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Introduction to Credit Card Processing

Credit card processing can be confusing to new business owners who have never accepted credit cards before. But, when the steps are explained, they are very easy to understand.

What is credit card processing?

With online credit card processing, there are two steps:

1. the authorization
2. the settlement.

The authorization step in credit card processing is used to verify that the funds for the payment are actually available. This is where you will see either a credit card transaction "accepted" or "declined". If the funds are available, it puts those funds on hold, so you are guaranteed they will be given to you.

The settlement step is where the funds are electronically transferred to your bank account. This is normally done within 48 hours of the transaction.

There are several important things to think about when you are looking for a processing program. You want to know that the authorization is done in real time. You want the payment processing to be compatible with your system and software. If you are selling items or services online, you want to know that the payment processing is customizable to your Internet store. You should be able to pull reports on your credit card transactions if needed. A good payment processing company will offer you round the clock support in case you have questions. They should also be able to provide you the latest technology and include updates and enhancements as part of their services.

If you are receiving orders through phone sales, fax, or through email, you may want to consider a Virtual Terminal. This method of credit card processing is great if you have a service your customers subscribe to, to which they need to be billed on a reoccurring basis. For example, if you are selling month web hosting, a virtual terminal will continue to bill the customer's credit card each month.

Do not let the steps of credit card processing scare you away from accepting them. By understanding how they work, you will see how easy it is for you to benefit from accepting credit card transactions.