The Role of Your Credit Card Processor

 

 

The Role of Your Credit Card Processor

 

Whether you pay your credit card processor one lump sum at the end of the month or have a little amount deducted from each daily batch of transactions, you are paying for a service. But, what exactly are you paying for? Your credit card processor is merely one component of completing your transactions. There is a vast and complex network of companies involved in every transaction and your processor manages the process between all of the companies involved. In a nutshell, your processor represents your business with each of the card brands you accept such as Visa, MasterCard and American Express.

The Magic Behind the Scenes

When you accept a credit card there are a number of steps that place for the money to be deposited into your bank account. While the steps vary slightly based on the type of card, the steps involved start with capturing the card information. This can be done manually, through a website shopping cart, a POS system, or a terminal with a chip or stripe reader. The card data, along with your business information and the information about the specific transaction is sent to an Acquiring Bank such as First Data. The Acquiring Bank sends the information to the card brand (Visa, MasterCard etc.) who then checks with the specific Card Issuing Bank (Wells Fargo, Capital One, Bank of America, etc.) to see if there is enough available credit on the account. Assuming the funds are available, the Card Issuing Bank holds the funds required for your business.

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What is a Risk Hold?

 

 

What is a Risk Hold? 

 

Have you ever had your credit card deposit placed on Risk Hold? We understand the frustration you feel when this happens. A Risk Hold is common for new merchants and can also be used when you have a very large transaction or a questionable transaction. Risk Holds are implemented by the funding bank and not your processor. Your credit card processor has no control over this but may be able to help get the money released sooner by acting on your behalf.

 

A risk hold is a fairly a routine procedure that many merchants experience in their first few weeks of processing. It can create fear and uncertainty but you will almost always receive your money sooner or later. A Risk Hold may hold up your settlement payments for as long as a week but more likely about 72 hours.

 

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Where Do My Credit Card Fees Go

 

 

Where Do My Fees Go?

Many merchants falsely believe all of the fees they pay go to their credit card processor. If that was the case there would probably be a lot more credit card processors out there today. The truth is, your processor actually keeps a very tiny portion of the transactions. This blog is intended to provide a clear understanding of how those fees work, what they do for you, and how you can avoid additional fees that you don’t need to be paying. This is a guide on how fees are calculated for most merchant accounts:

The transaction begins the moment your customer swipes, taps, keys or inserts their credit or debit card to pay you for goods or services. Fees are usually based on the amount of the transaction. This amount is determined by important factors such as your merchant services provider, such as Chosen Payments, your bank and the customer’s bank, and the card brand, such as MasterCard, Visa or Amex that issued your customer's credit card.

Some processors charge a fixed price per transaction without charging you any additional fees. Others charge a little more than what the credit card issuer would charge directly. Some processors have a tiered pricing system that depends on the type of card presented and other variables not within your control. These include rewards cards, government cards, corporate cards, non-rewards cards etc.

 

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Credit and Debit Card Skimming Continues to Grow


 

  

We continue to warn about credit card skimmers because it has become big business. As a merchant, you have an obligation to protect credit card data entrusted to you. This includes protecting and monitoring your credit card equipment and online processing. The latest trend is for thieves to install micro cameras allowing the thief to easily see the PIN code being entered into a keypad.

 With this in mind, we will focus on sharing tips on what you should be looking for as a merchant as well as being a consumer that likely uses ATM's and other electronic payment points. It really only takes a quick inspection to look for things that might be amiss and cause you to become a victim of identity and credit card theft. Skimming works by retrofitting card readers such as an ATM or gas pump card reader with a camouflaged counterfeit card reader. The counterfeit reader records all of the information from the magnetic stripe on the back of your card. The thief can then duplicate your card onto a new blank credit card or simply capture all the data needed to sell on the black market.

You may wonder where a person might get such sophisticated equipment to do this. The truth is, skimming gear is readily available online at a cost of about $400. In most cases, the companies selling card readers are legitimate businesses that sell the readers to companies for use with point of sale systems. However, the sale of such equipment is completely unregulated. Since there are no regulations, skimmers can also buy them. A typical bundled package includes a card reader and a card writer.

A thief will usually buy a card skimmer that matches the type of device type he plans to attack. As an example, he might by a gas pump style reader and then connect it to the circuitry of the real card reader in a gas pump. The card skimmer has a magnetic stripe reader and local flash memory that stores the card data. Newer advanced skimmers are equipped with 3G radios that transmit skimmed data back to the thief in real-time over a cellular network. This eliminates the need for the thief to ever come back to collect the skimmer and data. It also reduces the chance that law enforcement will catch the thief by setting up a stake out and waiting for the thief to return.

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