Dual Payments presents

The Complete Guide to Credit Card Processing

​The perfect resource for entrepreneurs to big business looking to keep a higher percentage of every payment.

customer paying with credit card
Employee accepting credit card payment

Let's Get You Started!

The Complete Guide to Credit Card Processing is an in-depth explanation of how credit card processing works. This guide will help you evaluate and decide on the best merchant account without the false starts and missteps that others have fallen prey to in the past. Download your copy of the world’s most-comprehensive guide on credit card processing

Understanding how Credit Card Processing can work for you!

Paying too much to accept cards as payment? Need to learn the tricks of the trade? The Complete Guide to Credit Card Processing provides comprehensive information you need to find a processor that has your best interests at heart.

The Complete Guide to Credit Card Processing is full of insights and strategy for business owners, financial professionals, retailers, and anyone else looking to land the perfect merchant account for their organization.

Read it now to build your knowledge or evaluate your current credit card processor and finally learn exactly how much you should be paying to accept credit card payments at your business.

stack of credit cards

What Is Credit Card Processing?

Credit Card Processing is the process by which merchants accept credit cards as payment from a customer. A customer submits a credit card to the merchant as their form of payment, and the merchant’s processing company verifies the payment validity to complete the transaction.

At the end of the day, credit card processing is all about trust.

“I (the merchant) am trusting that you (the customer) actually have the money to pay for the goods that you’re walking out the door with today.”

The process is as simple as the above statement, but contains many moving pieces.

How Does Credit Card Processing Work?

When a credit card is submitted as payment, the merchant swipes the card through a card reader to send the card information to the processor. The merchant processor authorizes the validity of the payment processing with the issuing bank. Payment is transferred from the customer account to the merchant’s account and the sale is finalized.

What’s amazing is that all of this happens in just a few seconds from the time a card is read.

As an example…

Think about the last purchase you made. Maybe you purchased a printer for the office, hired a plumber to fix your leaky faucet, or bought lunch for your staff.

Regardless of what it was, you probably paid with a credit card. You probably didn’t think much about the method of payment at the time, but it matters a whole lot to the business owner’s bottom line.

Most customers will submit plastic as their preferred form of payment.

That being the case, it’s vital to understand who all gets a piece of a credit card payment – regardless of what you sell.

woman paying by credit card in a cafe

What is the cheapest way to process credit cards?

The cheapest way to process credit cards is to pass the processing fees back to the customer. If your business doesn’t pay the processing fee, you will be paying $0 to accept credit cards as payment. This type of merchant account is called cash discount processing, and it’s growing in popularity across the United States after taking hold in Europe over the last 20 years.

In this guide, you’ll learn…

  • Exactly how much you should pay for equipment (like credit card readers) to process payments at the point of sale…
  • Whether a simple terminal, POS system, virtual terminal or one of the mobile card readers are right for you…
  • What kind of an interchange rate or processing model you should expect to be offered when you speak with a processor…
  • If your business is considered a high risk business and how that affects the rate you’re offered…
  • Why chip cards, mobile payments, Apple Pay, Amazon Pay, Samsung Pay, Quickbooks payments, mobile processing and Shopify payments entering the market should encourage you as a business owner…
  • How online credit card processing and electronic payments affect the rates offered to ecommerce businesses…
  • Who the best processors are in the industry that should be your first call so you can be sure you’re signing up with the best credit card processor the first time around…

This is why we’ve put together this guide: To help you evaluate and decide on the best merchant account without the false starts and missteps that come with doing it alone.

What Parties Are Involved In A Credit Card Transaction?

The parties involved in a credit card transaction are the customer, merchant, processor, and issuing bank.

