Merchant Processor

2007-03-08 10:33:40

( Business )



What is a Merchant Processor
A merchant processor is a service provider that facilitates online financial transactions. A merchant processor usually handles online credit card transactions that occur between storefront owners and buyers of goods. A merchant processor is basically an online payment processor.

How do Merchant Processors Work?
Merchant processors function as intermediaries between the buyers of goods, the sellers, banks, and clearinghouses. The merchant processor will receive the data given by the buyer, and transmit it to the bank, which will deduct the sum paid from the credit account of the buyer. The money will then be transmitted to the account of the seller of the goods. When postal money orders are used, the merchant processor can track the order, receive confirmation from the clearinghouse, and ensure remittance to the proper account.

Is it safe to Use Online Payment Processors?
It depends on how you define safe. There is no merchant processor in existence that is completely safe from credit card fraud. The biggest online stores still write of millions of dollars in losses from credit card fraud every year. The best merchant processors will allow the losses to be minimized but not eradicated. In other words, you will get what you pay for.

How Do Merchant Processors Make Money?
Merchant processors make money by charging service fees.

How Can I Minimize Credit Card Fraud?
If you own a storefront, you can minimize credit card fraud by doing two things. First, obtain a reputable merchant processor. Second, implement a clearing period before finalizing transactions involving greater sums of money. This may irritate customers, but you can tell them it will only happen in once, to validate their credit card number.

The Growing Need for Online Payment Processors
The predominance of online commercial transactions has forced many businesses to obtain webspace for online transactions. The growth of online industries has brought on a rising need for online payment procesors. Finding the right one is a matter that requires personal inquiry into the various options available.


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