Home » Business » Everything You Need to Know About Secure Credit Card Processing

Everything You Need to Know About Secure Credit Card Processing

secure credit card processing

Is your business missing secure credit card processing? If so, you’re missing out on possible payments.

Many Americans have a credit card, and they get used regularly for payments. The average American credit card debt amounts to over $15,000 — and that debt doesn’t stop people from using their cards to make new purchases.

With a secure credit card processing option, you’ll open up a new way for customers to pay you. If people can’t use their credit cards securely on your site, they’re more likely to navigate elsewhere. Give them the option, and watch your profits grow.

Not sure how card processing works, or how to use it? Then this guide is for you. Keep reading to learn what you need to know about card processing for your company.

What Happens When Someone Uses a Credit Card Processor?

To understand online card processing, you first need to know what how credit card transactions work. Let’s take a step-by-step look at the process.

1. Authorization Request

As soon as the consumer runs their card online, the data goes to a processing company in the form of an authorization request. That information makes its way to the bank the credit card is attached to. The bank needs to approve the transaction for it to move forward.

If it gets approved, the information now goes through to the payment gateway.

2. Data Transfer

The data transfers aren’t done yet. Next, the data from the cardholder’s bank goes to the bank acquiring the transaction, sending the code for denial or approval back to you for acceptance.

3. Sale Amount Transfer

An interchange fee gets charged for each sale, and then the amount of the sale minus fee gets transferred to your bank. Finally, the transaction amount ends up in your bank, minus any fees.

The fee for transaction depends on the credit card company, but every card company has a fee. Although no one likes paying those fees, they’re well worth the opportunity to collect payments from many more customers.

The Factors in Credit Card Processing

As you can see, there are a few major factors in each credit card transaction. Let’s take a closer look at what those are.

1. Acquiring Bank

The acquiring bank is the one that’s in charge of your company’s merchant account, allowing you to accept credit payments.

2. Issuing Bank

Any bank that gives credit cards to consumers is an issuing bank. However, these banks are important not just because they power consumer and business credit cards. They also play a big part in controlling the fee rates you’ll have to pay when you accept credit payments.

3. Card Processor

The credit card processor is another essential piece of the puzzle. It allows you to move the necessary information from the credit card to the relevant banks, and back again.

You’ll use either hardware or software to link to the credit card processor. As an online merchant, you’ll most likely be using software. This software takes care of fee calculations, data processing, and much more.

4. Credit Card Company

Last but certainly not least, the credit card company plays its part in the transaction.

The credit card company isn’t the same as the issuing bank. These brands don’t actually issue cards to consumers directly. But they do oversee the issuing and acquiring bank networks, playing an important role.

Ensuring Secure Credit Card Processing

It’s one thing to accept credit cards — it’s another thing to make sure your processing is secure. Here are the steps you need to take to make sure payments are safe for both you and your customers.

1. Use Tokenization

Tokenization is an essential credit card security measure. With tokenization, you won’t be storing sensitive customer or payment data. Instead, you’ll only work with the minimum necessary information.

Tokenization achieves this by changing sensitive customer data into randomly generated code. This code can’t be changed back to the real data without proper authorization, so it’s less vulnerable to hackers.

2. Use a Login Screen

Always give customers a login screen before they enter their payment information. This is a valuable added security step.

This login step doesn’t have to be complex. You can simply ask for an email address and a password before payment can be completed. Don’t forget to include a CAPTCHA verifier for when your customers need to reset their password.

3. Choose a Good Payment Processor

Not all payment processing companies are created equal. Look for a payment processing company that has security solutions in place, so all of the security measures aren’t your responsibility alone. You should also look for other useful features like solid customer support and fast transaction time.

4. Adhere to PCI Standards

PCI (Payment Card Industry) standards are a set of regulations to protect you and your customers in credit card transactions. If you make your company PCI compliant, you’ll have a standard to follow that will help keep you safe.

PCI standards were created after countless large data breaches showed the need for preventative measures. PCI compliance helps to protect you, and also reduces the fines you can get charged by credit card companies if customer data gets compromised. This is especially important if you’re in a high risk industry that’s likely to get targeted (view here for examples).

5. Update Your Systems Regularly

Failing to make timely software updates leaves your systems vulnerable to hackers. This is an easy way to ensure secure credit card processing. Do regular tests to make sure everything on your site is working correctly. If it isn’t, fix any glitches, and run software updates as needed.

Make More Profits With Secure Credit Transactions

If you offer secure credit card processing, you’ll avoid the data breaches that can ruin your reputation and cost thousands of dollars. Security measures are relatively easy to implement, and the benefits are huge.

Wondering how to get your customers to make a purchase through your secure credit card system? Check out our guide to converting leads to customers.