everything is secure throughout the process.

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The square also helps in taking care of everyday things. From point of sale to payroll, we have all kinds of services to help you save time and run more smoothly.

Generally, if you want to start working with credit cards, you can apply for a merchant services account at the bank, which can be a complicated process. Once you’re approved, you can then connect your point-of-sale system to your merchant account and start accepting credit cards.

But with Square, things work a little differently. Square itself has an account with merchant services and banks. We act as a single account for merchant services for all businesses using Square.

In the credit card world, certain types of business can be considered “high risk.” High-risk merchant service accounts may have higher fees and stricter terms. Institutions may deny accounts to high-risk traders.

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There are no hard and fast rules, but certain types of businesses are characterized as riskier businesses than others. This may include businesses that sell illegal goods or services, consumer or membership clubs, credit counseling or repair services, and businesses that engage in deceptive marketing techniques. Read the Square User Agreement and Terms of Service for more information.

Now that we’ve gone through all the parties involved in credit card processing, we’ll move on to how it all works. Let’s go back to the cup of coffee. You give the barista your card and he runs away. What happened after that?

When a merchant swipes or taps (in the case of EMV) a customer’s card, a request is submitted to Square. We then forward the transaction to the receiving bank, which in turn forwards it to the authorizing bank. Issuing a bank check for sufficient funds. It also runs the transaction through fraud models to check that the transaction is secure (for the protection of the cardholder and the issuing bank).

This is the processing stage, that is, how the money from the transaction is sent to the recipient to start the process of depositing it into the merchant’s account. This is called batching because payments are sent to a large group.

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A financing step (or settlement) is when businesses receive money from credit card transactions that are deposited into their accounts. Square deposit is usually scheduled within two business days. But if you set up Square Instant Deposit, you’ll get money instantly – 24/7. The fee is only 1% per deposit.

Many companies have a ton of hidden fees when it comes to credit card processing. This may include transaction fees (such as exchange and assessment return fees), flat fees (such as PCI fees, annual fees, early termination fees, and reduced monthly fees), and unexpected fees (such as withdrawal fees or authentication services). Squares, on the other hand, have none of these.

Square’s pricing is simple – no hidden fees. Only 2.6% + 10¢ on magstripe card transactions, chip card transactions, and contactless (NFC) payments. The fee for manually entered transactions is 3.5% + 15¢. These fees apply to all types of businesses, including non-profit organizations.

You need to get a new piece of technology to process credit cards. A credit card machine, aka Point of Sale (POS) is a device that interacts with payment cards to make electronic money transfers. Newer point-of-sale systems (such as Square contactless and chip readers) also accept mobile NFC payments such as Apple Pay, Android Pay, and Samsung Pay.

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Some credit card machines can cost hundreds of dollars. Square’s latest credit card reader, on the other hand, costs just $49. The Square contactless and chip reader accepts EMV chip cards and NFC payments.

There are many marketing programs big and small. Square’s POS products are flexible and fully mobile. They are designed to look good on your counter top when you shop at your brick and mortar store, and fit in your pocket if you go shopping.

If you’re new to this whole thing, or just starting your first business, getting set up to process credit cards can seem daunting. Fortunately, this should not be the case. These days, with tools like Square, it’s easy to get up and running accepting credit cards for your small business. After all, you only need your mobile device. Square works directly with the device you already have to accept credit card payments and, with our new reader, NFC payments like Apple Pay.

Credit cards are processed differently based on the type of card. Magstripe cards swipe right through a credit card reader. EMV chip cards are inserted vertically into the payment reader for the entire transaction. You can recognize an EMV card by a small chip in the corner of the card.

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You should set up your business to accept EMV chip cards as soon as possible. EMV chip cards are more secure than MasterCard cards (which have been around for decades). Magstripe cards are easy to counterfeit and have become increasingly common in the United States. EMV chip cards have enhanced security features that protect against cloning and counterfeiting. To help prevent fraud, US banks issue these EMV chip cards to consumers in large numbers. Soon, many people will have.

But there’s another reason you should accept EMV cards for your business—credit switching. Under the liability shift (which took effect in October 2015), businesses not set up to accept EMV chip cards can now be on the hook for certain types of fraudulent transactions (although banks previously bore this cost). So to protect your business from unwanted payments, it is wise to get an EMV compliant point of sale system.

In addition to EMV chip cards, it’s a good idea to also accept NFC mobile payments such as Apple Pay, Android Pay, and Samsung Pay. These new payment methods are as secure as EMV but with a much better experience for customers. According to a Square Future of Commerce report, all consumers surveyed in 2022 will offer this type of offer.

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