How to Start a Payment Processing Business
Banks are usually the ones providing a payment processing business but you can also provide this payment processing with the right knowledge and foundation about the business.
The term payment processing means the acceptance as well as funding for debit and credit cards at the point of sale.
Starting a Payment Processing Business
In the past, banks are generally the one who only provide this kind of service but today, there are many non-financial institutions that are providing these services too. So how can you establish a successful payment processing business?
Steps when Starting
First is to have a business license, sales, and tax number. Register your company with your local municipality by applying a business license. This is a must for any business before starting. You must also apply for the other two – use and sales tax number so that you can buy your equipment without the need to pay the sales tax. Next is to purchase machines for credit cards. This will enable you to capture electronic debit and credit card information of customers. You can buy this credit card machine from various entities but if you can buy them directly from a manufacturer, then this is great because it will be much cheaper.
An agreement between you and a gateway provider must be established and signed so that you can process transactions made by customers. Eventually, you can establish your own gateway but for starter, you must obtain an outside gateway provider first. Then, develop a contract for standard merchant. The relationship between the merchant and the processor must be always documented by a written contract and a sign. This will prevent any problems regarding the time frames of deposits, pricing, as well as disputed withdrawals from the checking account of customers. Next, create your internal merchant database so that you can keep tabs of your clients’ transactions and ensure that each of them received the right payment.
With your bank’s cooperation, you should create a funding platform of your back-end. This will make your customers pay the credit transactions that they made. After the gateway processor completed the transaction, the money will be deposited in your business account. The processing fee can be deducted per deposit or at the end of each month. Last but not the least is to create a dispute resolution process. The dispute resolution should provide a copy of sales draft, signature, and other documentation. The payment processor should have a proper process in place to the debit merchant where the disputed transaction came to avoid any absorption of a loss. These things must be taken into consideration in order for your payment processing business to be successful.
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