Types of credit card processing
There are several types of companies you can turn to for credit card processing.
Bank: The bank you use for your business finances should be the first place you contact. Banks can be the easiest source to turn to for credit card services; many offer service packages for businesses that include merchant services. Most banks do not process credit card transactions themselves, though. Instead, they outsource credit card processing to a third party processor. It can be tough to get approved from this channel, though. Banks are likely to inspect your business more closely before deciding whether or not to accept your application.
Third Party Processor: Third party processors dedicate themselves to handling credit card processing. As such, they take care of different aspects of the transaction process such as authorization, billing, reporting, and settlement.
Independent Sales Organization: An independent sales organization (ISO) is essentially a registered credit card merchant broker who represents one or more third party processors. They set up and service credit card merchants, but do not do the actual processing. ISO’s are less selective than banks, but that comes at a somewhat higher price. They are also not strictly regulated the way banks are, so be particularly vigilant when evaluating potential suppliers.
Financial Service Provider: MasterCard and Visa require you to establish a merchant account through an intermediary. However American Express and Discover give you the option of applying directly to them. Association Small business and trade associations often offer credit card processing at discount prices. They are a particularly good resource if companies in your industry historically have trouble attaining credit card merchant status.
Source: http://www.buyerzone.com/finance/credit_merchants/buyers_guide3.html
Bank: The bank you use for your business finances should be the first place you contact. Banks can be the easiest source to turn to for credit card services; many offer service packages for businesses that include merchant services. Most banks do not process credit card transactions themselves, though. Instead, they outsource credit card processing to a third party processor. It can be tough to get approved from this channel, though. Banks are likely to inspect your business more closely before deciding whether or not to accept your application.
Third Party Processor: Third party processors dedicate themselves to handling credit card processing. As such, they take care of different aspects of the transaction process such as authorization, billing, reporting, and settlement.
Independent Sales Organization: An independent sales organization (ISO) is essentially a registered credit card merchant broker who represents one or more third party processors. They set up and service credit card merchants, but do not do the actual processing. ISO’s are less selective than banks, but that comes at a somewhat higher price. They are also not strictly regulated the way banks are, so be particularly vigilant when evaluating potential suppliers.
Financial Service Provider: MasterCard and Visa require you to establish a merchant account through an intermediary. However American Express and Discover give you the option of applying directly to them. Association Small business and trade associations often offer credit card processing at discount prices. They are a particularly good resource if companies in your industry historically have trouble attaining credit card merchant status.
Source: http://www.buyerzone.com/finance/credit_merchants/buyers_guide3.html
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