Understanding How Retail Credit Card Services Work

If you sell anything at all, whether it is a service or a product, you may need retail credit card services in order to be able to process payments from your customers, especially if you sell your product or service over the internet and need to authorize net credit card processing.

The way retail credit card processing works is that the credit card processing company with whom you choose to do business verifies the availability of funds when your customer attempts to make a purchase on your website or through your retail store. Your service provider then completes the transaction by taking the funds from the cardholder's account and transferring those funds to you, minus their negotiated fee.

There are several advantages to having retail credit card services, because many people, particularly those who shop online, use credit cards to make purchases because they feel safer doing so in this age of fraud and identity theft. In addition to processing payments, you may also be able to obtain a credit card through your merchant account to use for all of your business related expenses.

There are many benefits to obtaining a retail credit card, including:

Credit card rewards. You are going to spend the money anyway, in the process of running your business, so why not be rewarded for the expenditures you have to make by earning points, cash back, or mileage? When you choose a credit card that has an awards program, you can typically choose the reward that makes the most sense for your business. Do you do a lot of traveling by airplane? An airline mileage reward program might be best. Are you on the road a lot? Cards that give double points for fuel purchases might help you earn rewards more quickly. Do you spend a lot on office supplies or other purchases? Cash back rewards, ranging from 1-5% might be your best choice. The key to making the reward program work for you is to remember to use the card for purchases your business actually needs, and don't get in the habit of spending on the card just to earn the points.

Separate personal and business expenditures. Not only will your accountant be thrilled, but the IRS will be happier, too, since there will be a clear delineation between business and personal expenses when it comes time to file your tax return. Having a retail credit card can also make it easier for you to manage your expenses, since most credit card service companies will provide you with detailed, itemized statements of your expenditures, making it easy for you to track costs.

Build credit. By having a retail credit card in the name of your company, you can establish credit that will allow you to build lines of credit with your suppliers and build a credit rating for your company.

Retail credit card services help you manage your business effectively by processing the transactions of your customers' purchases, protecting you from fraudulent claims, and giving you spending power to grow your business.