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What is credit card processing?

Businesses rely on credit card processors to handle the details of accepting credit and debit cards, whether in person, over the phone, or online. Dependent on a third party to perform such a crucial service can make anyone anxious. This article seeks to relieve that anxiety by outlining the basics of credit card processing.


How credit card processing works

First, a customer presents their credit card info for payment. The payment information is then sent to the processor, who communicates with the customer’s bank via the appropriate card networks (such as Visa or Mastercard).

The customer’s bank approves or denies the transaction. Approval is dependent on detailed verification including card number validity, sufficient available funds, and other factors. That approval is sent back through to your payment processor and then finally back to your terminal or credit card reader.

You’ll then send batches of approved transactions for settlement; typically at the end of each business day. At that point, your customers’ accounts will be charged and the transaction amounts will be deposited into your bank account (less processing, interchange and other fees).

Quality Matters

Credit card processing services vary in quality. When evaluating potential companies, ask tough questions about these four critical areas where credit card processing quality matters most to your business:

  • Transaction speed and reliability

Your customers love to pay with debit and credit cards, but they take the speed of such payments for granted. Even short delays can cause big annoyances. You’ll want to choose a processor capable of processing a high volume of transactions safely, accurately, and quickly.

  • Strong uptime record

Simply put, outages are bad for business. A credit card processing outage means your business as good as shut down. It’s not just the downtime itself that hurts, as customers turned away during an outage may view your business as untrustworthy and/or inconvenient. That’s not the brand association small business owners are looking for.

  • Fair and transparent rate structure

The rates and fees you’ll pay depend on many factors, starting with the interchange category applicable to your business. Though payment processors charge their own rates and fees on top of interchange, the cost of interchange is set by the card brands and is the same for all processors. Interchange pricing varies based on the risk factors of different types of businesses.

  • Access to helpful customer support

When things go wrong, you need to be able to count on support from real people who know how payments work, know what your terminal or POS system’s common failures are, and how to resolve them. You need to be able to speak to someone right away when you call—whether it’s in the middle of the night, or on a busy holiday.

When you’re doing your research, ask about a credit card processor’s uptime history, the steps they’ve taken to minimize downtime, and backup plans in the event of downtime.

Now that you have a better idea of what credit card processing is all about, check your statements, we can be 20-30% lower per month in fees.

If you have question, we're here to help. Let us know a little bit about your business and we will get in touch to help get you started.

(201) 699-0688 or

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