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What Is Payment Processing

Payment processing boils down to the automation of electronic payment transactions between the merchant and the customer. Payment technology helps process, verify and accept or decline credit card transactions through specialized hardware and software.

As a business owner, there are 3 main things you should know about payment processing (sometimes referred to as Merchant Services). Below will cover: What the banks do for your business, What types of hardware/software you will need, and what a processor does for you.

Let us know if you have any questions about getting started with Elevated Payment Solutions.


There are two types of banks that are used in a credit card transaction. The first is the Issuing Bank:

This is the bank that provides the customer with his or her credit card. As an example, if you have an account with PNC Bank then you most likely also received your credit or debit card from them. This makes PNC the issuing bank, who receives most of the interchange fees charged by the card brands.

The Second is the Sponsor Bank:

The sponsor bank is responsible for getting the funds to you- the business owner - and ACH payments to the processor. They are also responsible for paying the card brands and the issuing bank their share of the interchange fees.


Hardware and Software are also important, since this is the way you and your customer interact with their account.

The Technology can get very complex, but for the sake of attention there are 3 main technologies to use: Terminals, Point Of Sale, and Shopping Carts,


This is the traditional method for accepting credit cards. A merchant can swipe, dip or key enter transactions into the machine. Newer Near Field Communication (NFC) technology allows many terminals to accept payments directly from a cell phone through apps like Apple Pay or Android Pay.

Point Of Sale:

A POS system is similar to a terminal, but it’s generally tailored to meet the needs of each business. A salon POS, for example, might want to offer an appointment scheduling feature.

Shopping Carts:

Merchants can process transactions online through a website or mobile application by using either a shopping cart or a hosted payments page. These tools allow businesses to run an online storefront, or take payments online for B2B transactions.


Payment Processor:

The processor helps shuttle all of the information to the card brands and banks. Businesses are connected to the processor through the hardware or software they are using, and when they run a transaction the information is routed to the appropriate network. Then when a merchant “batches”, or closes out for the day, the funds are moved from the Issuing Bank to the merchant’s bank. They will then calculate the interchange fees and provide the data to the merchant and the card brands.

Elevated Payment Solutions is the Payment Processor partnered with Card Connect First Data, but also has relationships with all major Terminal, Point of Sale, and Shopping Cart systems to help identify and customize your business needs.

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