Credit Card Processing: Evolution and Notable Providers
Credit card processing refers to the transaction of money when a payment is made via credit card. There are multiple steps that need to be taken in order to process the payment safely from the credit card user to the merchant. Once a customer uses a credit card, either in-store or online, the information of the payment is sent to the processor. The processor gets in touch with the customer’s bank, which either approves or denies the transaction. Once the bank approves of the payment, information gets back to the processor, which then allows the payment to be made to the merchant. The customer’s accounts are then charged for the transaction and repayments must be made as per the payment schedule of the user’s bank.
Evolution of Credit Card Processing Systems
Credit cards have been in use since the early 1920s. They first started with store credit cards that allowed customers to have a more convenient mode of payment. Nearly a century later, credit cards are still in use by a large population of the world. With the development and advancement of technology, credit cards have become more secure and an even more convenient mode of payment online or offline. Let us look at the timeline of how technology has come into play in the evolution of credit card processing systems: –
- Early 1920s- Customers were given store credit cards issued by large scale merchants. These cards were short-lived as newer and more convenient methods were then created.
- 1928- “Charge-It” cards were created in Brooklyn which customers could use to pay local stores. Bill payments had to be made at the end of every month.
- 1946- Thousands of customers began using a charge card for travel and entertainment created by The Diners Club.
- 1950- The Bank of America launched “BankAmericard”. It is a revolving credit card product issued by a third party bank for the first time in history.
- 1958- American Express, or Amex, cards debuted with the use of plastic cards rather than the paper ones. This gained popularity over the years, with over 9 lakh users.
- 1959- The second bank-issued credit card was launched with Mastercard. Payment involves the merchant, the customer and the company that issued the card. There were no merchant accounts or payment processors which could not be used on a large scale. There were many security concerns and frequent errors made.
- 1971- BankAmericard was changed to Visa. This allowed international partnerships and licensing agreements. The first modern electronic POS was introduced. This paved the way for magnetic stripes that offered quicker and more efficient credit card processing. The magnetic stripes held the information of the cardholder, and it made transactions quicker and easier.
- The 1990s- Credit card processing became more sophisticated. Many companies emerged to streamline payment processing for merchants and card networks.
- 1995- The wireless credit card terminal was introduced. A few years later, CVV was introduced. Card Verification Value, or CVV, was a three or four-digit code added to a credit card to increase security against fraudulent activities.
- 2005- The EMV chip was introduced as an additional security feature. This was used to combat the creation of counterfeit credit cards.
- 2015- Millions of customers around the world now own credit cards issued by different banks that provide higher security to users.
- Today- Payment process has become more complicated. The number of credit card users grows each day thanks to the highly convenient payment processing offered by banks in addition to the high security facilities.
Leading Companies and Providers of Credit Card Processing Technologies and Services
There are a wide variety of companies and providers all around the world that offer credit card processing technology and services to users. The leading companies and providers of credit card processing technologies and services include:
Square Point of Sale
Square Point of Sale offers many features to users. The most attractive features of this provider are the straight-forward and predictable pricing. The reasonable prices, availability of customer services, compatibility with both iOS and Android devices and the fact that it can be used offline has made it one of the best credit card processing providers.
Helcim provides credit card processing services with complete transparency. The pricing and fees that they charge are clearly laid out on their official website, which makes it very convenient for users.
Intuit QuickBooks Payments
This provider offers point-of-sale options with solid pricing options. There are various integrations that are useful to users in addition to the compatibility of both mobile phones and desktops.
This provider provides secure payment technology to small businesses and customers. It has a highly rated customer service and provides all the services needed for e-commerce. It is a good option for high-risk merchants, and it provides transparency with its interchangeable pricing option.
The number of credit card users is steadily increasing globally, thus fueling the demand for latest credit card processing technologies and services. It is certain that in the coming years, several new technologies will emerge to make the user experience more convenient.