What is a Payment Processing Solution?
Using a payment processing solution is a game-changer for businesses. But not all payment processing offerings provide merchants with the same fees or services. So how do you decide which is best for your business?
We’ve created this guide to help you learn the benefits of payment processing, why opening a merchant account is the solution you need, costs associated with them, which questions to ask when choosing your provider, and how to get started.
Get approved for a merchant account in less than 24 hours
What are payment processing solutions?
Payment processing solutions make it possible for businesses to accept credit card and debit card payments (and even crypto payments) from customers, using methods such as payment links.
When customers pay for your goods or services with a card or digital currency, there are a lot of moving parts in the background, including the bank, card provider, your company, and the customer. A payment processor brings all these parts together to make it possible for each and every transaction to operate smoothly and efficiently.
How do payment processing solutions work?
Every time a customer pays for a product or service with a credit card, debit card, or digital currency, a series of secure steps takes place in just a few seconds. Payment processing solutions manage this entire sequence automatically, ensuring that funds are transferred safely from the customer to the business.
1. Authorization
When a customer enters their payment information at checkout, the payment processor encrypts the details and sends them to the card network (such as Visa or Mastercard). The network then contacts the customer’s issuing bank to confirm whether the card is valid and if sufficient funds are available for payment collection.
2. Authentication and fraud checks
During this step, additional verification tools (such as address verification services (AVS), CVV checks, or 3D Secure authentication) confirm that the person making the payment is the legitimate cardholder. This protects merchants from fraud and helps prevent chargebacks, especially in card not present transactions.
3. Transaction approval
Once the bank authorizes the payment, an approval code is sent back through the processor to the merchant’s website or POS system. The transaction is now confirmed, and the customer receives a payment confirmation.
4. Settlement
After the transaction is authorized, the processor moves the approved funds into the merchant’s merchant account, where they are held temporarily before being transferred to the business’s main bank account. Settlement usually happens within one to three business days, depending on the provider and account type.
5. Reporting and reconciliation
Modern payment processing solutions include dashboards that let merchants track transaction history, identify chargebacks, and analyze payment trends. These tools are especially useful for high-risk businesses that need transparent records to maintain compliance and manage disputes effectively.
In short, a payment processing solution acts as the middle layer between customers, banks, and businesses. It keeps every transaction secure, verifies each payment, and ensures that merchants receive their funds quickly and safely.
How merchant services can help
A merchant account is a payment processing solution that is an important part of running an e-commerce business. Specifically, a merchant account is a bank account enabling your business to accept credit card and debit card transactions. Despite your industry, you'll be able to accept different payment methods and get paid by all customers.
When a client pays for your services using their credit/debit card, the payment is temporarily held in the merchant account and then transferred to your bank account. The merchant account makes it possible for your e-commerce business to efficiently process payments from consumers.
Without a merchant account, your business would only be able to accept cash and check payments which is extremely limiting to the business overall and would hurt your cash flow. This is why most e-commerce businesses choose to use a merchant account to manage payments and gain a competitive edge.
Benefits of merchant accounts
Merchant accounts can transform the way you do business. The merchant accounts TailoredPay provides can enable you to:
- Accept credit card and debit card payments
- Accept crypto payments
- Grow your client base
- Increase your total sales
- Reduce the risk of fraud
TailoredPay offers high-risk merchant accounts that give customers access to affordable payment solutions, giving you peace of mind that it’s possible to reach your revenue goals while keeping your payment processing fees low. High-risk typically refers to a higher probability of fraud and chargebacks, as well as transaction size, sales model, order fulfillment timeframes, and specific industry.
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Who Can Use a Merchant Account?
Our merchant account payment processing solutions are ideal for businesses in the following industries (typically deemed high-risk):
Why your business might be considered high-risk
Some payment providers will not work with businesses that are considered high-risk. There are several reasons your business might be considered high-risk, they include:
- Having bad credit: A business owner with no credit/limited credit or a poor credit score might qualify the business itself as high-risk.
- Offering free trials: Payment providers sometimes consider the offering of free trials as high-risk.
- Recurring billing: If your business offers recurring payments, it might be considered high-risk.
