Functioning Of Credit Cards
According to find.co.uk,credit cards form the base of many businesses theses days. It has been proved by researchers that people trend to do spend more if business holder is providing facility of credit cards acceptance.
There are five parties to a credit card processing transaction:
1) The cardholder
2) The issuing bank that issues the card and advances the line of credit
3) The merchant the retailer.
4) The acquiring bank that handles the merchants receipts
5) The network (e.g. Visa or MasterCard) which is a co-operative venture between the affiliated card issuers and which links the issuing and acquiring banks and co-ordinates the exchange of information and the flow of funds.
The cardholder's card is swiped through the merchant's point of sale terminal or any other credit card processing solution, which transmits information stored on a magnetic strip or a chip to the acquiring bank in encrypted form. The acquirer checks the merchant's ID, the card number, the expiry date, the credit limit and the remaining credit. The acquiring bank connects to the issuing bank via the network's computer. The issuing bank transmits the account information and later transfers the funds to the acquiring bank. The issuing bank debits the cardholder's account and reduces the balance of credit available. The network charges the issuing banks to cover its costs. The acquiring banks charge the merchants a percentage of each transaction and pay interchange fees to the issuing banks. The issuing banks charge cardholders interest on unpaid balances, and sometimes an annual fee.
Merchant Services offers point of sale terminals for POS transactions for both virtual terminals and payment gateways for ecommerce sites.
Merchant Services also offers a wide range of ACH/EFT/eCheck processing solutions. For new and/or growing businesses merchant services offers complete legal entity/incorporation services to more efficiently run the business. Additionally, Merchant Services offers alternative financing solutions to help established businesses. There are 2 primary categories the merchant service industry divides all merchants into. They are called "Swiped" and "Non Swiped". A "swipe" merchant means the business owner will be conducting business face-to-face and will swipe the customer?s credit card through a credit card machine. The processing banks prefer this type of transaction as the probability of fraud is greatly reduced. Because of the lower risk involved, "swiped" business types are offered lower rates. The second category is called "Non Swiped." This includes all other business types such as mail order, phone order and ecommerce. Because the merchant is not swiping the customers? credit card through a machine, the banks feel there is a higher risk of fraud and so charge a higher rate.
About the Author: For more information on credit card processing,please visit http://www.paynetsystems.com