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The ability to carry out transactions is one of the things that make a business. This means that there should be an exchange of something valuable for the product or service rendered. For the most part, what is offered is money.
But what happens if some clients do not want to pay for services or products in cash? There are other payment options and reasons why clients would prefer those options.
For instance, people that pay using credit cards are more protected from theft. This is because some credit card companies bear the brunt instead of the cardholder. For more on this, you can read this article.
This is just one reason why some customers of yours would rather opt for payment options other than cash payment. For this reason, goods and services providers need to have provisions for those that do not want to pay with cash. In addition to this, knowledge of the basics of payment processing is also important.
This is what this article will focus on. So, if you want to learn a thing or two about this subject, continue reading.
Parties Involved in Payment Processing
Other than the buyer and the seller, there are a few other parties involved when payment processing happens. All of the parties involved are:
The Seller
It qualifies as payment because something valuable is used to compensate the seller for offering a product or service. The seller can be a healthcare service provider, grocery store, bar, hair stylist, or any other person or company that renders a service or sells a product.
The Buyer
The buyer is expected to pay for the service or product offered by the seller. That is what makes it a business transaction. Other than cash payment, the use of credit or debit card is quite common for transactional reasons. In that case, the buyer can also be termed the cardholder as s/he owns the card.
The Acquirer
The acquirer is simply the bank that represents the best interest of the seller (also known as the merchant). The bank does this by ensuring that the buyer/cardholder is good enough to buy the merchant/cardholder’s product or service. The acquirer does this by contacting or communicating with the buyer’s bank.
For starters, this is to make sure there is no question mark as regards the card’s validity. In addition to this, it is also to make sure there is sufficient funds to carry out the transaction.
If it is a credit card, it means that the card works with a limit that cannot be exceeded. The acquirer contacts the buyer’s bank to make sure the limit has not been exceeded and that transactions can proceed.
These processes (even explained up to this point) seem lengthy but that is far from the case. As a matter of fact, all of these processes happen in a matter of seconds (all things being equal). This is thanks to automation that has positively impacted the financial sector. That being said, authorization codes enable the acquirer and buyer’s bank to communicate very quickly.
The Issuing Bank
A couple of things have been said about the role of the issuing bank while discussing the acquirer. But you should also know that the card that makes the buyer a cardholder is issued by the issuing bank. Once again, some key communications happen between the acquirer and this bank before a transaction is successful.
Credit Card Network or Brand
There are many credit card networks or brands that have made it possible to make payments in a cashless manner. Some of them even rank as high-flyers seeing how they offer impressive services to cardholders.
Payment Processors
Many resources stop at the last point but there is this one as well. When using your debit or credit card, there is also a payment processor involved. This is the machine that allows all the payment processing to happen in the first place.
Smart terminals and Point-of-Sales machines are examples of such machines. Using them will cost you something as a seller and so using something reliable but budget-friendly is advised. You might even be better off with a payment processor that would charge you a flat rate.
There is the possibility of a data breach happening with payment processors. However, this should not make you rule them out. What you should do instead as a seller is to use one that is good on security. For one, only choose a PCI-compliant processor.
This is because such processors were made in adherence to certain security standards. There are also some tips to help you safely use these machines. For example, buyers should use a strong password and not reveal it.
Tips on Choosing the Right Payment Processor
Apparently, there is a market for payment processors. This is because more people are opting for cashless transactions even offline. However, you are better off using some processors as a seller. To ensure that you use the right processor, here are some tips you should take note of:
Budget-Friendly Transactional Fees
Transactional fees are some of the ways the payment processor company profits from the solution they offer. So, this is quite understandable.
However, you should only choose one that works with budget-friendly transactional fees. This is so that the charges do not eat deep into the profit made.
This is especially important for companies that do not generate so much on single transactions. It is even the reason some sellers are averse to the idea of using these machines. Well, there are some with budget-friendly transactional fees out there.
No Unnecessary Fees
As if charging for transactions is not enough, some payment processor companies introduce other fees. Cancellation fees are an example. For some, there are even hidden fees that are involved. You should avoid payment processor companies that work this way. The reason is that it is not ideal for you as a seller.
Various Subscription Options
We advised at some point that you consider flat fees. This works for many sellers but not everyone. It is for this reason that working with a company with lots of subscription options is advised. This would even help if you need to change your plan or terms anytime.
Great Customer Support
Being able to contact and get support from the customer support team is important if you have issues with the machine. This is why you should only use processors from companies that have great customer support. Customer support should even be live at all times.
Transactional Speed
You do not want your buyers to go through complications when using your payment processor. One of the common issues in this regard is delayed transactions. This could be not only from the concerned banks but also the processor’s end as well. So, make sure to get and use something that would not delay transactions.
Wrap Up
The number of people that pay for products and services using cashless methods has increased. For more on this subject, you can visit: https://smallbiztrends.com/
As a seller, this means that you need to understand the payment processing options available and how to use the right one. We have discussed something in that regard here and you should make good use of this information going forward.
Photo by Clay Banks on Unsplash