What Businesses Should Know About Merchant Processing

Finance & Money Blog

Merchant processing services are essential to many kinds of businesses. If you've never set up merchant processing before, it's important to understand what it is and how it affects a business. Be aware of these five critical facts.

What Merchant Processing Is

If you've ever swiped a credit card through a terminal at a store, then you've dealt with merchant processing. Merchant processing allows businesses to connect their accounts to terminals that handle transactions directly through credit card companies. The services are also frequently connected to secure APIs on websites to handle online sales.

Accounts and Fees

A business has to configure a merchant account. The business will work with its bank and a merchant processing services provider. In exchange for a processing fee, the provider delivers the near-instantaneous transactional experience that your customers expect. The fee usually includes a flat rate for equipment and a percentage of each transaction.

Notably, there may be fees for chargebacks. A chargeback occurs when a customer demands their money back through the credit card company. Credit card companies tend to be extremely pro-consumer so it can be tough to avoid a chargeback. Make sure that you document all efforts to satisfy custom complaints and provide refunds. Without this evidence, you'll be out the chargeback and the accompanying fee.


The big thing you want to understand is payment card industry compliance. PCI compliance represents the set of standards for every terminal or connected software application. Providers conduct regular audits of business systems to ensure that everything complies with the PCI standard.

If a connected system isn't compliant, the provider will notify the business and identify the non-compliance issues. The business will have a set number of days to fix the problem and schedule a new audit. Otherwise, the business risks losing merchant processing access. The purpose is to ensure that all systems will safely and quickly handle your customers' transactions.


There are a handful of major credit card companies on the planet. These present different networks, such as Visa and Mastercard. If you know your customers will use a particular card all the time, make sure the merchant processing services company provides the network for that type of card. Many businesses elect to save some hassle by omitting lesser networks, but they need to tell their customers which cards they can process.


Most merchant processing systems come with reporting tools. These can help you monitor cash flow, study customer data, and identify trends. Many reporting systems also can connect to your preferred accounting software suite. 

For more info about merchant processing, contact a local company. 


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