Merchant Services
December 8, 2022
Payment Processing: Choosing a Provider
Understand how payment processing works, compare providers, and choose the right company and payment methods to lower fees, reduce risk, and boost your approvals.
Payment processing is a vital part of both brick-and-mortar retail and e-commerce. Modern technology lets a customer make a purchase, present a payment method, and get that purchase approved almost instantly. Payment processing companies provide and manage this technology.
To choose a payment processor, merchants need to understand how transactions move through the system and what to look for in a processing vendor.
Payment processing companies provide the hardware, software, and transaction management that connect merchants, customers, and banks. To keep each transaction secure, they must follow a set of security rules called the Payment Card Industry Data Security Standard (PCI-DSS).
These rules require processors to:
Payment processing involves several steps to ensure accuracy, regulatory compliance, smooth transactions, and customer satisfaction. It all begins at the point of sale (POS).
All of this happens in a matter of seconds. But once a sale is authorized and completed, the merchant doesn't yet have the money.
Several parties work together to process a single payment:
Beyond the key parties above, the payment processing platform includes several components:
Payment processors and credit card networks charge merchants a percentage of each transaction, plus other fees for the services they provide. Payment processors typically charge a flat monthly service fee plus a terminal lease fee to cover the cost of credit card transaction equipment.
Other common fees include:
In addition, the four major credit card companies — Visa, Mastercard, American Express, and Discover — each charge fees to use their products and services. These include:
Merchants must also pay an Acquirer Processing Fee on each Visa transaction, a Network Access and Brand Usage Fee on each Mastercard transaction, and a Fixed Acquirer Network Fee on all cards.
Payment processing companies are essential to the retail industry, online and in person. Following PCI standards keeps transactions authentic, accurate, and secure. They also let merchants use one system for all payment types, cutting down on confusion and redundant work.
Many processors integrate with a merchant's accounting and customer relationship management software, saving time and effort at tax time or during marketing campaigns. Together, these advantages lead to satisfied merchants and customers.
The payment processing sector is an ecosystem made up of credit card networks, acquiring banks, issuing banks, payment gateways, payment processors, independent sales organizations (ISOs), and payment facilitators (PayFacs). ISOs sell processing services and act as intermediaries between merchants, acquiring banks, and payment processors. PayFacs use more advanced technology to offer faster onboarding and a simpler fee structure.
Beyond banks that serve as payment processors, technology has enabled companies like Amazon, Google, PayPal, Square, Stripe, and Shopify to offer processing options as well.
Merchants need to weigh several key factors when selecting a payment processor. This is a partnership that will directly affect the business's profitability and its ability to serve customers for years to come.
As technology keeps evolving, the payment processing industry will grow. New fintech players will enter the market, and adoption of contactless payments and digital wallets will keep increasing. More people will also use cryptocurrency to pay for purchases.
Add to that the growth of peer-to-peer and real-time payments, automated sales systems like kiosks and vending machines, mobile points of sale, and the spread of smart devices and voice assistants — and the future of payment processing looks bright.
CARDZ3N is the right payment gateway because we offer a unified approach. With our flexible plans, merchants can accept credit cards in person or online from anywhere in the world, generate detailed financial reports, and improve performance and productivity.
CARDZ3N also delivers true global merchant solutions, so businesses can accept payments securely in markets around the world. We consult with our clients to provide a broad range of solutions for achieving their long-term goals.
Whether you sell online or in a traditional retail store, choosing the right payment processor is one of the most important decisions you can make. At CARDZ3N, we understand that payment processing is complex and different for every merchant. We work with our clients to build a custom solution with no setup fees.
To learn more about how your business can benefit from our services, email us at contact@cardz3n.com or call 702-623-3528.
Start protecting your revenue from chargebacks today — schedule your complimentary consultation with CARDZ3N’s dispute management specialists.