The business of credit card payments is a bit like a teenage girl on the telephone. It has a language all its own. And words don’t always mean what common sense might suggest they mean.
Say, for instance, you’re looking for payment processor for online payments. You may not realize that processing is just one step in a long chain of technological transactions. And some processors, playing on this ignorance, may offer opaque solutions with lots of hidden costs. You really want a Payment Service Provider. Preferably one who can help you navigate:
Payment Networks/Credit Card Associations: Better known as Visa, MasterCard, American Express or Discover. They set and police the rules that govern transactions on their network. Each one has its own set of rules. You want to work with a payment service provider who understands how all the different rules impact your business.
Issuer: This is where the consumer gets their card. Issuers set credit or purchase limits, provide payments and collect the debts from consumers. Visa and MasterCard generally rely on banks or other financial institutions to issue cards. Just remember, the issuer’s customer is the consumer, not you. And that may impact the side they take in a dispute.
Acquirer: The acquirer is to the merchant what the issuer is to the consumer. Before funds can be transferred to your account, they go to the acquiring bank. Acquirers also perceive risks when they work with online or direct marketers, so you need a payment service provider who can help you find a bank and negotiate fair terms.
Merchant: Anytime associations or networks say or write merchant, they mean you. Pay attention. Lawyers and bureaucrats write those rules and it can seem like a whole bunch of gobbledygook. Make sure you’re working with a payment service provider who can clearly explain how policy changes impact your business.
Consumer: In other words, your customer. These are the people who fill shopping carts on your website and proceed to checkout. When they click “submit,” they set the processes and players in motion.
Gateway: This is the door to all the services that allow you to accept online payments. Whether with credit cards, debit cards, direct debit, bank transfers and real-time bank transfers. Some payment service providers have the volume to eliminate or save you money on gateway fees.
Risk Management: As an online or direct marketer, you can’t know for sure that the person entering card information is who they say they are. That’s why many processors and banks prefer not to work with you. A payment service provider who deploys technologies to mitigate the risks and offers protections against chargebacks (friendly fraud) may be better able to help you collect payments online.
Processing: Payment service providers are often called processors, but processing is only one step in getting you paid. This is the exchange of data and funds between the consumer, issuing card, merchant, the payment service provider and your acquiring bank (acquirer). One who works with all the networks can save you a lot of money and headaches in the long run.
Payment Service Provider: This is where it all comes together. At Pinpoint Intelligence, we specialize in mitigating fraud risks providing payment services for card-not-present businesses. By bringing both services together under one roof help you strike the most profitable balance between risk and reward, costs and benefits, for your unique business model.
