How Credit Card Processing Works

Important Information About Credit Card Processing for Business Owners

Although the entire transaction only takes seconds to complete, the credit card processing system is a complex process that takes multiple parties and steps to complete. The bankcard networks handle billions of transactions between merchants, processors, and banks around the world. And these bankcard networks must be as secure as possible to prevent credit card fraud. Learn more about the parties needed in order for a transaction to be completed, as well as the steps of the credit card processing system.

Parties Involved in Credit Card Processing

To understand credit card processing, you first must understand the players involved. They include:

Cardholder

These are your customers. Cardholders are people who obtain a credit or debit card from an issuing bank and use it as a payment method.

Merchant

Merchants are any businesses that sell goods or services. If you are a small business owner, you are the merchant. A merchant account is needed for your business to accept credit or debit cards from cardholders.

Card Associations

More commonly known as Visa and MasterCard, card associations are responsible for working with credit card processors to transfer data between the issuing bank and the merchant. They also are in charge of setting the interchange and assessment fees, although they do not collect all of them. For example, the interchange fees are passed onto the issuing bank.

Card associations, or networks, don’t actually issue credit cards or merchant accounts. They function as the governing body of a community of financial institutions, ISOs and MSPs that work together in association to support credit card processing and electronic payments.

Acquiring Bank

Think of the acquiring bank as the merchant’s bank, as they contract with merchants to create merchant accounts. An acquiring bank is a registered member of the card associations (for example: Visa and MasterCard). They are the ones who provide equipment and software to merchants so they are able to accept cards and other necessary aspects involved in card acceptance. The acquiring bank is also responsible for depositing funds from these sales into a merchant’s account.

Some merchants don’t see their acquiring bank as the primary provider of their merchant account. This is because acquiring banks play more of a hands-off role and enlist the help of third-party independent sales organizations (ISO) and membership service providers (MSP) to conduct and monitor the day-to-day activities of their merchant accounts.

Issuing Bank

An issuing bank is the consumer’s bank; they are responsible for issuing credit cards to consumers. Like an acquiring bank, an issuing bank is also a member of the card associations. An issuing bank pays the acquiring bank for any purchases the cardholders make. Cardholders are then responsible to repay the issuing bank under the terms of their agreement.

Credit Card Processing Steps

Now that you know who’s involved, it will be easier to understand how the process works. While you don’t necessarily need to understand the inner-workings of the bankcard system, knowing how it works can potentially help you save on credit card processing fees. The steps are as follows:

1. The Consumer Makes the Purchase

In order for the process to begin, a consumer must purchase a good or service from the merchant using a credit card. This can be done in person, online, by phone, or by mail.

2. The Transaction is Entered

The consumer will either swipe or enter their card or insert it into the payment processor. For online purchases, the consumer will manually enter their credit card information.

3. The Processor Collects Data

The payment processor collects the consumer’s credit card information, as it is responsible for routing that data across to other stages and facilitating communications between the parties. Their first role is to send the payment information to the card network.

4. The Card is Approved or Denied

After the data has been received, the credit card issuer will either approve or decline the transaction. Common reasons for cards to get declined are the card is no longer valid or the consumer does not have enough funds available. Additional security measures may be taken to verify whether the purchase is legitimate or not.

5. The Transaction is Completed

If the transaction is approved, the processor and merchant receive an authorization response. The merchant then goes ahead and completes the transaction. But just because the transaction is complete does not mean that the funds are released yet. This is a separate process that takes several days to complete, depending on the card networks involved.

6. The Merchant Submits a Batch Closure

In order for the merchant to receive the money, it must first complete a batch closure at the end of the day. This will close out all of the transactions that have been processed on that day. This allows the processor’s acquiring bank to collect the money from the credit card issuers.

7. The Funds are Deposited to the Merchant

Once the funds have been collected, the acquiring bank then deposits the money into the merchant’s bank account.

Now that you know how the process works, be sure to visit our blog to learn how to determine your credit card processing fees!

Common Errors in Sending Email from QuickBooks

Benefits of Sending Email from QuickBooks

While configuring your email may not be the newest feature from Intuit’s QuickBooks, it is definitely one of the most helpful ones. Connecting your email address to your QuickBooks account is highly beneficial, as it allows you to send invoices, as well as send and receive reports without having to leave the software.

With this being an integral feature for your business, it’s important that no mistakes are made when you are setting it up. In this blog, we’ll explain how to connect both Outlook and Gmail within QuickBooks, as well as common errors you may experience and solutions for them.

How to Connect Outlook in QuickBooks

To connect your Outlook email to QuickBooks, you will need to contact your Internet Service Provider (ISP) for the following information:

  • Username
  • Password
  • Incoming email server address
  • Incoming email server type
  • Outgoing email server address

From there, select the edit menu, followed by preferences. When the dialog box opens, look for the send forms option. When adding your email, be sure to select the Outlook option. If the Outlook option is missing, it may be because of one of the following reasons:

  • You’re using an older click to run version of Microsoft Office
  • Your profile is not set up in Outlook
  • Outlook is not the default email program
  • Your QuickBooks is hosted on the Cloud and your service provider does not have Office installed as a hosted application

The solution to fix this issue depends on what is causing it. Use Intuit’s detailed instructions on how to add the Outlook option here.

How to Connect Gmail in QuickBooks

To connect your Gmail account, it is preferred that you connect with Secure Webmail. This provides you an easier and safer connection to your email provider. With regular Webmail, you will be required to enter your password every time you send an email. Secure Webmail links your Intuit account to your webmail account, so you will only need to enter your password once. You can only connect to Secure Mail if you have a more recent version of QuickBooks installed.

