The Evolution of Merchant Services

Understanding Payment Processing

Merchant services have evolved over the years, from specific merchants extending credit to certain customers to electronic payments, where the merchant and customer don’t need to be in the same geographical location. With the continued growth and change of the industry, merchant services feature a new set of rules and equipment to keep up with the times. Now, merchants do business four ways: through a standard terminal, an IP terminal, processing software, or payment processing gateway. We’ve broken down each type to give a better understanding of what merchant services are and how payment processing has evolved.

Standard Terminal

Very few businesses still use standard terminals. These require a standard phone line connection to an acquiring bank. The merchant will authorize the request and submit it through the terminal. Some of these terminals can store transaction data, which can be transmitted to a gateway processor. The downside to this type of terminal is that immediate authorization isn’t available, which creates an increased likelihood for failed payments.

IP Terminal

Many merchants and businesses have swapped out traditional terminals in favor of an IP terminal. These require an internet connection for the merchant to submit a sales authorization request to the acquiring bank. Like the standard terminal, an IP terminal is still a physical terminal. The connection to the acquiring bank is more secure and stable, making these types of terminals more efficient for business.

Processing Software

Now, merchants don’t even need traditional, physical terminals. With the use of processing software, the sales authorization request gets submitting to the acquiring bank over the internet through a magnetic stripe reader. This is the most common type of terminal used today. Merchants can even use a terminal application on their computer or smartphone to replace a dedicated credit card terminal. These applications transfer magnetic stripe data to the application.

Payment Processing Gateway

With more consumers shopping online, merchants had to develop ways for online purchases. The payment processing gateway allows for sales authorization request to be submitted through an automated website that communicates with the acquiring bank. Authorization is nearly instantaneous, but merchants must be more vigilant about fraud and chargeback risks.

Complete Payment Processing with TOTAL-APPS

TOTAL-APPS is a leader in advanced payment processing solutions. We offer complete credit card processing services from international payments to split payments. Our dedicated processing experts help improve payment processing efficiency with fraud and chargeback protection, full-service reporting and analysis, and are PCI-compliant.

Contact TOTAL-APPS to fulfill your payment processing needs today.