How Merchants Get Their MoneyHow Merchants Get Their Money
Once a merchant accepts a credit card and processes the customer's purchase as a transaction, how does he or she get the money and how does it get funded to the merchant's bank?
This is a very commonly asked question, and not really that complicated. There are four steps to getting your money-initiating, authorizing, completing the transaction and receiving your funds.
The first step is to initiate the transaction, which verifies that your customer's credit card is active and the amount of the purchase is within his or her approved spending limit. This happens in a number of ways, depending on what kind of business you operate:
In brick-and-mortar, retail or restaurant environments the card is physically present. To initiate the transaction, you swipe the card or key in the number through a point-of-sale terminal.
In mail order and telephone order environments, the card is not present. To initiate the transaction, you enter the card identifiers the customer has provided you by mail, telephone or fax-these include the credit card number, expiration date and card verification or validation codes (the three-digit numbers on the back of the card).
Address Verification Service (AVS) helps verify street numbers within the United States before the merchandise is shipped. Be sure to input all your customer's numerical address and ZIP code information. If you don't have AVS, contact your credit card processor to add this service to your arsenal of fraud-prevention weapons.
In an Internet environment, the card is also not present. To initiate the transaction, your customer provides your Web site with the same card identifiers as a mail order or telephone order transaction.
Many prospective clients and existing Merchants call me wondering how all the pieces fit together at Cardservice International. Particularly frustrating is the variances of pricing which can result from talking with different Agencies.
CSI has a corporate office in Moor Park, Californiawith better then 800 employees. By definition CSI Corporate is a "Transaction Service Provider". This means that as a company they "acquire" businesses to help them accept credit cards for a consortium of banks. An "Acquirer" is in fact a licensed member bank. CSI for the most part makes money on...