what is a payment processor?
Every time a customer exchanges money for goods or services, that is considered a business transaction. What you might not know is that in the few seconds after a consumer swipes their credit card in person or enters the information online, tons of data is being transferred between their card, their bank and your business’ bank to verify that the payment is valid. The third-party organization that handles that data transfer is called a payment processor.
what data is processed?
To complete the transaction, a payment processor will need to verify three things:
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Transaction information (i.e. value, parties involved, etc.)
Availability of consumer funds
Card validity to prevent fraudulent activity
how is the data processed?
Every credit/debit payment utilizes some sort of software to seamlessly to move funds from the consumer’s account to yours. In brick and mortar stores, this will take the form of a POS terminal. For online payments, you’ll need a “payment gateway”. Payment gateways can be managed either by a third-party servicer or are tied together with your “merchant account”. Payment gateways provide an easy, integrated purchasing platform for e-commerce businesses while also guaranteeing data security for consumers via encrypted transfers.
what is a merchant account?
In order to actually receive the funds after processing, your business will need what is called a “merchant account”. This is a dedicated bank account that accepts payments from consumer debit and credit cards. You can apply for a merchant account at most banks through an application process similar to that of a small business loan.
interested in payment processing?
Try using the CONEXT® B2B Payment Network. It's free to transfer between cardholders, and you can send/receive up to 50k in payments each day. You can manage these payments on desktop or right on the mobile app. It's never been easier to pay or be paid.
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