- High-ticket sales: Processing large ticket amounts might qualify your business as high-risk.
- Your industry has a high rate of fraud or chargebacks: If the industry has a high rate of fraud or chargebacks (higher than what is considered average), it might be labeled as high-risk.
However, some high-risk industries fall under separate reasons for why they are categorized as high-risk. One particular example is cryptocurrency. Cryptocurrency exchanges are considered high-risk to most merchant account vendors primarily because of the following reasons:
- Significant volatility: Cryptocurrency is known for being an extremely volatile market, often having unexpected increases and decreases in prices.
- CNP transactions: Also known as card-not-present transactions, this contactless technology means that a credit or debit card was not physically present for the crypto purchase.
- Potential for money laundering: Cryptocurrency is not backed by a central authority and it has no physical presence which means the currency is susceptible to money laundering in global payments.
Equipment needed accept credit card payments
Processing credit card and debit card payments for e-commerce transactions doesn’t require any type of equipment. Everything is done online using your existing software, making it easier than ever to grow your client base and expand your business.
However, businesses with brick-and-mortar locations will need a few things in order to accept digital payments. This usually means having a POS register and a card reader, which can be mobile or more traditional.
How much it costs to accept payments using high-risk merchant accounts
Costs for payment processing solutions will depend on a few factors, including the provider you are using, whether the payments are made in-person or online, and whether your business is considered high-risk (as opposed to low-risk).
In-person transactions are considered to have less potential for fraud, which means the payment processing fees for these types of payments are often lower.
At TailoredPay, the rates are lower than the industry average and we don’t charge any setup fees for your high-risk business because we believe in making our services accessible to everyone. The exact rate will vary depending on the classification of your business.
It’s true that high-risk merchant accounts generally come with higher fees than low-risk accounts. However, you can get reasonable rates that enable you to retain more of your profits if you look for payment processing providers who structured their pricing around giving you the most value.
What to look for when choosing your payment processing provider
When choosing a payment processing provider, the below key features are important to consider. While some payment processing options might seem the same at first, many often include hidden setup costs, long wait times for approval, and increased fees for companies deemed high-risk (including start-ups and businesses conducting sales in digital currency).
Ask yourself these questions before selecting a provider:
- What are the fees? Including setup fees and high-risk industry costs.
- How quickly are approval decisions provided?
- Which industries are accepted?
- What types of industries does the provider cater to?
- Is there a chargeback prevention system in place?
By asking the above questions and doing your research ahead of time, you’ll be more likely to both save money and work with a provider whose payment system is a better fit for your business needs.
Ready to start growing your business? Here’s how to apply for a merchant account
The application process at TailoredPay can be completed in three easy steps and takes less than 10 minutes:
- Quickly complete the online application.
- DocuSign the merchant processing agreement.
- Wait to be approved by the underwriters (48-72 hours).
You’ll need to include the following documents with your application:
- Passport, Driver’s License, or government-issued ID
- Voided check or bank letter
- If applicable, 3 months of most recent credit card processing statements from your previous or existing provider
- 3 months of most recent business bank statements. If the business is new, 3 months of most recent personal bank statements are required.
TailoredPay: your reliable payment processing solution
At TailoredPay, we’re high-risk merchant account and payment processing experts who have our clients’ best interests in mind. Our carefully selected range of online and virtual payment gateways are ideal for high-risk businesses of all shapes and sizes.
| TailoredPay |
|---|
| Digital application process |
| Approvals within 48-72 hours |
| No setup fees |
| Wide range of industries accepted |
| Focus on high-risk merchants |
| Chargeback prevention system |
| Traditional Providers |
|---|
| Digital application process |
| Approvals within 48-72 hours |
| No setup fees |
| Wide range of industries accepted |
| Focus on high-risk merchants |
| Chargeback prevention system |
Security & Privacy are #1
We use high levels of security & encryption standards to protect your data.
How It Works
Complete our free online application
E-sign the merchant processing agreement
Get approved and start processing
Instant online quote
Low Rates
Quick approvals
Questions? We can help
Call us at (888) 599-6482 or read our FAQ.
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