Merchant service is a broad term that includes various kinds of services, one of which is the credit card merchant service. But do you know how does it work?

It is a complicated process but can be completed within seconds, thanks to today’s technology.

The whole process can be divided into four parts. At the first stage, a customer swipe his credit card to try to pay for his bill. During this process, a POS terminal is an indispensable tool which is provided by the merchant service provider.

Then the payment processor receives this signal and transmits the customer’s information. The bank which serves the customer will decide whether there is enough money in customer’s account or not.

After the bank’s approval, here comes the third step. The business will get the payment through its POS terminal and until now the whole purchasing process is completed.

But the whole transaction does not finish. Merchant service providers charge administrative fees on this process. Therefore, after the purchase is approved, the provider will take its fees and then give the rest of fund to the business’s merchant account. For now the whole transaction has been done.

The above-mentioned steps occur within seconds when the customer swipe his credit card. It’s true that the merchant service providers play an important role in businesses’ daily operations. They provide not only the hardware support, such as POS terminal, but also the technology of software, such as the payment processor. Without a merchant service provider, the business will never receive the credit card payments from countless customers. It is reasonable that service providers charge fees.

Credit card payment is the most fundamental way for customers to pay now. With the development of technology, it is expected that there will be more types of merchant services to better serve the operation of businesses.

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