Traditionally, for a business to process credit cards, there had to be a credit card terminal, or point of sale system, physically at the place of business that the customer had to swipe their card through. This method is perfectly acceptable to any business which is a traditional brick-and-mortar setup. However, for businesses which travel to their customers, like plumbers, cable technicians, home repair, mobile auto detailers, and so on, there becomes a problem. It is best to collect the money at the time the service is rendered. For mobile businesses, without a terminal, the customer’s credit card number would have to be written down and charged later which leaves the door open for many problems. Two other types of businesses that need the ability to process credit cards, but cannot physically swipe the customers card are online stores and phone order companies. The aim of this article is to make the reader aware of the various payment acceptance methods of merchant credit card processing.
Retail credit card processing is the standard method of accepting merchant credit card payments. With this method the business has a card terminal, or point of sale system with integrated card reader, physically at their place of business. When a sale is made, the customer swipes their card and the terminal connects to the payment processor via dial up modem or dedicated internet access. This is the most straight forward solution for any standard brick-and-mortar business in which customers come to the store. Examples of stores like this are: convenience stores, auto repair shops, clothing stores, etc.
Wireless credit card processing is a credit card terminal that has the ability to connect wirelessly to a payment processor. Usually these types of terminals connect via an AT&T or Verizon service plan that is included with the monthly price of the terminal. This type of merchant processing is ideal for businesses who travel to their customers. Rather than having to carry cash, worry about theft, invalid card numbers, or bad checks, the customers card can be ran on the spot. If the card is invalid, or has insufficient funds, the terminal reports that immediately. Wireless merchant accounts make doing business on the go much easier.
Online merchant accounts are geared mostly toward online businesses. The types of accounts, in their simplest form, come with an online virtual terminal with their payment gateway. Two popular payment gateways that offer virtual terminals are Authorize.net and Linkpoint. The virtual terminal lets a business log in from any internet connection, via a web browser, and type in the customers information into the virtual terminal for processing. The virtual terminal replies immediately to whether the card was successfully processed or not. For online stores, and more advanced users, the payment gateways can be directly integrated via programming and API calls, to an online store. This type of merchant service also works well for mobile businesses because, with a laptop and wireless internet connection, the virtual terminal can be used from anywhere. However, using the virtual terminal, rates are usually higher than using a standard wireless credit card terminal.
MOTO (Mail Order, Telephone Order) credit card processing is for exactly that: businesses that handle mail orders or telephone orders. This type of processing is much less popular due to the popularity of website ordering. Merchant service providers usually view MOTO processing as a higher risk of chargeback or fraud because the customers card is not physically required, in any way, to process the transaction. Typically rates for MOTO accounts are higher than standard retail or online merchant accounts.
A new type of card processing emerging, due to the popularity of smart phones, is mobile card processing. This type of processing is very similar to wireless credit card processing in the sense that a business can travel to the customers and accept payments on the fly. The difference is, however, the processing program is downloaded as an app on a smart phone (Android, Blackberry, or iPhone). The app’s have many more features than a standard hand-held credit card terminal and give users the ability to view detailed reports, customer search queries, and more, from the palm of their hand. The most popular mobile credit card processing app is Payware Mobile for the iPhone. Payware Mobile is available through many merchant service providers.
I hope this article helped you discover that there are many options available to you in the method you accept credit card payments. Stay tuned for more articles explaining facets of merchant accounts and credit card processing. Thanks for reading.
My name is Paul Roberts. I have degrees in business and computer science from the University of Nevada, Las Vegas. I have been an IT business consultant in Las Vegas for the last 10 years. As a consultant, I have worked with CardSmart Merchant Services of Las Vegas, NV on programming projects ranging from setting up their website to programming a custom payment gateway. When I first started developing merchant services software, I found the learning curve to understanding the lingo very steep. I hope to share, in a small series of articles, the general in’s and out’s of credit card processing to help business people better understand the basics of this essential part of doing business.
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