PAYMENT PROCESSING – THE BASICS
What is payment processing?
Payment processing is a secure way to handle credit and debit card transactions across all your sales channels, from the storefront to the street to the web.
What is a payment processor?
A payment processor is a company, contracted by the merchant, to handle credit, debit and gift card transactions. The processor provides services to support authorization, capture, and other related processing services.
How Does it Work?
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A cardholder swipes a card’s magnetic stripe, inserts its chip into a terminal, or uses its chip to exchange data with a card reader. The merchant submits the transaction to a payment processor.
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The payment processor sends the information to a payment network to verify the card details with the issuing bank and relays the information it receives to the merchant.
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The merchant batches and submits the transactions to the payment processor for settlement. The issuing bank bills the cardholder and pays the payment processor, and the payment processor pays the merchant.
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What is a Merchant Account?
You can’t accept and process card payments without a merchant account. Your merchant account is what allows credit card companies to pay you or take back funds from fraudulent or disputed transactions.
What is a Payment Gateway?
When customers enter their payment information into an online form, the behind-the-scenes technology that processes those payments is the payment gateway.
What Does My Business Need?
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- Brick and Mortar Locations
a. Payment device and a merchant account - Mobile businesses
a. Payment device and a merchant account - eCommerce
a. Payment gateway and a merchant account
- Brick and Mortar Locations
How Do I Protect My Business?
PIN Debit vs Signature Debit – Accepting PIN debit payments, which requires a customer enter their PIN (personal identification number) for identity verification instead of signing a receipt, reduces the risk of misuse of stolen cards. Signature debit mirrors the payments process for credit card transactions, allowing customers to pay with a card that directly accesses funds in their preferred accounts,
What is Encryption and Tokenization?
Eliminate the need to store account numbers in your data environment and reduce the chances of a data breach. From the moment a card is swiped, card data is encrypted, transmitted for processing and replaced with a token — rather than the card number — for the merchant to store. If stolen, tokens cannot be monetized by criminals unless they have access to the encryption key. Tokenization gives merchants confidence that customers’ payment information remains protected.
What is EMV Chip-Based Technology?
EMV is a collaboration between EuroPay, Mastercard® and Visa® and was implemented in Europe in the 1990s. The chip on EMV cards is a microprocessor that provides a unique code for each transaction, helping prevent card data from fraudulent reuse. Although more secure than a magnetic card stripe, EMV chips do not protect cardholder data once the payment method is validated or while the payment is processed.
What are Mobile and Digital Wallets?
Digital or cardless wallets enable customers to pay via smartphone at your store or online — quickly and conveniently — without having to access a physical credit or debit card.