How Credit Card Processing Works : http://www.bancardsales.com
How Does Credit Card Processing Work
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This video explains how credit card payments are passed from the cardholder to the merchant bank account. Included in the video is the transaction cycle, and a detailed explanation of the two main pricing models.
If you've ever wondered:
How Does Credit Card Processing Work?
How To Process Credit Cards?
How Credit Card Processing Works?
How To Accept Credit Card Payments At Your Business
or Understanding the transaction flow,
then you'll want to watch this video.
It's part of a credit card processing basics video series so be sure to check back for more updates and additional videos in the series.
Additionally, you can check out http://www.bancardsales.com for more tips and tutorials on how merchant account processing works.
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*You are the man. It's sad that most of the people from outside the payment industry don't understand, even at a high-level, the ecosystem of payments. Everyone knows Visa and MasterCard, but no one knows what they do and how they make money. For the majority of the people, it's just a logo on their card. These companies, both networks and merchant acquirers/payment processors, are very profitable. These are essentially technology companies with very low overhead and highly scalable business. I briefly worked for Vantiv/Worldpay and had a time of my life learning about the industry. Thank you for this awesome educational video. You should charge your own interchange for doing this video. :)*
Thanks for the comment. I appreciate it. I'm sure you did learn a lot working for Vantiv and Worldpay.
Charging my own interchange would be great, btw! As you said, I'd be a lot more profitable if I could! Haha.
Are you still in the business or doing are you doing something different? - Brian
It's a mix. Typically the terminal manufacturers build the hardware so that they can integrate with all the processors.
Some processors do build their own software to be installed on the hardware.
So both scenarios are present.
The major difference, for the most part, is American Express issues its own cards as well. You can go to its website and apply for a credit card. You can't do that in case of Visa and MasterCard, except certain travel cards. Credit cards and debit cards with Visa or MasterCard logo are issued by your traditional banks, such as Bank of America, they also issue American Express credit cards.
+Binsa Bose >>> the 1.79 is just a sample rate used for comparison. It could easily be 1.85 or 1.9. It was just used to demonstrate the differences between tear and interchange Plus pricing programs. Thanks for watching :-)
Are you referring to the sample transaction @5:28? If so, it's just a sample qualified rate that was chosen for the purpose of illustrating the difference between tier based pricing and interchange plus.
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Great presentation! How does or what software is used by Credit Card Processing companies to determine the qualifications of the transaction? I.e, How would the software identify when a Business card or reward card is used to properly category the transaction into the "Non-Qualified" category? I know the Bank Identification Number (BIN) is crucial in the process.
Thanks for watching!
Interchange is the governing set of rules/rates in the merchant account industry. Interchange is a rate table that all merchant account processors have to adhere to.
When a card is accepted at the point of sale device, the bank that issued that card is "called" and thus matched with an interchange category that holds a specific rate.
With tier based pricing, each processing company sets their own qualified, mid-qualified and non-qualified rates so the "qualification" (i.e. the rate charged) can vary from processor to processor.
Banks are issuing counterfeit money! Credit cards as they are issued is
illegal per article 1 section 8 clause 5 of the US constitution. here
is something that they will not teach you in this video. Where does the
money come from when money is placed in a credit card account? FROM
THIN AIR. Banks are creating their own proprietary, endogenous money
and inundating the economy with it! There are so many dumb people out
there that cannot figure out how this hurts them economically.
The Money comes from the Card issuing bank. That bank then bills its customer the consumer for the charges it made at businesses. Card issuing banks make money from the Interchange and from the consumer not paying off her or his credit card at the end of each billing cycle. Banks are not creating their own proprietary money. They have real dollars they must deposit with Merchants each day and collect real dollars from their customers at the end of each billing cycle.
If my card limit of spend is 10 thousand and i spend 1000 only in month at one time purchaise.
What interest i wll be charged ?
I hve to pay interest only on 1000 or have to pay interest on remaining balance 9000 which i didnt used to purchaise anytg ?
I am waiting for ur kind informatian and its important to me
The pricing principles apply to retail and ecommerce merchant accounts. If you would like to schedule an appointment with me to talk about your situation, please head over to http://www.bancardsales.com/contact-us
Thanks for this very good video! I`ve got just one question left, so according to your video it is okay to give out the credit card details (card number and security code) over the phone in order to make a payment?
I've worked in this industry forever and I never once seen a 3 tier statement that could not be easily beaten by interchange pass through, even assuming that the processor is not lying about where the card falls in the tier system. Interchange pass through would still dominate all 3 tier rates, Why?, The most popular card have the lowest rates, in tier 1 that would be 0.95-1.03% cost so if you have 1.75% tier1 your being robbed. It's that simple.
+Jason Richter -> Jason, I appreciate your feedback. Whether it's interchange plus, tier based, blended rate or fixed rate pricing, it ALL comes down to the effective rate that the merchant pays and that's really the important part of the pricing discussion in this video. Thanks for watching and commenting! :)
I think processors means a terminal which is being used to process that transaction. For example: u go to Zara to buy a something. At the payment reception the card swiping maching is a HDFC machine. In this way, HDFC is a processor.
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