Credit card machines are a critical part of payment processing for businesses of all sizes. They allow businesses to accept credit and debit payments from customers, authorize and process those transactions, and then settle funds to the merchant’s bank account at the end of each business day.
But what exactly happens behind the scenes from swipe (or dip in the case of chip cards) to completion of a transaction? In this article, we’ll take a look at the core functions of credit card machines and help you understand what to look for in a machine that will fit your needs.
The Right Machine for Your Business
Whether you need to swipe or insert, chip or NFC, there are a variety of credit card machines available that can help you meet the payment demands of your customers. However, the “right” credit card machine for your business will depend on a number of factors, including the type of payments you need to process, the types of customer you serve and where you do most of your selling (e.g., is your business mobile, desktop or a point-of-sale (POS) system).
The most important function of any credit card machine is to enable the processing of sales transactions. When a customer makes a purchase using a credit or debit card, the credit card machine takes the customer’s card information and sends it to your merchant services provider via the internet. This information includes the payment amount, which is then verified by your merchant services provider against the customer’s bank card records to ensure that the cardholder has enough available credit or funds to cover the requested purchase.
This step is also known as “authorization,” and it’s the first time that the customer’s bank checks to see if they have enough credit or funds to make the purchase. Once the credit or debit card is authorized, the merchant service providers passes the payment authorization to the customer’s card issuer who then confirms the sale with the customer and sends the payment confirmation back to your credit card machine.
At the end of the day, credit card machines perform a batch settlement process that totals up all of the authorized transactions and transfers the settled funds from your merchant account to your bank account. This helps to prevent chargebacks and ensures that the correct amounts are transferred from your customers’ banks to your account.
Lastly, some credit card machines have reporting capabilities that can help you keep track of your daily sales activity and provide insights into how your business is growing. Depending on the features you need, this functionality can include sales summaries and other data for your accounting and record-keeping purposes. Some devices also have an offline mode that allows you to continue processing payments if the internet connection is lost. The right credit card machine can improve your business’s payment processing workflow and enable you to grow your sales. So, before making your next purchase, be sure you know how credit card machines work!
