Understanding the Ins and Outs of Credit Card Processing with pay.cc

Credit cards reign supreme as the world’s preferred choice for payments. If you’ve yet to embrace this trend, it’s high time you consider it. The key to accepting credit card payments lies in partnering with a reliable payment service provider like Pay.cc. But what exactly is credit card processing, and how does it function? Well, credit card processing encompasses all the behind-the-scenes maneuvers necessary to conclude transactions conducted with credit cards. Whether it’s at the cashier’s desk, on an e-commerce website, or through a phone call, credit card processing makes the wheels turn.

Continue reading this piece to deepen your understanding of credit card processing. Here, you will get to learn about the main players involved in the process and plenty more.

Parties Involved in Credit Card Processing

When your customers swipe their cards, there are some participants making the payment process happen. Let’s take a closer look at these essential roles in the world of high risk payment processing.

The Merchant

This is you—the business eagerly awaiting payment and seeking credit card processing. You’re the one offering goods or services, ready to complete the transaction.

Cardholder

Your customer, the proud owner of the credit card used to make the purchase. They’re the ones initiating the payment and taking home your product or service.

Card Association

Card associations are names like Visa, American Express, Mastercard and Discover. They aren’t banks but rather influential bodies that determine interchange rates, mediate between acquiring and issuing banks, and continuously refine their card networks.

Payment Processor

Payment processors are the companies that take charge of processing and bundling the transactions involving credit or debit cards. They’re also known to lend a helping hand with technological aspects and customer support. In essence, they act as intermediaries connecting the dots between the card associations and the banks, making the payment process seamless.

Issuing Bank

This is the cardholder’s financial confidant. Issuing banks distribute credit cards to consumers and participate in card associations. They’re the ones footing the bill for their cardholders’ purchases, while the cardholder, in turn, undertakes to repay that sum per their credit card agreement.

Acquiring Bank

Think of this as the merchant’s financial ally. They safeguard the merchant’s funds and snatch the money from a sale. Once a card is authorized, they receive the sale proceeds and add them into the business’s bank account.

Why Do Some Businesses Need High Risk Credit Card Processing?

Don’t let the term “high-risk” mislead you, as it’s not inherently negative. It primarily revolves around the nature of products and services offered by a merchant or the industry they operate within. Furthermore, “high risk” predominantly pertains to credit card processing scenarios where transactions occur without the physical presence of the card, such as in the world of eCommerce. High-risk businesses tend to navigate higher processing expenses due to the perceived risk associated with their offerings in the eyes of banks. This higher cost stems from the fact that what they sell is often considered risky compared to other goods and services.

Who Needs High Risk Payment Processing Accounts

A high-risk merchant account is a specialized type of business account that banks classify as having an elevated level of risk when it comes to processing credit card payments. When business owners apply for a merchant account, it undergo a thorough evaluation to assess the potential financial risk it might pose to payment processors. If your business is deemed low-risk, it’s considered safe and not likely to trigger heightened scrutiny or financial losses for the bank or payment processor.

Several factors contribute to a business being labeled as high-risk for credit card processing. These factors include a merchant’s credit history, pricing structure of products or services they offer and more. Accounts with prior chargeback history or selling restricted products tend to be classified as high risk accounts.

It’s important to note that there isn’t a one-size-fits-all definition for high-risk businesses across credit card processing services and banks. Each entity has its own unique criteria, which can vary significantly. Nevertheless, common denominators among high-risk businesses include an increased likelihood of encountering chargebacks or refund requests, potential non-compliance or actual non-compliance with security policies at the country or state level. Any business that comes under the high risk category should consider choosing a high risk payment processing provider like Pay.cc for seamless transactions. 

Final Thoughts

If a credit card processor labels your business a high-risk merchant account, the odds can seem daunting at first. But it is essential to realize that being labeled high risk doesn’t preclude working with open banking payment gateways like Pay.cc and does not reflect poorly upon you or your small business.