How to Set Up Secure Webmail

  1. Go to the QuickBooks edit menu
  2. Select preferences, then send forms
  3. Select web mail, then add
  4. Choose your provider from the drop down before entering your email address
  5. Check the use enhanced security option, then select ok
  6. Sign in to your Intuit account (note: the username/email address used here may not be the same one you are trying to connect to QuickBooks)
  7. When your webmail provider’s login page displays, sign in and grant Intuit access

How to Set Up Regular Webmail

To set up Webmail, you will need to know your webmail servers and port settings, which are determined by your ISP. While QuickBooks can automatically fill out this information for common providers (like Gmail), you can find out the port and server information on Intuit’s website. Once you have this information, complete the following steps:

  1. Go to the QuickBooks edit menu
  2. Select preferences, then send forms
  3. Select web mail, then add
  4. Fill out the add email information requested, then choose ok and save

Common QuickBooks Email Error and Solutions

If you’ve been sending emails through QuickBooks for some time now, there’s a good chance you may have received the following message:

QuickBooks is unable to send your email to Outlook. Close any open Outlook windows and try again.

To fix this issue, you must first figure out what is causing you to receive this error message. It may be occurring for one of the following reasons:

  • You have the incorrect email setting
  • You have a damaged MAPI32.dll file
  • You are running QuickBooks as an administrator
  • QuickBooks was damaged during installation
  • Outlook was damaged during installation
  • You have Outlook open in the background when sending email through QuickBooks

Once you know what is causing the issue, you can use one of the solutions below to fix it and continue sending emails through QuickBooks.

  • Solution 1: Ensure that QuickBooks is not running as an administrator. To do this: go to the properties menu, followed by the compatibility From there, you can deselect the option that says run this program as administrator. If this option is grayed out, first select the show settings for all users. Once you click ok, go ahead and restart QuickBooks.
  • Solution 2: Ensure that your email preference is set correctly in QuickBooks. Please follow the steps above to ensure your email is properly set up.
  • Solution 3: Ensure your email preference is set correctly in Internet Explorer. To do this, first open up Internet Explorer and click on tools, then Internet options. From there, select the programs tab to make sure the correct email program is selected as the default option. For example, if you are trying to use Outlook, make sure that you have Outlook selected. From there, close Internet Explorer and open QuickBooks to see if the issue is resolved.
  • Solution 4: Test and repair your MAPI32.dll. This solution is highly technical in nature and should only be performed by an IT professional to ensure nothing goes wrong.
  • Solution 5: Reinstall QuickBooks or Repair Outlook. To reinstall QuickBooks, see Intuit’s article on how to do so using a clean install. Repairing Outlook is another highly technical procedure and is best performed by an IT professional.

Now that you know how to connect your email address and how to address common errors in sending emails from QuickBooks, you can properly set it up on your QuickBooks account.

QuickBooks Credit Card Processing Reviews

No matter what version of QuickBooks Online you have, chances are it is an integral part of your business’ operations. Not only is Intuit’s software easy to use, but also, it’s ability to connect to hundreds of different integrations makes QuickBooks one of the most popular accounting softwares in the market.

One of the many integrations offered is QuickBooks credit card processing option, which is handled by Intuit Merchant Services. QuickBooks Payments allows business owners to process credit cards through the accounting software, which automatically updates their bookkeeping with the transactions. It’s important to note that Intuit offers different payment processing options, all of which are dependent on what version of QuickBooks you are using. You want to know the differences so you know exactly what product you are signing up for.

Drawbacks to Using QuickBooks Payments

High Fees and Lack of Cost Transparency

Credit card processing fees can quickly add up. And just because Intuit is not charging you a setup or termination fee does not mean you are saving money. In fact, the per-transaction fees are quite high. Every variation of QuickBooks Payments comes with its own pricing scheme, so it’s important that you know what you are going to be charged. Keep in mind; if your business processes more than $7,500 per month, you may be eligible for custom rates.

Find out the different pricing plans based on your version of the software here. In addition to per-transaction fees, swiped credit/debit fees, etc., your account may be responsible for other fees as well. For example, a chargeback fee or a returned check fee. In addition, if you opt-in for PCI compliance service, you will be charged $9.95 per month, or up to $100 annually for PCI compliance (monthly fee accounts). Other expenses include hardware costs and other opt-in features.

Lack of Customizable Invoices

This complaint tends to come up often from QuickBooks Payments users. In regards to customization, Intuit’s invoicing feature is not as capable as many merchants would like it to be. Other than including the customer’s name, products and/or services to be provided, and payment options, there’s not much more customization that can be done to invoices.

Alternative QuickBooks Payment Processing Option

If Intuit’s payment processing fees are too costly for you, it’s important to know that there are alternative solutions. One of them includes Payment Collect, which offers simple, transparent rates that can help lower your credit card processing fees. Payment Collect’s easy to use software seamlessly integrates with both QuickBooks Desktop and QuickBooks Online.

Payment Collect offers many features, including EMV compliance, acceptance of all major credit cards, and transactions post to QuickBooks in real time. In addition, Payment Collect shines where QuickBooks Payments lacks, as it offers customized reporting as well as lower and more transparent fees.

One significant benefit of Payment Collect is that it may help reduce fraud. Our out-of-scope payment terminal ensures that no credit card data passes through your computer at anytime. This can help protect your customers’ identities and private information.

All you need to get started is a Windows computer on which your QuickBooks product is already installed, configured, and licensed. A merchant account is required to run Payment Collect, but their support team can help you find the right one to suit your business’ needs.

For more information about Payment Collect, be sure to visit the support page to get answers to frequently asked questions.