March 31st, 2014 by Elma Jane
A payment processor is a company often a third party appointed by a merchant to handle credit card transactions for merchant acquiring banks. They are usually broken down into two types: Back and Front-End.
Back-End Processors accept settlements from Front-End Processors and, via The Federal Reserve Bank, move the money from the issuing bank to the merchant bank.
Front-End Processors have connections to various card associations and supply authorization and settlement services to the merchant banks’ merchants. In an operation that will usually take a few seconds, the payment processor will both check the details received by forwarding them to the respective card’s issuing bank or card association for verification, and also carry out a series of anti-fraud measures against the transaction.
Additional parameters, including the card’s country of issue and its previous payment history, are also used to gauge the probability of the transaction being approved.
Once the payment processor has received confirmation that the credit card details have been verified, the information will be relayed back via the payment gateway to the merchant, who will then complete the payment transaction. If verification is denied by the card association, the payment processor will relay the information to the merchant, who will then decline the transaction.
Modern Payment Processing
Due to the many regulatory requirements levied on businesses, the modern payment processor is usually partnered with merchants through a concept known as software-as-a-service (SaaS). SaaS payment processors offer a single, regulatory-compliant electronic portal that enables a merchant to scan checks “often called remote deposit capture or RDC”, process single and recurring credit card payments (without the merchant storing the card data at the merchant site), process single and recurring ACH and cash transactions, process remittances and Web payments. These cloud-based features occur regardless of origination through the payment processor’s integrated receivables management platform. This results in cost reductions, accelerated time-to-market, and improved transaction processing quality.
Payment Processing Network Architecture
Typical network architecture for modern online payment systems is a chain of service providers, each providing unique value to the payment transaction, and each adding cost to the transaction. Merchant>Point-of-sale SaaS> Aggregator >Credit Card Network> Bank. The merchant can be a brick-and-mortar outlet or an online outlet. The Point-of-sale (POS) SaaS provider is usually a smaller company that provides customer support to the merchant and is the receiver of the merchant’s transactions. The POS provider represents the Aggregator to merchants. The POS provider transaction volumes are small compared to the Aggregator transaction volumes. The POS provider does not handle enough traffic to warrant a direct connection to the major credit card networks. The merchant also does not handle enough traffic to warrant a direct connection to the Aggregator. In this way, scope and responsibilities are divided among the various business partners to easily manage the technical issues that arise.
Transaction Processing Quality
Electronic payments are highly susceptible to fraud and abuse. Liability to merchants for misuse of credit card data creates a huge expense on merchants, if the business were to attempt mitigation on their own. One way to lower this cost and liability exposure is to segment the transaction of the sale from the payment of the amount due. Some merchants have a requirement to collect money from a customer every month. SaaS Payment Processors relieve the responsibility of the management of recurring payments from the merchant and maintain safe and secure the payment information, passing back to the merchant a payment token. Merchants use this token to actually process a charge which makes the merchant system fully PCI-compliant. Some payment processors also specialize in high-risk processing for industries that are subject to frequent chargebacks, such as adult video distribution.
Posted in Best Practices for Merchants, Credit card Processing, Electronic Check Services, Electronic Payments, Internet Payment Gateway, Merchant Services Account, Payment Card Industry PCI Security, Point of Sale, Visa MasterCard American Express Tagged with: aggregator, aggregator transaction volumes, back end, card associations, card data, chargebacks, credit card transactions, electronic portal, front end, front-end processors, issuing bank, merchant, merchant bank, network architecture, online payment systems, payment gateway, payment processing, payment processor, payment transaction, pci-compliant, point of sale, POS, SAAS
January 6th, 2014 by Elma Jane
It can be difficult for travel agencies to choose a merchant services provider. The credit card processing industry generally categorizes travel agents as a high risk business type due to the fact that most travel agency transactions take place long before the actual product or service is delivered to the customer. This leaves travel merchants open to chargebacks and other payment disputes, which are costly procedures that deter many merchant services providers from offering travel merchant accounts.
National Transaction Corporation is one of the travel merchant account providers and credit card processors to provide high risk merchant services for travel agents. Most providers are geared toward e-commerce business types, although some offer options for traditional travel credit card processing. National Transaction Corporation (nationaltransaction.com) is a Coral Springs, FL-based, NTC’s member bank is US Bank Minneapolis, MN; that offers high risk travel agent merchant accounts. NTC’s credit card processing, no holds on funding, integration with Trams, Sabre, and ARC business solutions, and payment gateways for e-commerce travel merchants. National Transaction Corporation’s parent company Elavon, has a grade of “C” award. The Better Business Bureau (BBB) currently grants National Transaction Corporation an “A+” grade, citing only one complaint in the last three years.
Posted in Credit card Processing, e-commerce & m-commerce, Electronic Payments, Internet Payment Gateway, Merchant Services Account, Travel Agency Agents Tagged with: chargebacks, credit card processing, e-commerce, high risk, merchant services provider, no holds funding, payment disputes, payment gateways, provider's, transactions, travel agencies, travel agency, travel agents, travel merchant account, travel merchants
