January 10, 2011

How Real Time Credit Card Processing Works?

When a merchant accepts credit cards for products or services, they must decide which type of credit card processing will work best for their business. There are two types of credit card processing from which to choose; batch processing and real time processing. Deciding whether batch or real time processing is the best fit for your business will depend on several factors. There are pros and cons to each type of processing. Here we look at the advantages and drawbacks of using real time credit card processing.

What is real time credit card processing?

When a credit card is used to pay for a product or service, the merchant receives payment via a credit card processing system. With real time processing, an authorization is obtained immediately and each transaction is processed on an individual basis. This is different from batch processing where all of the credit card data is stored and then transmitted for processing in a group or "batch" at a later time.

Advantages of real time credit card processing

Merchants who need immediate authorization do well with real time processing. Since the credit card information is processed at the time of sale, merchants receive approval or in some cases denial, while the customer is still present (or in the case of online sales, before a product is shipped). This protects the merchant from accepting a credit card for payment that may not have the available funds to cover the purchase. Real time credit card processing is popular with Internet businesses as well as retail and restaurant businesses that require immediate authorization before completing the sale. As a general rule, real time credit card processing is faster and cheaper than batch credit card processing.

                              credit card processing

Drawbacks of real time credit card processing

With the obvious benefits of real time processing, many merchants may question why anyone would choose batch processing. The potential drawbacks of real time processing should be considered before making a final decision. A common concern with merchants using real time processing is fraud. If a thief were to present a credit card that has not yet been reported stolen, it is possible a transaction will be approved and processed with no one being the wiser. Credit card companies protect account holders who have been the victim of fraud, therefore it is the merchant that most often loses in this situation. Another potential drawback with real time processing may occur is there are problems with your processing equipment such as the server. Without the ability to immediately transmit data, merchants may find themselves unable to accept credit card payments at all.

There are clearly many factors which must be taken into consideration before deciding which type of credit card processing is best for your business. It is also important to compare how much it will cost in fees and equipment for each type of processing. By taking your time and doing research to learn how each process works in detail, you can make an informed decision regarding the processing of your credit card sales.

3 comments:

chandra said...

Very informative details on credit card! thanks dude!


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Muddassar Shah said...

A costumer can also used credit card online facilities to get benefit from his credit card.
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Credit Card Processing said...

Superb pictorial representation of the Credit card process and usage. The post nicely highlighted the benefits of the credit cards.

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