Happy Labor Day!

 

“Start where you are. Use what you have. Do what you can.” — Arthur Ashe

Happy Labor Day from us at Bankcard Processors LLC to all of you. Enjoy your weekend.

CA 916-518-5195

jphaire@bankcardprocessors.biz

Payment Processors 101

 

Businesses that accept electronic payments through multiple channels—in-person, online, and mobile—need to work through various complexities. This includes selecting a suitable payment processor, an important decision that can affect long-term success and impact multiple parts of the business.

As more businesses expand globally, there is a growing need for multi-currency and localized payment options. To address these evolving demands, business owners and entrepreneurs should be well-informed about the key factors to consider when choosing a payment processor.

What is a payment processor?

A payment processor is a company or service that facilitates electronic transactions—such as payments made with credit cards, debit cards, or digital wallets—between businesses and their customers. Payment processors enable businesses to accept various forms of payment securely and quickly and facilitate the transfer of funds from the customer's account to the business's account.

What do payment processors do?

Payment processors play an important role in the electronic payment ecosystem, enabling businesses to accept and process various forms of payment from customers. Here's an overview of the primary functions of a payment processor:

Transaction facilitation

When a customer makes a purchase, the payment processor receives the transaction details and securely transmits this information to the appropriate parties, including the issuing bank (customer's bank) and acquiring bank (business's bank), via the card network.

Authorization and authentication

The payment processor requests authorization from the issuing bank to ensure the customer has sufficient funds or credit available. It also verifies the customer's identity and the validity of the payment method to minimize fraud and unauthorized transactions.

Encryption and security

To protect sensitive financial data, payment processors use encryption and tokenization to securely transmit transaction data between the customer, business, and banks. They also need to comply with the Payment Card Industry Data Security Standard (PCI DSS) to maintain a secure environment for handling cardholder information.

Settlement and funding

Once a transaction is authorized, the payment processor coordinates the transfer of funds from the issuing bank to the acquiring bank. The merchant account is then credited with the transaction amount, minus any applicable fees.

Data for reporting and analytics

Payment processors produce data about customer payments that can be used to generate transaction reports, analytics, and insights to help businesses track sales, identify trends, and manage their businesses more effectively.

Fraud detection and chargeback management

Payment processors use advanced algorithms and tools to monitor transactions for fraudulent activity, helping businesses minimize their exposure to fraud. They may also provide support and assistance in handling chargebacks and disputes.

Support for multiple currencies and payment methods

To help businesses expand globally, many payment processors offer support for multiple currencies and popular local payment methods. For example, Stripe supports more than 135 currencies, allowing businesses to do business globally and receive payouts in local currencies.

How do payment processors work?

Payment processors facilitate electronic transactions between customers and businesses—but businesses may not be aware of the details of this process. To understand how payment processors work, let's describe a typical payment processing flow in detail:

Customer initiates payment

When a customer makes a purchase, they provide their payment information—such as a credit card or digital wallet—to the business. This can occur in-person at a point-of-sale (POS) terminal, online through an e-commerce website, via a mobile app, or through payment links.

Transaction data encryption

The business's payment system encrypts the transaction data, ensuring it is securely transmitted to the payment processor. This encryption helps prevent fraudulent actors from intercepting and misusing sensitive customer information.

Transaction data transmission

The encrypted transaction data is sent from the business to the payment processor, which then forwards the information to the acquiring bank.

Acquiring bank to issuing bank

The acquiring bank forwards the transaction details to the issuing bank through the appropriate card network (e.g., Visa, Mastercard, or American Express) for authorization.

Authorization request

The issuing bank reviews the transaction details and checks if the customer has sufficient funds or credit available. It also confirms the authenticity of the payment method and the customer's identity, to mitigate the risk of fraud.

Authorization response

If the issuing bank approves the transaction, it sends an authorization code back to the acquiring bank through the card network. If the transaction is declined, the issuing bank sends a decline message with a decline code that explains why the translation was not approved.

Processor receives response

The payment processor receives the response from the acquiring bank and forwards it to the business. If the transaction is authorized, the business can proceed with the sale. If it's declined, the business must request an alternative payment method from the customer.

Transaction completion

Once the transaction is authorized, the business delivers the goods or services to the customer. At this point, the transaction is considered complete, although the actual transfer of funds is still yet to occur.

Capture and settlement

“Capture” refers to the transferring of funds from a customer's account to a merchant account for a particular transaction. Typically, at the end of the day, the business sends a batch of authorized transactions to the payment processor for settlement. The payment processor then submits this batch to the acquiring bank, which initiates the process of transferring funds from the issuing bank to the merchant account. This transfer usually takes 1–3 business days, depending on the specific processor and bank involved. Source

Accepting Cryptocurrency

 

What is Cryptocurrency? 

