What is a Credit Card Payment Processor?

September 7, 2023

A credit card payment processor is a tool used by merchants to process transactions. The payment processor provides a way to accept credit card payments and transmit banking information securely. Credit card payment processors can specialize in high risk industries or be traditional mainstream processors. High risk credit card processing makes accepting payments easy. Ecommerce trends put a heavy emphasis on the use of credit cards. With the implementation of a payment processor, merchants can accept more payments.

Merchants can implement credit card payment processors in a variety of ways. Most commonly, merchants can use a credit card terminal to swipe cards or read card chips. Mobile terminals that plug into cell phones and iPads have expanded markets for merchants allowing them to accept payments wherever they go. Credit card payment processors have extended to the internet to accept card-not-present transactions. As commerce continues to thrive in online marketplaces, credit card payment technology continues to advance.

Mobile Credit Card Payment

How Does Credit Card Payment Processing Work?

The credit card payment process begins when a customer purchases from an eCommerce site. During the checkout, the customer’s payment data is collected and safely encrypted in the high risk payment gateway. The payment gateway can be considered the middle man between the merchant and paying customers. Once the gateway receives the payment data, the payment processor can verify it. This step ensures that the buyer is indeed who they say they are. After the cardholder is confirmed, the payment processor transmits the payment data to the respective credit card company and bank. It is up to the card company or bank to authorize the transaction. Card companies and banks make sure the purchase is a typical behavior of the cardholder. Most times, a transaction checks all the boxes and is approved. During this step, the payment processor communicates to the payment gateway that the transaction is approved. Finally, the payments reach the seller’s high risk merchant account after being released from the bank. The merchant gateway reflects that the transaction is complete and releases purchased products for shipping.

The transaction may decline if fraud is detected during the approval process by the card company and bank. In some cases, card companies and banks will place a hold until the cardholder indicates the purchase is valid. When this happens, the processor communicates with the high risk payment gateway that there has been a denial. Because online payment processing is a card-not-present transaction, it makes it easy for hackers to submit fraudulent online orders. Thanks to the built-in safety features of credit card processors, all parties are better protected from fraud.

High Risk Credit Card Payment Processors VS Traditional Processors

High risk credit card payment processors offer expertise for high risk industries. While both types of credit card processing complete the necessary steps outlined above, high risk credit card processors have the specialization that traditional payment processors do not. These industries are continually facing changes in regulation. The laws surrounding them can be challenging to navigate. Traditional payment processors do not want to deal with the changes in regulations that come with industries advancement. Payment processors are constantly being brought up to regulation, keeping merchants in good standings. Mobile Credit Card Payments Apps

The high risk industry comes with many restrictions surrounding the sale of specific products, making card-not-present transactions a greater risk than usual. Luckily for merchants, the high risk payment processor can help facilitate product orders. For vape, CBD, tobacco, and other age-restricted products verification is required. A buyer’s age is validated early on in the process to prevent unlawful sales. Additionally, high risk credit card processors can check for necessary licensing needed from buyers to purchase the products.

Establishing a business on a traditional platform can result in headaches for merchants. Traditional payment processors like Stripe and PayPal do not take this risk. These conventional platforms explicitly ban the sale of high risk products on their platforms or with the use of their payment processing. However, the promise of instant merchant account approval by these platforms is misleading for many merchants. Unlike traditional payment processors like Stripe and PayPal, high risk payment processors accept the risk of its merchant’s product sales. Due to the nature of high risk industries, merchants may experience a high chargeback ratio. 

How Can a High Risk Credit Card Payment Processor Benefit Merchants?

High risk payment processors better protect merchants due to their industry specialization. With security features like age verification and licensing checks, high risk merchants stay in compliance with the highly regulated industry guidelines. The credit card processor’s ability to determine the authenticity of a buyer early on keeps the merchant’s inventory and cash flow better protected from fraud. Additionally, the customers’ data is safely encrypted.

Having the right credit card processing makes it easy for merchants to run a high risk merchant gateway integration. The payment gateway helps merchants manage orders and view the status of transactions from one place. Moreover, they can be configured to manage inventory. As orders are placed and fulfilled, the inventory tracker reflects the difference. Recurring billing can be easily set up with customer payment information safely encrypted in the high risk payment gateway. Companies can also manage their recurring billing and shipping schedules from the gateway. Subscriptions can be maintained or quickly canceled by the gateway as well.

Mobile Credit Card Payment Processing

Why Trust PayKings?

PayKings is the leading provider in establishing credit card payment processing for high risk businesses. Let our team of industry experts develop your high risk eCommerce accounts. Whether you need a merchant services business opportunity account or high risk payment and merchant gateway, PayKings can help you decide which solution is right for your online business.

Get a free merchant account quote from PayKings today and put your high risk business one step closer to the solution you need. In as little as 48 hours, you will receive quotes from one of our dedicated high risk merchant account brokers. An individualized PayKings portal account will keep you updated with the status of your account set up. Your merchant account broker will even help you select credit card processors and gateways that work with your merchant account. Additionally, your PayKings merchant account will seamlessly integrate into existing websites and mobile apps.

Dedicated to providing merchants the best high risk solutions, PayKings offers the most competitive rates. PayKings refuses to compromise on quality or security. With dozens of trusted card and bank relationships that are willing to take on the liability of your high risk eCommerce accounts, call PayKings today to get your credit card processing solution.

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Kyle Hall CEO

September 7, 2023 | Merchants | Kyle Hall