Due to the large number of customers that prefer using a cashless method for payment, it is important for merchants to accept credit cards. This makes it easier for customers to make purchases, and it also increases the revenue of the merchant since they are not restricted to a single method of payment. Credit cards are a must for transactions which are made over the internet, as cash cannot be used. In order for a merchant to accept credit cards, they must apply with a credit card company.
Creating a Merchant Account
Payments which are received by credit card must be placed in an account, and this is why businesses must setup merchant accounts in order to process them. Merchant accounts can be opened through either a bank or related institutions. Merchants must apply for these accounts and if approved they will be able to accept most credit cards such as MasterCard or Visa.
Setting Up Credit Card Hardware
Once a merchant account has been opened, a merchant must buy or rent equipment which allows them to process credit card transactions. In most cases this equipment will come in the form of credit card terminals, which allow customers to swipe their cards. It consists of a card scanner which connects to a modem. These terminals allow merchants to verify cards immediately, and the transactions may be approved or declined. The merchant is responsible for verifying the identity of the cardholder, and ensuring that they are the authorized user. This is done by either asking for ID or getting a signature.
Accepting Credit Card Payments Online
If you operate a business that is 100% e-commerce, with no physical store, then you can accept credit card payments over the web. The process is similar to offline stores, and you will still need a merchant account. You also have the option of using a company such as PayPal to process your card payments. To do this you must set up an account and verify it. PayPal charges a fee for each transaction, but these fees may be lower than traditional merchant account providers. Most online shoppers trust merchants that use sites like PayPal for credit card payments.
While a merchant will always incur a fee for accepting credit cards, it is considered bad business to pass on these costs to the customer, as it violates the rules of most card processing companies. Merchants that violate these rules may have their accounts suspended, and be barred from accepting card payments.