Credit Card Processing: A Simple Guide for Business Owners
Payment processing is essential for businesses today. It enables smooth transactions, allowing payment through credit/debit cards and digital wallets. Good payment processing improves customer satisfaction, cash flow, revenue management, and reduces fraud risk. With the rise of e-commerce, having a trustworthy payment system is crucial for success.
Understanding Credit Card Processing
Credit card processing is an essential part of running a business, but it can feel overwhelming. If you've ever been confused by terms like interchange fees, processing rates, or PCI compliance, you’re not alone. In this blog, we’ll break down credit card processing as it relates to your point-of-sale (POS) system, helping you make sense of the process so you can focus on what really matters—growing your business.
What Is Credit Card Processing?
When a customer pays with a credit or debit card, several steps happen behind the scenes to complete the transaction. Your POS system plays a key role in this process. Here’s a simplified version of what happens:
Card Authorization: The customer’s card information is sent to the credit card network for approval.
Transaction Settlement: Once authorized, the transaction is processed, and the funds are transferred to your business’s account.
Payment Processing Fees: Each transaction comes with fees paid to various parties involved in the process (more on this below).
Understanding the Fees: Credit card processing involves several types of fees. Let’s break them down into simple terms:
Interchange Fees: These are fees set by the credit card companies (Visa, Mastercard, etc.) and go to the cardholder’s bank. They’re usually a percentage of the transaction amount plus a flat fee.
Assessment Fees: Charged by the credit card networks themselves, these are smaller fees that apply to each transaction.
Payment Processor Fees: These are charged by the company that processes your credit card payments. If you’re using a modern POS system like SkyTab or NRS, these fees are usually bundled together, making it easier to understand.
How to Simplify Credit Card Processing
Modern POS systems are designed to take the headache out of credit card processing. Here’s how:
Integrated Payment Processing: Many POS systems, like the SkyTab and NRS systems we offer at New England POS, come with built-in payment processing. This eliminates the need to manage multiple accounts or vendors.
Transparent Pricing: With our POS systems, you get clear and transparent pricing, so you know exactly what you’re paying for each transaction.
PCI Compliance: POS systems automatically ensure your business is PCI compliant, meaning your customer data is secure, and you avoid costly penalties for non-compliance.
It Pays to Understand
Knowing what you’re paying for allows you to better manage your business expenses. By using an integrated POS system, you’ll have access to detailed reports on transaction costs, making it easier to track your profits and identify where you can save.
Credit card processing doesn’t have to be confusing. By using an efficient POS system, like SkyTab or NRS from New England POS, you’ll get transparent fees, simplified transactions, and peace of mind knowing your payments are secure. If you’re looking for ways to streamline your business, we’re here to help!
Disclaimer: This content is provided solely for informational purposes and is not intended to serve as accounting, tax, legal, or other professional advice. You are solely responsible for your own compliance with laws and regulations. You should contact your accountant, attorney, or other relevant advisors for advice specific to your circumstances.