Though most people regularly use or accept credit cards, credit card processing is actually quite complex. So while a credit card transaction may be approved or denied within seconds, there are many roles, responsibilities and systems doing their part behind the scenes.
Read on for a high-level overview of how credit card processing works, how it impacts your business and how to enjoy simpler and more affordable credit card processing for your B2B eCommerce transactions.
How credit card processing works
Credit card processing requires collaboration and communication across multiple people and companies:
- the cardholder
- the cardholder’s credit card network (e.g. Visa)
- the cardholder’s bank (also called the issuing bank)
- the merchant
- the merchant’s bank (also called the acquiring bank)
- the credit card processor/payment processor
Sometimes payment processing is also outsourced to third parties called independent sales organizations (ISOs) and membership service providers (MSPs). Usually, the inclusion of third-party processors leads to higher interchange fees for merchants (also referred to as swipe fees) because there are more entities involved.
Here’s how it works:
- The cardholder (customer) begins a payment with a credit card
- The merchant receives their card information (whether in person, virtually or over the phone)
- The merchant passes their information along, and it reaches every participant in the process
- The issuing bank (the customer’s bank) verifies they have enough credit and takes measures to make sure the transaction has actually been placed by the customer
- If everything is approved, they send the money to the merchant bank.
- Hours or even days after the cardholder’s purchase, the credit card transaction goes through a behind-the-scenes settlement process. When it’s complete, the merchant has access to the funds.
Point-of-sale (POS) systems
Like other forms of technology, POS systems have changed substantially over the years– as have credit cards. Financial companies innovate to make credit cards and credit card processing more secure and to offer greater flexibility and convenience to suit changing business needs and consumer lifestyles.
The latest POS systems allow you to accept payments on site, on the web and on the go – but be sure to choose the best options for your business. For example, you may want to accept gift cards on your B2C eCommerce site and accept scan-to-pay methods in your stores. As for wholesale eCommerce sales, you might want to skip expensive ACH and accept credit card payments instead!
Credit card processing at NuORDER
NuORDER Payments brings the ease of credit card payments, terms based on shipping and instant financing to the wholesale business. Because when you make it easy, fast and safe to buy from your brand, you reduce abandoned carts, encourage reorders and in-season purchases and motivate retailers to keep coming back for more. NuORDER Payments also takes the middleman of the equation so you can skip the complex merchant account application process, get paid faster and avoid expensive fees.
More ways you win with NuORDER Payments:
- Accept mobile payments
- Add shipping charges while processing orders
- Immediately collect payment or automatically collect upon shipping
- Get paid faster with transactions that settle in under 24 hours
- Receive local bank payouts for easy business with international retailers
- Access a dashboard of real-time insights
- View monthly statements and daily reports
- Receive annual support for your taxes
No matter where or how you sell, it’s important to understand the fundamentals of how credit card processing works so you can choose the best payments option for your business. With the best solution for your business, you can accommodate customers’ preferred ways to pay, safeguard their information, receive your funds faster, minimize your transaction costs and more.
For more information, check out NuORDER.
NuORDER is a B2B eCommerce platform and marketplace, connecting retailers and brands and streamlining the wholesale process for virtual, hybrid and in-person market appointments. The NuORDER platform offers a seamless and collaborative way to do business with interactive and customizable solutions, easy payments, real-time inventory insights, comprehensive data and more for increasingly informed buying decisions.