Cryptocurrency is a digital currency that allows people to exchange value without a bank or government. It's a type of electronic cash that exists only as a digital token on a blockchain. Cryptocurrency has been a popular subject for quite a while now. As a consumer, you may be intrigued by it. Maybe you’ve already used it to buy goods and services. Or perhaps you’ve invested in it.

As a business owner, it’s the latest form of payment acceptance to offer your patients. So even if cryptocurrency isn’t on your radar otherwise, it’s important to consider it in terms of your practice.You want to make it easy for your patients to pay for services and supplies however it’s convenient for them. If they start asking about cryptocurrency as an option, you want to be prepared.

The process is similar to how you accept credit cards. Whether you use a credit card terminal, payment form, invoice or shopping cart, it’s a realistic, no-hassle option for your patients. Plus, there are no chargebacks!

NetCents

You can work with NetCents to easily integrate cryptocurrency payments into your practice. It’s basically like a virtual terminal or payment gateway. As long as you have internet access, you’re able to use it.

NetCents allows your patients to choose from popular cryptocurrencies, including Bitcoin, Litecoin, Ethereum, Bitcoin Cash and more. One important thing to note is you don’t have to receive the payment as cryptocurrency. You can choose to accept it as US dollars that go right into your account. You just may be surprised how easy it is for both in person and online transactions.

In-Person Transactions

As long as your patient has a crypto wallet set up on their smartphone, it’s a painless process.

• Countertop Terminal: If you prefer a terminal, we do have an option compatible with cryptocurrency. All you have to do is open the NetCents app, and you’re ready to accept the cryptocurrency payment.
• Smartphone, Browser, or Tablet: If you need to accept payments outside of your practice, or want another in-person option, you can use a smartphone, browser, or tablet.

Online Transactions

Your patients don’t have to be in your practice to pay with cryptocurrency. They can pay their bill or buy vitamins from you online by using one of these techniques;

• Shopping Cart/Payment Form: If your practice has an online presence with a payment form or shopping cart, accepting cryptocurrency is as easy as a credit card. 

Invoice: From your dashboard, you can create an invoice to send to your patient. When they open the invoice, there will be a QR code for them to scan. That’s when the customer takes out their smartphone with the crypto wallet to pay with their preferred cryptocurrency.  

Source

How Much of My Credit Should I Use?

Good credit management can have a significant impact on your overall financial health. With the right credit habits, you can reach many important goals, like buying a home or getting a car. But, if you're new to credit, one question that you may have is how much of your credit you should use. While the answer differs based on your personal circumstances, there are some things that you should keep in mind to make more informed decisions about your credit usage. One thing you may want to consider is your credit utilization ratio.

What is a credit utilization ratio? 

Your credit utilization looks at the amount of available credit that you're using on your revolving accounts (like credit cards) as a percentage. Your credit utilization ratio makes up 30% of your credit score and lower credit usage is better for your credit score. Credit utilization is important because lenders want to see how you're managing the credit currently available to you. If you're using too much credit, it may show lenders that you're overextended.

How can I calculate my credit usage? 

You can find your credit utilization ratio by dividing the amount of debt you owe on your revolving credit accounts by your total available credit. You can usually find this information by logging into your credit card account.

What should my credit utilization be?

Since your credit utilization accounts for 30% of your credit score, you should keep your available credit limits high and your debt low. The Office of Financial Readiness suggests a credit utilization ratio of 1-10%. If you max out your credit cards, you may increase your utilization ratio. This leads lenders to view you as a potentially risky borrower. So, if you're using a high percentage of available credit, you should try to pay down your balances as quickly as possible to lower your usage.

How can I improve my credit utilization ratio?

Since your credit limit and current debt makes up your credit utilization rate, you may be able to lower your ratio if your available credit increases or if you lower your credit card balance.

Pay off your credit card balance

One way that you may be able to lower your card utilization is to pay off your credit card debt. If you’re close to maxing out your credit cards, you run the risk of your utilization becoming too high. You can try to make more than one credit card payment a month to help you keep your balance low.

Ask for a credit limit increase

If you want to increase your spending power while keeping your credit utilization low, one thing you may be able to do is get a credit line increase. You can request a credit limit increase from your credit card company. It’s important to note that there’s no guarantee you’ll get a credit line increase. If you recently opened your account or haven’t managed your account wisely, you may have issues getting an approval.

It’s still important to keep in mind that you can still run up your credit card balance (even with a limit increase) if you don’t practice good credit management.

Apply for a new credit card

You can get a new credit card to increase your total available credit. It’s important to carefully consider this option because applying for a new credit card may impact your credit score in other ways. But you may find it easier to keep a low credit utilization ratio if you have more than one card. One thing you can do is see if you prequalify for any credit card offers. When you prequalify for cards, you typically only get a soft inquiry, and you can compare different card features to find the best credit card for you.

For example, a $1,000 balance on a single credit card with a $10,000 limit equals a credit utilization ratio of 10%. If you have another card with a $100 balance and a $5,000 limit, your credit utilization on that card would be 2%. Your total credit utilization on both cards would be about 7%.

