Credit cards are all over the place. Earlier, a few select businesses accepted cards as payment options. Now, almost all businesses accept credit payments. How did this change come about? What is making credit cards such a popular payment option? The answer to these questions is affordable processing fees.
Credit transactions always involve some risk. Any company that plays a part in the credit chain will charge for its services. As card processor facilitates card payments for a business, it charges a processing fee for its service.
Origin of credit card processors
Extending credit to customers is an age-old policy to assure more sales. United States saw the first credit cards in early twentieth century, with oil companies and hotels being the pioneer card issuers. Processing and collection of the bills was carried out by the businesses in-house. Then, banks began to offer credit cards and took over the messy work of processing card transactions. Businesses were unburdened from having to extend credit from their own funds. The job of processing and collecting bills was transferred to banks.
Success of early credit card processors
As banks took on the task of processing card transactions, many businesses began to accept credit and debit cards as payment options. Visa and MasterCard appeared on the scene offering effective credit processing services and taking the tedious work out of the hands of businesses. Credit card business flourished and so did the card processing companies.
Arrival of the Internet
The internet has changed the market scene completely. Big players no longer monopolize the card processing market. The internet has facilitated the entry of small players into this domain by providing fast and cheap transfer of information.
Lowering cost of hardware and software has made it possible for small companies to process electronic payments effectively, and at much lower costs than banks and giants like Visa and MasterCard. The cost of online payment gateways has also reduced drastically and many businesses have taken their products online through ecommerce applications.
Big drop in credit card processing fees Echeck Processing
As the internet makes credit and debit card processing faster and cheaper, more and more companies are jumping in to get a slice of the pie. The competition is bringing down the cost of processing fees like never before. Small businesses can easily afford the cost of processing fees, making cards a viable payment option. This also increases their total sales volume, as many customers prefer to pay with credit.
Reasonable processing fee and good quality service
A good processing fee should not be at the cost of low quality services. Card processors offer many services such as setting up merchant accounts, installing point-of-sale terminals for processing cards, supporting ecommerce applications, using secure technology to avoid fraud, and more.