Credit and debit cards are becoming a popular payment option across the globe – a trend that is making even small home-based businesses seek out credit card processing services. A payment processing service basically processes a credit card transaction. It is the bridge between the retailer and the card company – Visa, MasterCard, American Express, Discover, etc.
If you are considering starting your own business, consider starting a credit card processing service. Even though it is a competitive industry, it is still very lucrative. Let’s discuss the basics of starting such a business.
1. Understanding credit card processing
As a credit card processor, you will be providing the framework that enables:
- a retailer to swipe cards in POS terminals
- verification of credit card credentials over a secure SSL network
- software to process information; accept and reject cards
- confirmation of payments by the payment gateway to retailer and customer
- debiting funds from the credit card holder’s account and holding them in the merchant account
- releasing funds to the retailer’s checking account
For every transaction, the processor collects a percentage of the amount involved. This is the main source of income, though there are other fees too.
2. Register as a company Payment Processing
Get information from the Chamber of Commerce or the local Small Business Bureau on how to register as a corporation or LLC. This protects you from personal liabilities.
3. Look for reseller option with banks
Banks offer reseller programs that allow a company to resell the bank’s processing service under its own brand in exchange for a fee. You can act as an “authorized agent” for the bank.
4. Approach multiple banks
Banks are a mandatory part of processing credit and debit cards. Approach various banks with a strong business plan and a potential client list. Let them know that you will not entertain high risk businesses such as adult websites, and other types that see a high rate of fraud.