In this article, we share with you payment processors and 4 relatively important terms. Most companies routinely accept credit card payments from their clients, but few give it any thought. But as a business owner, you risk getting into difficulty if you don’t understand how payment processing works.
You may even be curious as to what a payment processor is. Down below, we’ll look at four other terminologies related to payment processing and provide a solution to that question.
Also read: Best 5 payment gateways for small businesses 2023
Payment processor relative terms
By serving as the middleman between the retailer and the relevant financial institutions. Payment processors help you to control the credit card transaction process.
A processor works to guarantee that merchants are paid on schedule by enabling the flow of payments and can authorize credit card transactions.
Some payment processing providers include customer support, security solutions, help with PCI compliance, equipment for card acceptance, and other value-added payment processing services.
A payment gateway, which is distinct from a payment processor, is a secure software program that approves credit card or direct payment processing for online purchases and other card-not-present transactions.
Also read: Credit card processing and payment gateway
The financial institution that manages a merchant’s account so they can accept credit cards is called the acquirer, often known as the acquiring or merchant bank.
For a merchant, the acquirer settles card transactions into their account. Sometimes the acquirer and the payment processor are the same.
The issuer, often known as the issuing bank, is the bank of the cardholder and is in charge of both collecting money from cardholders and paying the acquirer (and subsequently the merchant) for authorized credit card transactions.
Also read: Best Small businesses credit card processing
Payment processors: The term “PCI compliance” refers to adherence to the Payment Card Industry Data Security Standard (PCI DSS). All organizations that handle credit card processing, storage, and/or transmission must adhere to the PCI DSS information security standard.
Any business that accepts credit cards is required to abide by PCI regulations.
A merchant who does not attain and maintain PCI compliance may be more susceptible to a data breach and the associated negative consequences, such as penalties, fees, and lost business.
PCI compliance is intricate and depends on many variables. Some payment processor provide their merchants with tools and support for PCI compliance. Offerings of this nature may include breach coverage, hands-on assistance, and security checklists.
It’s a good idea to engage with seasoned Payment processors that provide a full PCI compliance assistance program because PCI regulations are revised frequently.
Also read: What is a merchant account? Do you really need one?
EMV chip credit card
Since the shifting of the fraud chargeback liability in October 2015, EMV chip cards have grown more prevalent. The change in liability gave businesses new duties regarding card-present fraud.
In essence, a corporation could be liable for any fraud that happens if it processes chip cards without utilizing an EMV-enabled terminal.
EMV is not required, unlike PCI (e.g. merchants will not be fined for not using an EMV-enabled device). However, it is essential for retailers to do so in order to lower their rates of fraud and chargebacks for card-present purchases.
But it’s vital to remember that EMV does not offer data breach protection; PCI does. Therefore, make careful to inquire about EMV and PCI compliance options from your payment processor.
Also read: How to Get a Business Credit Card with an EIN Only
Knowing some of the keywords related to payment processing currently will help you choose the best payment processor for your company. You may securely accept credit card payments with the help of a reliable and skilled payments processor who will give you the knowledge, resources, and advice you need.
In the above article, we shared with you payment processors and 4 relatively important terms. For more information feel free to contact us at YMSR.