If you want to set up a merchant account for credit card processing, you probably wonder about the credit card fees you will be charged. What You Need to Know About Credit Card Processing The merchant may also be charged fixed fees for each transaction by the issuing bank and the acquiring bank. These fees include a percentage of each transaction, and the higher the transaction amount, the higher the fee. In other words, the acquiring bank loans money to the merchant to cover the cost of customers' credit card transactions.Īfter a credit card transaction is complete, the merchant will have less money than the original transaction amount because both the issuing bank and the acquiring bank will charge the merchant fees for their services. The payment is actually a loan to the merchant's account from that merchant's acquiring bank. A merchant account is an unsecured line of credit that pays a merchant for customer purchases. They also provide merchants with:Īny merchant who wishes to accept credit card payments must have a merchant processor account. Acquiring banks deposit funds for credit card purchases into merchants' accounts. How Does Credit Card Processing Work?Īcquiring banks (also called merchant banks) contract with merchants to operate accounts that allow the merchants to accept credit card payments. Have you ever wondered what's involved in credit card processing? Every credit card transaction involves four parties: The customer making the purchase, the merchant receiving payment for the purchase, the bank the merchant processor uses for credit card processing services (acquiring bank), and the bank that issued the customer's credit card (issuing bank).
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