Credit card processing is a complicated thing. And it’s just one of the dozens of complicated things that small business owners have to figure out. This means it’s too often put on the back burner or ignored entirely.

While we can’t really blame you for not prioritizing processing, there are some things that business owners should be paying attention to. Remember, processing costs are inevitable, but rates vary and it’s possible to reduce the total amount that you’re paying in processing costs each year.

In this post, we’ll go over some of the basics of credit card processing and look at ways that businesses can save some money and help out their bottom lines.

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What Is Credit Card Processing?

Credit card processing is also commonly referred to as merchant services. This provides businesses with the ability to accept credit and debit card payments. Such payments might be swiped on a traditional credit card machine, dipped into an EMV portal, keyed into a physical machine or eCommerce payment portal, or tapped on a contactless credit card reader.

Credit card processors facilitate communication between all parties involved in this process. They also ensure adequate security for the transaction.

Businesses must pay a fee for this service. Processing fees are assessed with each transaction and deducted from the payments received by the merchant.

What Parties Are Involved in Credit Card Processing?

Customer: Without the customer, no purchase is made.

Merchant: With the merchant, the customer has nowhere to make a purchase.

Processor: The credit card processor is responsible for setting the merchant up with PCI compliance and making sure that all communication of every transaction is seamless.

Card networks: Also known as card associations, these organizations are responsible for setting and assessing the interchange rates. The card networks are familiar names: VISA, American Express, etc.

POS system: The POS system provides the merchant with credit card terminals and point of payment hardware to allow businesses to make a physical transaction.

Issuing bank: The customer’s bank determines if any transaction is legitimate or not.

Acquiring bank: The merchant’s bank accepts the final payments after everything has been batched.