Keep your old credit cards open

You should keep your old credit cards open even if you don’t use them much because closing a card could lower your available credit, which in turn can give you a high credit utilization ratio.

Monitor your spending

A good budget can help you manage your credit utilization rate. Limit your spending on your cards and always pay your credit card bill on time. You can get text or email alerts when a minimum payment is due on your credit card bill. You should also check your credit utilization on your individual accounts, and make sure you’re not going over on any one card.

Remember, a credit card can be a great tool to help increase your spending power and give you access to more money than you have on hand. But it’s important to use your card wisely by keeping your credit utilization low. By establishing good credit habits, you can help secure your financial future.

Source

How Debit Cards Can Make Life Easier

 

Let’s take a deep dive into debit cards and explore just how they could make your life easier;

Keeping Track of Spending

One of the biggest advantages of using a debit card is the ability to keep track of your spending. Every transaction appears on your statement, which means no more losing track of your cash expenses. By keeping track of your spending, you can budget and plan for financial goals more efficiently. Plus, it’s easy to view all your transactions online or with your bank mobile app, which makes it simple to monitor your finances.

Cashless Transactions

Debit cards are convenient and save time. You can go cashless and leave your cumbersome change behind. Simply carry the small plastic card that fits even into the smallest of pockets. You can buy things online or at point-of-sale locations, making it easier to transact. Many places even have gone cashless and only take debt or credit in terms of payment.

Increased Security

Debit cards are also more secure than carrying cash with you. Unlike cash, a lost or stolen card can be reported and canceled, right from our mobile app, which ensures that no one else can use your funds. Debit cards have revolutionized the way we spend money, especially for people on the go. They add a convenience that can’t be matched by using cash. From keeping track of spending to earning rewards and managing your account from your phone. Source

Payments' Digital Evolution

 

Technology has changed how, and how fast, consumers interact with the world around them. The expectation for immediate satisfaction extends from the delivery of information and service to the way purchases are made. We want it now, and we want it at our fingertips.

This is especially true for payments, which continue to evolve from checks to electronic formats. Switching to electronic payments is an easy win in the effort to streamline back-office processes and expense.

Electronic payments can reduce processing costs up to 60 percent and can be processed almost twice as fast as paper checks, according to some estimates. By leveraging online bill pay, you can make sure payments aren't delayed by meeting or travel schedules or by critical days in the mail.

Even better, electronic transactions are widely considered to have a lower risk profile. Banks are able to quickly run authentication procedures to approve or deny almost instantly, without sacrificing attention to risk management.

 Source

Why Does Credit Card Transaction Processing Matter For Businesses?

 

Credit card transaction processing directly impacts a business’s ability to provide convenient and secure payment options for customers, which can affect sales, customer satisfaction, and overall growth. Finding the optimal credit card processing system offers several benefits in these areas, including:

Enhanced customer experience

By offering a simple, convenient credit card payment experience, businesses can meet the evolving needs of their customers, leading to increased customer satisfaction and loyalty. The benefits are even greater with a unified commerce model, where businesses integrate all sales channels, data, and backend systems into a single, seamless platform.

Increased sales and revenue

Credit card payments can boost sales for businesses by lowering the barriers that customers face when making a purchase. Generally, customers spend more when using credit cards compared to cash. Accepting credit cards also enables businesses to accept payments in different currencies without needing to deal with conversion, further expanding their market reach.

Improved cash flow

Credit card transactions are typically settled and deposited into the business’s bank account within 1–3 business days, resulting in faster access to funds compared to other payment methods such as checks.

Secure and compliant transactions

A strong credit card processing system helps protect both the business and its customers from fraud and data breaches by adhering to security standards such as PCI DSS. This compliance is important for safeguarding sensitive customer information and maintaining trust.

Competitive advantage

Accepting credit card payments and providing a simple payment experience can give businesses a competitive edge over competitors that do not offer these options, helping them attract more customers and increase their market share.

Cost optimization

By carefully selecting the right credit card processor and negotiating favorable rates and fees, businesses can streamline operations, minimize processing expenses, and maximize their cost margins.

Access to valuable data and insights

Credit card processors often provide detailed transaction data and reports, allowing businesses to track sales, identify trends, and make data-driven decisions that can optimize their operations and marketing strategies.

Reduced risk

By accepting credit cards, businesses can minimize the risks associated with handling large amounts of cash, such as theft, loss, or mismanagement.

Adaptability

A thoughtfully designed credit card processing system enables businesses to embrace flexibility and adapt to new payment technologies, such as contactless payments or digital wallets, helping them stay ahead of industry trends and cater to evolving customer preferences. Setting up a credit card processing system in a strategic way enables businesses to access these benefits and create a more robust, adaptable foundation for growth and stability.

Working with a strong payment processing provider will help ensure that your credit card transaction processing system is tailored to your needs while allowing you to provide a secure, efficient, and compliant customer experience. Source