When people hear the term merchant services, it always implies the idea that it is all just about credit card and debit cards. But debit or credit card transactions are just the small part of it, the entirety of merchant services helps your business grow.
Merchant services are widely used by any store who accepts credit card or debit cards. Payment online and mobile can be done when they use merchant services. To achieve this, a business owner needs a credible merchant services provider to provide forms of technology for new profit gaining opportunities.
Just like a ecommerce-based business and a body shop; if you look at these two forms of businesses, you can say that both have different needs. An eCommerce business will need a more complex security system than a body shop. Body shops required a physical interaction for payment processing unlike ecommerce businesses that needs a virtual-based payment.
So here’s how payment processing work: First the merchant needs to have an account with the merchant services provider. After this is done, then the payment processing can begin.
Payment processors serves as the bridge between the customer, banks, merchant and credit card networks. Once the card is swiped a message then is sent though the payment processor to let the bank confirm or decline the transaction. This is done in order to check that the cardholder has sufficient fund in their account to pay for the transaction. After the bank approves the transaction, the processor then send the authorization code to th merchant so the customers can continue with their transaction.
But if the bank declined the transaction, then the processor will need to notify the merchant so that they can inform the customer. The merchant can then suggest to the customer to pay in cash or if they have another mode of payment.
After all the transactions have been made for that particular day, the merchant will then send the authorization codes to the payment processor. Which the processor will then forward to their respective banks to be settled. They call it batching or batch settlement.
But because the merchant is handling confidential information, it is vital that they have a security system to prevent any form of fraud. If these merchants do not follow these regulations about safety measures, there will be a large fine. Their merchant services provider account can even be revoked which can greatly impact the profit on their business because they will no longer be able to process credit or debit payments. This can greatly impact their reputation.