Accept Credit Card Payments Instantly to provide your customer the best shopping experience
When you’re going through a financial slump, credit cards can be a huge help. It will not only provide you with a much-needed break, but also the means to get back on your own two feet without relying on anyone else.
Without a doubt, having your first credit card can be exciting, tempting, and intimidating. With each expenditure, you can reap numerous benefits. Furthermore, it opens the door to a variety of other financial offerings.
A credit card is a type of payment card that can be used to make purchases online or in stores. It can also be used to make cash withdrawals, which are known as cash advances.
Unlike debit cards, which are issued to anyone with a bank account, consumers must apply for and be approved for a credit card. Financial institutions assess a person’s creditworthiness and, if approved, grant the cardholder a specific credit limit. The higher someone’s credit limit, the better their credit. Individuals should spend more than the limit. If they do, there’s a chance the transaction will be rejected. If it goes through, cardholders may be charged overdraft fees.
Charges and Fees for Credit Card Processor
According to the Pew Research Center, three out of every ten US adults make no cash payments to pay for their purchases in a typical week. With so many customers opting for cashless transactions, businesses must be able to accept credit card payments in order to maintain customer service satisfaction and avoid lost sales. This, however, entails more than simply opening a merchant account and installing a credit card terminal on the counter.
Credit card processing fees and costs include, but are not limited to:
Merchant Discount Rate
Merchants are charged this fee for accepting and processing debit and credit card payments. The merchant discount rate is typically between 1% and 3% of the total purchase price after taxes (with eCommerce merchants typically paying the higher end due to the costs of added security). As a result, merchants must keep this fee in mind when pricing their goods and services. So that it does not affect their margins.
The merchant discount rate is then divided into these components.
Interchange Fees – These are transaction fees paid to a card-issuing bank by the merchant’s bank and acquiring processor. Whenever one of their cardholders makes a purchase from their store. Interest rates and the costs of moving money influence exchange fees, which are not constant.
Visa and Mastercard, for example, update their interchange fees twice a year – in April and October. And charge different rates depending on card type (e.g., debit and credit), transaction type, and business size, among other factors.
Assessment Fees – Assessment fees are typically flat-rate fees paid to credit card networks. Visa and Mastercard charge 0.14 percent and 0.1375 percent of the total purchase price, respectively, as of February 2020.
Markup Fees – Payment processors charge markup fees to cover the cost of processing credit card payments.
Fees for Chargebacks
Chargebacks are a fee paid by merchants when a cardholder disputes a transaction charge with their issuing bank, also known as the chargeback process. While they are reassuring to customers, they can result in lost revenue for merchants.
The exact rate will vary depending on the acquiring bank and processor. Fees may be higher, for example, for merchants who have a history of multiple disputed charges.
How companies can keep online credit card processing safe?
The integrity of online credit card processing is predicated on all parties having faith in the system’s security and taking the necessary precautions to keep it secure. Consumers, for example, can only pay by credit card if they willingly give businesses their payment information. Businesses, in turn, must keep this information secure.
PCI compliance is a framework of mandatory guidelines provided by the Payment Card Industry Security Standards Council that applies to any organization that accepts and processes card payments. Businesses that comply with these standards are expected to do the following.
- Use payment processing systems that are PCI compliant. The merchant’s processor’s card payments network must have a track record of solid data security and verifiable uptime.
- Customers participating in online transactions should be required to verify their identities by providing their card numbers, card expiration dates, billing addresses, CVV codes, and, if necessary, authentication data.
- Take the necessary steps to reduce payment security risks. Such as updating the infrastructure that processes and stores card data or installing security patches on a regular basis.
- To improve the security and safety of your card payment environment, use security tools.