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The Pillars of Credit Card Processing

Without credit card terminals, the job simply doesn’t get done. A terminal can be as elaborate as an integrated solution within a point of sale (POS) countertop model or as simple as a card reader that attaches to a mobile device. They can be in a form of a sleek handheld version for wireless processing or even a virtual terminal for e-commerce transactions. The point is, it is the conduit through which the transaction’s process flows. Consequently, it’s essential for merchants to have a basic understanding of how a credit card terminal works in order to choose the right fit for their processing needs.

A terminal’s purpose is to retrieve the account data stored on the payment card. The card can have the information saved through a magnetic stripe or via a more secured EMV, microchip manner. The information kept within the card is (1) the card number, (2) expiration date and (3) other identifying information. This information is then passed to the credit card processor (otherwise known as a merchant services provider). How it does this depends on the type of transaction being processed.

In card-present transactions (“face-to-face”) where the card and cardholder are physically present, the card is connected to the reader housed in the terminal (swiped or entered if EMV). The data is captured from the card and transmitted electronically to the merchant account provider. From there, the merchant services provider handles the authorization process with the issuing bank and credit card networks (Visa, MasterCard, AMEX, etc.).

When the card is not present (CNP) the merchant enters the information manually using a keypad on the terminal or the e-commerce shopper enters it on the website’s payment page. CNPs will typically take place with transactions associated with mail orders, telephone orders and online transactions. These are handled in similar ways on the back-end.

How does the information actually travel? The actual data transmission goes from the terminal through a phone line or Internet connection to a credit card processor, which routes it to the bank that issued the credit card for authorization. After checking the cardholder’s credit line, the bank either accepts or declines the transaction and relays the decision back to the processor, who sends the message back to the merchant. This complex process extraordinarily usually takes just seconds to complete.

Selecting the right terminal for your credit card processing needs depends largely on the type of business the merchant operates and the types of transactions processed. For example, a POS retail terminal with a phone or Internet connection works best in a traditional retail setting that deals exclusively in card present transactions. For a business with a mobile sales or work force, a mobile credit card terminal option equipped with a card reader would be a better suit.

At TouchSuite, we offer a broad range of PCI-compliant terminals to meet every need. We believe an informed business owner will benefit your bottom line and we’re committed to sharing our credit card processing expertise with you to help you thrive. TouchSuite representatives will advise you on the credit card terminal that suits your business and your budget. Start accepting credit cards today with TouchSuite.