To adequately weigh your options when it comes to processing credit card payments, you require a basic understanding of how the credit card processing system works. The multiple steps are usually complicated and often involve several different vendors and entities. Listed below are three straightforward steps to process a credit card.

Collect and enter the credit card information
To process a payment, you will have to start by collecting the credit card information from whoever is making a payment, and then either electronically or manually transfer this information to a service capable of processing such data. In this particular step, you can effectively collect the necessary data by typing the card information into an online system, writing it down and then sending it to your bank, or by merely swiping the credit card through a hardware device specially developed for such purposes.

Authorize and commit the charge
After you have entered the payment information, the data is then electronically transferred to a payment processor. Payment processors always approve payments only after checking to confirm whether or not the credit card account exists and whether or not the money in that particular account is enough to cover the incurred charges. Only upon confirmation can a processor charge the credit card. Regardless of the method you use, you have to involve a processing specialist since they manage the entire electronic flow of money related to credit card transactions. Since such specialist usually do very little else, they almost always work hand-in-hand with an additional system, which handles every other needed functionality while also providing the interface in which the credit card information is entered.

Deposit money to bank account
The step that comes after charging a credit card is critical since this is where you essentially receive the money. Payment processors always deposit an amount of money equivalent to the indicated charge into a bank account known as a merchant account. Once that transaction is complete, the money will then be transferred automatically from your merchant account and into a designated bank account from which withdrawal of cash is possible. You will, however, have to open a merchant account either through a bank recommended by your payment processor or through your bank for most credit card processing methods. It is imperative that you shop around since the rates usually vary. The account you choose determines the base amount you will end up paying for every transaction.

There will always be some charge involved since credit card companies usually charge a per-transaction fee. However, the amount and terms can differ substantially. For example, a merchant account could cost $25 per month and an additional 2.2 percent of each transaction, which is an excellent rate for a company with a high number of transactions. On the other hand, 2.8 percent of each transaction and no monthly fee might be more suitable if the number of transactions is small.

Be sure your merchant account allows online payments before committing yourself. To ensure it is compatible with your method of online payment, start by choosing an online payment vendor and follow their recommendations when it comes to choosing a merchant account bank.