Traditional Processing

Payment processing in South Carolina makes use of specialized hardware and software to process electronic payment transactions from the customer’s credit card to the merchant’s bank account. It goes through a verification procedure before the credit card transaction is approved or disapproved by the bank.

Who does what in the payment process? Find out below.

When you open an account in a bank, they will most likely issue you with a credit or debit card as well. The issuing bank collects most of the interchange fees that card brands charge.

Visa®, MasterCard®, Discover®, and American Express® are the leaders in this category. They work with governments to establish the rules applicable to credit and debit cards such as acceptance, security, and interchange rates.

When merchants want to have proper payment processing in place, they acquire products and services from processors. The processor provides the hardware and software necessary to process electronic payment transactions. For every transaction, the transaction data from the merchant is sent to the processor then forwarded to the card brands and banks. At the end of the business day, the merchant “batches” the transactions, and the funds are transferred by the Issuing Bank to the merchant’s bank. After this, they calculate the interchange fees and supply the data to the merchant and the card brands.

A payment gateway is responsible for integrating the payment technology such as terminals, shopping carts, etc. to the card processing networks. You may also integrate this into your current solution with the help of an Application Programming Interface (API). If you are still looking for a processor, you can ask them if they have their own gateway as well.

The sponsor bank distributes the appropriate funds to the merchant, the ​Automated Clearing House (​ACH) payments to the processor, the payment to the card brands, and their share of the interchange fees to the issuing bank.

The payment terminal is a very common method for processing credit card payments. It allows merchants to swipe, dip, or key in transactions into the device. It can also process payments directly from a mobile device through apps like Apple Pay or Android Pay with the use of Near Field Communication (NFC) technology.

The POS system has more or less the same functionalities as a payment terminal. However, it is customized to fit the specific needs of each business. For example, a salon POS has a feature that allows the merchant to schedule appointments.

Even mobile devices are now able to process credit card payments by plugging in hardware into the merchant’s phone or tab. Keying in transactions can be done via an app or a browser on the device.

A virtual terminal does not require any hardware installation unless you want to process card-present transactions, then you have to pair the virtual terminal with a device for swiping or dipping credit cards. However, if you are only using it for card-not-present transactions, then the software or web-based solution can process payments directly from the merchant’s desktop or laptop.

Online payments are useful for businesses with an online storefront, as well as those that take payments online for B2B transactions. Basically, it uses a shopping cart or a hosted payments page to process payments through an app or a website.

1. When a customer tries to make a payment, the merchant slides their credit card into the terminal. The transaction data is sent to the processing company to request authorization.
2. The processor then submits the transaction data to the card network as well as to the customer’s credit card bank. The issuing bank either approves or declines the transaction and sends the result back to the processor.
3. Once the processor has the result from the bank, they forward the information to the payment gateway.
4. The settlement network can now send the information from the issuing bank (customer’s bank), back to the acquiring bank (merchant’s bank), which routes the approval or denial code back to the payment acceptance application of the merchant.
5. The acquiring bank (merchant’s bank) does an interchange for each sale, with the cardholder’s bank. Then the issuing bank (customer’s bank) transfers the sale amount, minus the interchange fee to the acquiring bank. The payment is finally deposited into the merchant’s account by the acquiring bank, but not before deducting a discount fee.

Issuing banks that provide Visa, MasterCard, Discover, and American Express cards are the ones that pay or collect interchange fees. Generally, they issue consumer credit and debit cards. But they also supply corporate, business, purchasing, or rewards cards.

Interchange rates are not the same across the board. Each card brand has its own rates. When each of these networks is combined, there are more than 300 various levels of interchange.

A consultation with a Proudly representative can assist a business with navigating the confusing world of interchange. We will help with interchange optimization and provide the best payment solutions for each individual business.

What does it cost your business each month to accept credit cards? – basically your “effective rate”. When we make a price comparison or proposal, we show what it cost them with your current processor and what it would cost if you are on the Proudly platform. It is an apples to apples comparison.