How To Startup A Credit Card Processing Service Business

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.

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