A Complete Guide to Credit Card Processing for Businesses

Credit card processing has become unavoidable for businesses. Whether you have an online store or a brick and mortar, accepting credit cards along with other online payment options is a necessity for your business. You can get the merchant account with the payment processor or a payment gateway or if they have an offline store they can install the POS.

what is credit card processing

As per a report, the user base for credit cards touched 47 million in 2019 and during 2020-2025 it is expected to grow at a CAGR of 25%. This is due to the increase in the popularity of credit cards and the trend of ‘buy now, pay later’.

Below is the Current Year (2021) report data showing the importance of Credit Card and how it has been immensely adopted among consumers:

As per the Worldline India Digital Payments Report for 2021 Q1, the data for the total number of cards was 960.25 million in March; out of this 62.05 million were credit cards with an increase of 7% YOY. There was an addition of around 1 million credit cards in Quarter 1.

The total number of transactions with credit cards at POS terminals was 280.29 million and with eCommerce 244.24 million.

The customer preferences for the eCommerce payment method have changed to the credit card from the debit card as per the report and the increase is shown compared to the last year in terms of value as well. As per the value, the eCommerce transactions processed were for ₹ 1.07 trillion and POS terminals for ₹ 904.49 billion.

So, let us understand what is credit card processing for businesses and other essential related topics.

What is Credit Card Processing?

When you enable the card payment option for the customers to accept the business payments, then the whole process from making the card payment to the amount received in the bank account is called credit card processing.

For understanding the credit card processing and the parties involved in it read this detailed blog.

How to choose a Payment Processor?

You must have a clear idea of how credit card processing works. Now, let us understand how to choose the right payment processor to accept credit card payments for your business. Among various companies providing credit card processing services, it is important to choose the right one for your business.

Below are some of the deciding factors that you may carefully consider and compare among these companies:

PCI DSS Security Compliance

Payment Card Industry Data Security Standard is the security compliance for the platforms where the card payment is processed. Its main objective is to safeguard the business from fraud and other risks at the global level. Thus, your payment processor must be compliant with the PCI DSS and prevent you from failing to adhere to its security standards.

Merchant account

You need to open a merchant account with the ideal payment services provider or a payment gateway that would enable you with credit card processing services.

However, along with the credit cards payment method option, the availability of other essential products and features need to be looked into for your growing business. Examples of these other products and features would be, other payment options availability such as debit card, UPI, net banking, etc, EMI, integration options, dashboard tool, measures for fraud and risk prevention, settlement time period, etc.

It is possible that a particular payment gateway or the payment processor is providing the best of the particular services in terms of quality, pricing, and other aspects. However, it does not render the other services which are required for your business, in that case, you may go for the multiple payment gateway merchant accounts. Read more here.

Customer Services

You might need to contact your payment processor for various reasons essentially as the finances are involved and that too with such a risky payment method. It might be technical, customer-related, or anything else and you must have the customer service option to get in touch with the payment processor whenever you need it.

Protection from Risk and Fraud

Accepting credit card payments comes with the risk of friendly fraud. You may suffer the loss of products/services as well as the non-payment from the customer.

The customer may file the chargeback and this would impact the merchant and business reputation. High-risk businesses have a higher ratio of such chargeback and frauds.

The right merchant account service provider would save the business from credit card chargeback risks and frauds.

Pricing plans

Cost is also an essential aspect and thus pricing plans must be compared when you are choosing the payment processor. Various types of fees are involved in credit card processing, however, when you choose a payment gateway merchant account you need to compare only the transaction fees (TDR) which are charged by them and select the right quality payment processor for your business.

Technical efficiency

The payment processing is subject to downtime, technical outages, and glitches. This may result in the loss of trust from the customer side and also the financial loss for your business. Thus, it is necessary to research the uptime and the frequency of the outages with the payment processor.

Read: Five credit Card processing tips for any Business


Hope that this guide provides you with detailed information on what is credit card processing and how to choose the payment processor for your business to accept credit card payments.

Contact PayKun and get started with our best services for credit card and other payment method options.

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