Payment Processing Overview & FAQs

Overview

The business of merchant services and payment processing can be complicated. One of our goals is to take a consultative approach with our clients so they can best understand how the system works.

FAQs

FAQs

  • How does a business start accepting credit and debit cards?

    Businesses need a merchant account in order to accept credit and debit cards. This is an account that is set up with a payment processor like BananaPay to allow business to accept cards and ultimately collect sale revenue.

  • How do I get a merchant account and begin accepting credit and debit cards?

    Apply with a payment processor like BananaPay. We will collect information about your business and submit it for underwriting to determine whether your business qualifies for a merchant account. A merchant account to accept credit cards is a form of credit, so an underwriting process is required to determine your businesses creditworthiness and eligibility for a merchant account.

  • What are authorization and transaction fees?

    Authorization and transaction fees are flat fees that you are charged each time you swipe a customer’s credit or debit card. Thus, the more card transactions you accept, the more you will ultimately pay in authorization or transaction fees.

  • What is a discount rate?

    A discount rate is a fee calculated as a percentage of your card sales. As such, the more sales revenue you collect from your customers, the more you will pay from your discount rate.

  • What is EMV chip technology?

    EMV chip technology is technology featured in credit cards, debit cards, and other payment instruments that includes microprocessor chips to maximize the protection and security of cardholder data. EMV chip-enabled cards are now the standard for credit and debit cards and provide cardholders with an additional layer of security in their transactions. If merchants accept non-EMV chip enabled cards, they will be held liable for fraudulent cardholder transactions.

  • What is PCI?

    The Payment Card Industry Data Security Council Security Standard (PCI DSS) is an information security standard applicable to organizations that accept credit and debit cards. All merchants that accept cards must comply with the PCI DSS and certify such compliance or face monthly fines.

  • What is a payment processing terminal?

    A device that accepts credit and debit cards and interfaces with the bank and other entities in the payment processing ecosystem to transfer funds to the merchant.

  • What is a PIN pad?

    A device that accepts the cardholder’s personal identification number (PIN) and encrypts that PIN in connection with a debit card transaction.

  • What is a point of sale (POS) system?

    A POS system is a combination of hardware and software use by merchants to accept credit and debit cards and otherwise operate their businesses. The capabilities of POS systems vary, but generally include transaction management, marketing, inventory, scheduling, accounting, and customer service.

  • What is the difference between a credit card and a debit card?

    The primary difference between a credit card and a debit card is the source from which the card pulls money from the cardholder and deposits it with the merchant. A debit card pulls the funds directly from the cardholder’s bank account while a credit card charges the cardholder’s line of credit with the credit card company.

  • How does a credit card transaction work?

    When a cardholder swipes a credit card with a merchant, the credit card machine transmits the transaction details to the merchant’s acquiring bank, who then routes the information from the appropriate card network to the cardholder’s issuing bank, who then approves the transaction. The merchant’s acquiring bank then deposits the funds from the transaction into the merchant’s bank account and debits the merchant’s processing account for all fees related to the transaction.

  • What is a chargeback?

    A chargeback occurs when a cardholder successfully disputes the validity of a prior credit or debit card transaction and the funds are returned to the cardholder.

  • What is a regulatory product fee?

    This is a fee charged to merchants to cover the costs incurred by processors in complying with federal regulations requiring processors to report certain merchant transaction information to the IRS.

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