How Does Payment Processing Work?

When your customer swipes their card at your register, have you ever wondered what is happening behind the scenes to ensure that money changes hands? The answer to this lies within the inner workings of your organization’s payment processing system. 

PayHawk offers a popular integrated payment system with clients nationwide who are currently using and loving our solution! In this blog post, we’ll break down the subject of payment processing so that you can understand the basics. We’ll also fill you in on how to find out what credit card fees merchants are responsible for and what features you’re going to want when you’re in the market for a payment processor for your own organization. Are you ready to learn more? Great! Let’s get started.

What is a payment processing system?

A payment processing system is a type of software that helps businesses with managing their financial transactions. It’s typically set up to process credit and debit card payments, and sometimes even electronic checks and bank transfers. They might also be used to process payroll, track customer invoices and do things like calculate sales tax and even tips! There are online payment processors and there are also point-of-sale (POS) systems that are used to accept payments in brick-and-mortar stores. PayHawk offers a solution for both. We understand that each of our customers, whether they are running online businesses or physical storefronts, truly value having a reliable payment processing system. So, how does payment processing work and who all benefits from it? 

How does a payment processing system work?

After some time of selling goods and services, the Merchant sends a report of authorized transactions in batches through to their payment processor. The payment processor then passes that transaction data on to the banks and card associations. This data tells these banks and creditors all the details they need to know, such as the date of purchases and the amounts to be charged. The issuing banks or creditors then charge the cardholders’ accounts for those transactions.

EVERYONE benefits from payment processing technology!

Most people these days use credit cards to make purchases, so having a seamless payment solution for merchants and their customers is vital. But, how does a credit card work at the register? Let’s go back to the example of a customer making a purchase at your physical place of business. Let’s say they’re in line and in a hurry to pay and move on to their next errand. So they swipe their card, accept the total on the screen and, before you know it, they’re all squared away and out the door in a flash. They likely do not realize the multitude of events that just took place in those one or two minutes at the register – and maybe you are curious too! So let’s expand on that next.

At the moment your customer swiped their card in the example above, the card’s information was transmitted at the speed of light to your company’s bank. Before you even took your next breath, your bank had already contacted their credit card issuer to get authorization for the sale. Seeing the card was good for the purchase, the sale was authorized, and your bank pays you for the price of the goods or services they just bought. Now they are on the hook to pay their credit card company who just fronted them the money for that purchase. You got paid. The customer got what they wanted – everyone is happy! There are so many more benefits from payment processing technology. We have a complete guide on the benefits of payment processing for small businesses.

That’s a brief breakdown of everything that goes on during a purchase with a credit or debit card, and it’s all thanks to a beautiful payment processing system. Some payment processors, like Square, charge the merchant an arm and a leg for each credit card transaction.

When you give us a call, you’ll notice how PayHawk’s credit card processing solution takes care of so much more than just the moment of a purchase. A top-notch payment processing system like ours has an insane amount of other features that benefit you, the merchant, as well as your customers. Let’s dive into those now

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The Features You’re Going to Want – Explained

Finding the right payment processing system is crucial. After all, you need a system that is reliable and efficient so that you can focus on running your business. Below are the features you don’t want to miss out on, found in only the best payment processing systems, like PayHawk

Seamless Integration

You’re going to want a payment processing system that has the capability of accepting payments and moving money with a powerful API. It should be an effortless and problem-free experience to integrate a payment processing solution into your current system. With the power of API-driven integration, a digital platform like PayHawk will keep your business’s data in sync, enhance your productivity and drive revenue.

Multichannel Payments

You’ll want to make sure you have a payment processor that can handle multiple types of payments. And not just credit card processing. You want to be able to accept payments from all sorts of customers, no matter how they want to pay. Multichannel payments are the way to go! Whether your customers want to use their credit cards, debit cards or PayPal. you’ll be able to accommodate them. And with more and more people shopping online, being able to accept all sorts of payments is essential for any business that wants to stay competitive. So, if you’re not already using a multichannel payment processor, now’s the time to make the switch!

Merchant Onboarding

It’s definitely important to choose a payment processing system that offers features that fit your needs. And when it comes to onboarding merchants, you’ll want a processor that makes the process easy and straightforward. The last thing you want is to be bogged down by paperwork or have to jump through hoops just to get started. Look for a processor that offers simple and quick merchant onboarding, so you can get up and running without any headaches.

Client Portal

You wouldn’t want to deal with a payment processing system that doesn’t come with a client portal that you can access any time of day, from your laptop or mobile device, when you need to manage all of your company’s electronic transactions. In PayHawk’s client portal, you can do things like update the information on file if your address or contact person changes, opt to add additional products and services to your business, view online statements or terms of service and get information on your point-of-sale equipment.

Free Statement Analysis

A statement analysis (also referred to as a payment processing audit) allows you to submit your merchant statement for an in-depth look at your current processing fees, things like merchant fees debit vs credit, to see where you might be able to save money. Any payment processing company that has your best interest at heart would offer this service to you, free of charge. And at PayHawk, we do!

We offer a free payment processing audit! We want to make sure you aren’t being overcharged somewhere. So if you would like to possibly reduce your merchant account fees we would be happy to take a look at your statement. Our auditors really know how to comb through these and get you the most savings!

Get your free payment processing audit now!

24/7 Customer Support

Round-the-clock access to direct support is vital for businesses that rely on payment processing. Whether it’s a question about a transaction, an issue with a refund, or something else entirely, the last thing you want is to be left in the dark. That’s why we’re proud to offer 24/7 direct support to all of our clients. No matter what time of day or night it is, our team is here to help. And because we know that every business is different, we offer tailored support based on your specific needs. So whether you need a quick answer to a simple question or more in-depth assistance, we’re always here for you.

How Can You Learn More?

Here at PayHawk, we do not skimp on the details. Especially when it comes to helping businesses understand all of their options.

Contact us today to find out how PayHawk can make the days brighter in your workplace. We will share pricing information, what credit card fees merchants are responsible for and answer any other questions you might have to make sure we are the best fit for your organization.

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