  • The Customer – This is the person buying goods or services from the merchant.
  • The Merchant – This is the store or business that has goods or services for sale.
  • The Processor – The credit card processing company that handles communications between the merchant and the issuing bank.
  • The Issuing Bank – This is the banking organization that issued the card to the customer.
Customer using credit cart for payment

Learn The Essentials Of Great Credit Card Processing

Be aware, the credit card processing game is ever changing. New tactics, processing methods, and ever-changing equipment can change the processing landscape in only a few short months. Chip cards, nearfield terminals (NFC processing) and mobile wallets (mobile apps) are strong entries in an already crowded field. The truth is, finding the best credit card processing account is less about “percentage rates” and more about “partnering with a processor,” largely because your future credit card processor is going to be an extension of your business. At Dual Payments, our objective is to clear the confusion about merchant accounts so you can grow your business. We stand firmly against the “fly-by-night” processors who promote “free terminals” or “no cost processing” and then hide thousands of dollars in fees in the fine print. Here, we’re all about transparency and teaching you how to make the best decision for your business processing. As you’ll see in this guide, these 8 core essentials of credit card processing will be critical to selecting the best payment processor to help your business grow today, tomorrow, and for years to come. Each of these topics will be covered in depth in a chapter of this Complete Guide to Credit Card Processing as shown below.

About The Complete Guide To Credit Card Processing

Credit Card Processing can easily be a confusing process for merchants. Dishonest processors seek to confuse merchants so they can hide fees that make them more money, and our guide is meant to shed light on bad business practices in the processing industry. If your business is already accepting cards or just starting to consider them as a payment option, this guide is for you. The elements of an amazing merchant account are easily visible once you cut through the B.S. and know what questions to ask. In this guide you’ll learn the tricks that bad processors use and how to combat them with educated questions to keep your rates low and profits high.

girl trying to figure out why there's a charge that shouldn't be there

How To Spot Predatory Merchant Solutions Companies

There are companies that will promise flatrate pricing or interchangeplus pricing, but these payment solutions still cost your business a portion of each sale to pay the fees. If you’ve ever visited a merchant account provider’s website, you’ll see industry terminology all across the page designed to confuse you the merchant into a false sense of security. Statements like: “Pay only a flat rate to process credit cards.” “No termination fees and tiered pricing makes us the most transparent pricing available.” “Processing volume determines rates and fees and our processing rates can’t be beat.” “No per transaction fees, compliance fees and no long term contracts.” “We don’t have pci compliance fees or long term contracts for high risk merchants.” “No hidden fees, cancellation fees or monthly minimums for all types of businesses of all sizes.” The key to finding the perfect merchant account is to know how credit card processing solutions work. Once you fully understand the process, you can then get the best merchant account to fit the way your business accepts payments.

Want to save this entire guide for later?

What You’ll Learn

In each chapter, we’ll cover 3 key aspects to the topic being discussed:

Credit Card Processing Method

The Methods

The strategies and processes currently in use in the industry so you can translate it for your own business. In this Guide, we share the exact strategy and standards we use here at Dual Payments.

Credit Card Processing Statistics

The Metrics

The numbers you’ll need to know to measure a processors claim and see if they’re being honest with you (or are someone to run away from).

Card Processing Lingo

The Lingo

The terminology used by experts in the industry, so you can communicate intelligently (even if you don’t consider yourself a pro).

We’ve organized this Guide in a logical progression. Though you can jump around, learning the core methodologies in whatever order you feel you need them, we recommend you read through the chapters in order.

Take your time. We’re so serious about you learning how to take back control of your credit card processing account that we’ve turned this entire article into a downloadable PDF that you can have with you when you make a call to a potential processing partner.

You’ll be surprised at how quickly unscrupulous processors will run if you know the questions to ask them that will make them squirm. Then, once you’ve found the processing partner that best fits your business, it’s business as usual with more of your hard earned money in your own pocket at the end of the day.

Ready to start?

