How Retail Credit Card
Processing Works

Retail credit card processing is the traditional model of enabling credit card purchases.

Beside most cash registers in stores across America sits a small box, through which the attending clerk swipes the customer's card and enters the sales amount. After a brief moment, the retail credit card processing is complete - and the box, or terminal, prints an authorization code onto the credit card slip, which the customer then signs. It's that simple.

If you want to be able to offer retail credit card processing services to your store or office's customers face-to-face, you will need only two things: 

1. Your retail merchant account.

We discussed merchant accounts earlier in the Nine Minute Tutorial. We'll be addressing the criteria you should use in selecting which retail merchant account is right for your store or office - and the costs involved - a little later in the Nine-Minute Tutorial.

2. Your point of sale equipment.

The terminal equipment required for retail credit card processing can usually be either purchased outright or leased. Most leases are lease-to-own, so that at the end of the lease term, you will own the equipment outright. 

Many companies' lease programs will also offer you a buyout option, so you can choose to buy out the lease during its term. Your lease payments should be tax deductible. 

Your cardswipe terminal should probably incorporate a printer, to allow you to keep a paper copy of each sales transaction. Most equipment allows the user to enter the customer's credit card number manually on a keyboard as well, in case the card or swiping mechanism is defective. 


Some of the possible features of point of sale equipment include:

	debit card and check verification capabilities
	integration with your PC, to allow detailed reporting, batching, etc.
	reduced levels of chargebacks and fraud
	customer database building, allowing for processing of installment payments

In addition, many vendors offer maintenance services for all leased or purchased equipment. 

Note: Because the customer personally presents his card to the teller, incidences of fraud involving retail credit card processing are significantly lower than with online processing. As a result, the discount rate charged by the retail merchant account provider is generally some 25 to 35% less than with online processing.

NEXT: Click here to learn about the payments and fees involved with point of sale terminals and retail credit card processing. 

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