What is merchant services?
Merchant services are methods of accepting credit card payments for your
business. They are sometimes referred to as merchant account, payment
processing or credit card processing. Merchant services allow you to accept
credit card transactions via telephone, computer or mobile device.
You can also use merchant services to enable online shopping cart solutions.
When a person uses their credit card to buy a product from your business, you
can swipe the credit card through a credit card reader or type in the number
manually. At that point, you interact with a payment processor to get a prompt
asking if you would like to accept the charges.
This is called "authorization" of the transaction and gives an approval for money
to change hands. After you make a sale and the customer is satisfied, you enter
the final step in the transaction. At this point, you collect payment from your
customer and record it using computer software or hardware for your records.
This is called "settlement" of the sale.
How does merchant services work?
Merchant services are different depending on whether you want to accept credit
card transactions via the telephone, on a computer, or with a mobile device.
Credit Card Terminals: Credit card terminals are electronic devices that read the
information from your magnetic stripe credit cards and either allow you to swipe
the card for processing or require you to type in some of the digits of the credit
card manually. They are used when you want to swipe the credit card through a
slot. If you have an online store, terminals are sometimes called "credit card
readers."
Credit Card Readers: Credit card readers are small devices that connect to your
mobile device via Bluetooth or USB. They allow you to manually type in the credit
card information for sales processing on your tablet or smartphone.
Card Not Present Transactions: If you want to take sales via phone, an online
store, or by mail order without swiping the credit card through a terminal, you will
need to use a card not present service. Card not present transactions are
sometimes called "card-not-present" (CNP) transactions.
If you use a card not present service, you must have each credit card number and
expiration date for your customers. You can send the information to your
merchant services provider in a file or enter it manually when taking the sale.