Customer using credit cart for payment

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Example of High Risk Merchants

  • 1-900 Phone companies – If you’re the type of company that charges people to have a chat on the phone, you’ll be considered high risk.
  • Adult Bookstores – Clearly a part of the adult entertainment industry, and an easy mark for the high risk tag.
  • Adult Entertainment – Any business labeled with the “adult” descriptor will automatically be assigned a high risk status.
  • Adult Toys – As “adult” is in the name, it’s an easy target for association with the adult entertainment market.
  • Airline Industry – Due to cancellations on high ticket purchases, this will put your airline company in the high risk category
  • Amazon Stores – By having a high rate of return, Amazon stores are seen as high risk.
  • Ammo Sales – Association with the weapons industry guarantees high risk status.
  • Annual Contracts – Any time an annual contract is involved it can be considered highrisk because most consumers forget they signed up and chance of chargeback can be high.
  • Antiques – With a high average ticket per item, antiques are considered a risky merchant type.
  • Astrology – The study of the celestial bodies and the influence on human affairs can be a chargeback target if customers feel like they aren’t getting the answers they want.
  • Auctions – Because of the nature of bidding on a product and not having a set price the risk level goes up.
  • Autographed Collectables – There is almost always a question as to whether an autograph is authentic, and therefore chargebacks are much higher in this industry.
  • Automotive Brokers – Brokers of automobiles have a very high average ticket are are therefore of higher risk.
  • Bankruptcy Attorneys – Since the people who are working with bankruptcy attorneys are usually in financial trouble, the odds that a payment would be charged back is higher.
  • Betting Services – In many states betting is illegal but for the legal states betting with a credit card has huge chargeback implications.
  • Brokering – When a third party is involved with selling a product the risk level goes up ten fold.
  • Business Loans (Merchant Cash Advances) – Loaning money is always risky, but with business loans and startup lending, high risk is present by the nature of the business.
  • Casino – Just like a betting service, if a customer gambles with their credit card the chargeback rate sky rockets.
  • CBD Products – CBD itself poses high chargebacks because of the legitimacy of the product and the health benefits promised.
  • CBD E commerce – CBD E Commerce has twice the charge back of retail CBD because many consumers don’t feel like the product they receive gives them the benefits promised.
  • Check Cashing (Check Processing) – The level of fraud in check cashing and cash advances is what gives this industry a higher risk consideration.
  • Cigarettes – With higher levels of risk for theft and criminal activity, cigarette sales are deemed high risk.
  • Collection Agencies (Collection Agency) – Many banks see collections as an unsustainable business model that is many times unreliable.
  • Collectible Coins – A higher level of chargeback in this industry gives it a high risk tag.
  • Collectible Currency – Due to the level of inauthentic collectibles, the risk of chargebacks are much higher with collectibles.
  • Copyrighted eBooks – When someone sells something copyrighted without permission many legal issues can arise.
  • Coupon Programs – With many coupon programs the coupons expire and once they expire the consumer wants the money back they spend.
  • Credit Counseling – Due to their clients usually being in financial problems, this industry is fraught with non-payment and fraud.
  • Credit Protection – Most people that need credit protection are bad with money so chargebacks abound.
  • Credit Repair – If a consumer needs credit repair then chances are they are a high risk for chargebacks.
  • Currency Sales – Many businesses that exchange currency do it at incorrect rates hence more chargebacks.
  • Dating Services – Dating is a volatile industry, and is also lumped in with the adult entertainment industry, making it a high risk account.
  • Debt Collection Services – As the collection of debt isn’t always possible, this industry retains the tag of risky.
  • Debt Consolidation Services (Debt Consolidators) – Consolidating debt is a challenging business and as debt is usually the problem, it’s seen as unsecure from a payment perspective.
  • Debt Repair Services – Since the clients of debt repair services are usually having financial challenges, it makes this industry seem a higher risk.
  • Discount Health Programs – Many people don’t feel they are really getting a discount so they try to get their money back and if they don’t the chargebacks sky rocket.
  • Discount Medical Care Programs – Just like the discount health programs if they don’t save the consumer wants their money back.
  • Drug Paraphernalia – Anything that is associated with the drug trade is considered high risk. Offshore merchant accounts are commonly used for this type of business.
