Payment processing, merchant processing and credit card processing are interchangeable terms used to describe the method for accepting non-cash payments from customers. It is applicable to retailers, online marketplaces and even manufacturers and distributors who accept payment in the form of credit cards, ACH and similar means. However, understanding what it is and how it affects your business is not always understood by those who rely on it. The following is the first of a multi-part series that breaks down the complex environment of payment processing into simple, digestible bites. We’ll explain what payment processing is, what makes firearm transactions unique, explain how a firearm merchant can get an account, discuss hardware options, and unravel the myriad of fees that reduce your daily sales income.
Payment ProcessingIf you own or operate an FFL then you likely accept multiple forms of payment from your customers. In order for those customers to consummate a transaction and for you to subsequently receive funds in the bank, your business needs to be approved by a credit card processing company and to be provided an authorized Merchant ID (or “MID”). The parties involved in a non-cash payment processing chain are as follows:
- The card holder (e.g., the individual or business making the purchase – in this example “Sally”)
- You, the firearm merchant with your Merchant ID (Joe’s Gun Shop)
- A firearm industry ISO/ISA who “boards” your account onto the payment processor (Orchid Pay)
- The payment processor itself (Global / TSYS)
- The credit card network (Visa)
- The issuing bank (Sally’s bank)
- The merchant bank ( Joe’s Gun Shop’s bank)
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