Thanks to a credit card processing service, merchants can accept payment from credit cards. The three key participants are the customer, the merchant, and the card-processing business. Banks, financial institutions, or for-profit businesses referred to as "merchant service providers" often run card processing systems. Independent businesses, like GreenLink Merchants or banks authorized to take cards from specific issuers, are also merchant processors.
Credit card processing follows these steps:
- The customer uses their credit card to start a transaction, and the merchant receives the payment details.
- In one of two ways, the merchant then accepts and collects the payment information (either online or over the phone as a "card-not-present" or in-person as a "card-present" transaction).
- The payment information is sent to the card processor, who sends it to the card network.
- The card network then shares the information with the issuing bank, verifying whether the consumer has sufficient credit or funds to complete the transaction.
- Once the transaction has passed the issuing bank's verification process, funds are transferred from the bank to the merchant account.
- A notification is sent to the point of sale approving the transaction.
- The transaction amount is transferred from the issuing bank to the business's bank.
Credit cards are among the most widely used payment methods for goods and services. Despite the procedure of establishing a new credit card processing service, it is convenient for both the buyer and the vendor.
High-risk Industry Credit Processing is Difficult
While using credit cards benefits consumers and businesses, it is difficult for businesses operating in high-risk industries to perform credit card processing. One of the primary reasons is regulatory hurdles at the federal level. Although such trades may be deemed as typical businesses, most federal agencies view this differently. Credit Card transactions in the high-risk space must follow Visa guidelines and do not use a direct merchant ID for services, rather they use e-wallets or stable coins for purchases. This allows for low-risk transactions to take place on the Visa network in a compliant manner.
As a result, significant compliance costs and legal risks are presented to financial institutions. The federal government requires financial institutions to make several monthly reports, which can be costly. A bank may be subject to significant fines if it misreports its transactions or is suspected of not wholly following the reporting guidance by a future bank regulator. Consequently, most financial institutions are reluctant to offer services to businesses in high-risk industries.
GreenLink Merchants Will Help You
If you are a merchant in a high-risk industry concerned about financial institutions turning down their request to help with credit card processing, you shouldn't worry. At GreenLink Merchants with GL-Credit Card Processing, we offer credit card processing services to businesses in high-risk sectors to promote customer retention and enhance the generation of profits. Contact us today to learn how we can help your business.