  • E Commerce – As the source of the payment is unverifiable at the point of sale, any transaction without the card present has a higher risk of credit card fraud.
  • Ebay Stores – Many people sell items that aren’t as described so chargebacks can be an issue.
  • Electronic cigarettes – much like traditional cigarettes, e-cigarette sales are also deemed high risk.
  • Electronics – This industry has a much higher ticket compared with many other businesses. A chargeback for a $3,000 tv or two and your account can be in jeopardy rather quickly.
  • Escort Services – This is deemed a part of the adult entertainment industry and therefore needs a high risk merchant account and payment solution.
  • Event Ticket Brokers – If a customer buys a ticket and doesn’t use it they feel like they can charge the transaction back.
  • Extended Warranty Companies – Warranties are rarely used so people try to charge back the money that has been spent paying for them.
  • Federal Firearms License Dealers – Any organization associated with guns or firearms is automatically considered in this category.
  • Fantasy Sports Websites – Just like gambling, if a person starts to lose too often they try and charge back the transaction.
  • Finance Brokers – The entire financing industry is risky. By simply extending credit to other individuals, this business is betting that a majority of them will actually pay what they say they will.
  • Financial Advising/Consulting – The high risk tag on financial advisors isn’t about the advisors or their firm. It’s about the clientele and their current circumstances.
  • Financial Loan Modification Services – Due to a clientele in financial struggles, the high risk term is applied to any payments in this industry.
  • Financial Planning – Anything that includes risk for the consumer can have consumer implications with chargebacks.
  • Financial Strategy – Another risk and reward category, if money is lost, consumers try charging back making this a high risk industry.
  • Fortune Tellers – When a person doesn’t hear what they want to hear, or what is told doesn’t happen, the fortune teller can receive huge chargebacks.
  • Furniture Sellers – High risk only when its custom furniture.
  • Gambling – If money is lost the chargebacks rise.
  • Gaming – Chargeback levels skyrocket when consumers don’t win.
  • Get Rich Quick Programs – It’s rather common in this industry for an individual to purchase the training and then chargeback their purchase saying it didn’t deliver on what was promised.
  • Google Stores – With a high rate of return on their items, Google stores are considered high risk.
  • Gun Sales (Firearm Sales) – The gun and projectile industry is automatically associated with high risk credit card processing.
  • High Average Ticket Sales – With any high average ticket, just a couple of chargebacks can mean a massive shift in how risky the account is deemed by the processor.
  • Home/Vacation Rentals – Many issues with chargebacks can take place if the consumer decides not to travel.
  • Horoscopes – Many people believe this is hocum so will chargeback transactions.
  • How To Programs – A common practice in this industry is to purchase the program and charge it back with the description that it didn’t deliver what it promised.
  • Hypnotists – Many merchants will charge back these transactions if results they hoped for were not met.
  • Import/Export Business – Another example of taking goods over country borders which automatically brings in additional risk to any processing account.
  • Indirect Financial Consulting – When using a third party to consult, the high risk status gives the processor fraud protection.
  • International Cargo – Any time you introduce a multi-country element to credit card processing, the ability for fraud to be introduced skyrockets.
  • International Merchants operating in the US – Since the merchant isn’t operating from the United States, there are many unknowns about what is happening on the other side of their business, thus increasing the risk.
  • International Shipping – Transporting goods between countries is risky and introduces all sorts of elements to the financial stability of any transaction.
  • Investment Books – consumers get upset if the investor isn’t right which can lead to chargebacks.
  • Investment Firms – As investments are never a “sure thing” this is considered a risky industry for having a merchant account.
  • Investment Strategy – Anything with future promises can lead to chargeback.
  • Knife Sales – weapons of any kind are automatically given high risk status.
  • Kratom E Commerce – Accepting payments online is high risk, and Kratom is a substance in the health and wellness industry, which is also considered high risk.
  • Life Coaching – With no tangible goods involved in the transaction, life coaching is considered high risk.
  • Lingerie Businesses – Associated with the adult entertainment industry, chargebacks abound.
  • Lotteries – In most states you can buy lottery tickets with a credit card but if you’re allowed to and the ticket is not a winner, consumers try to chargeback the transactions.
  • Magazine Sales – Many magazine sales are recurring subscriptions, which can have issues with chargebacks.
  • Magazine Subscriptions – Same as magazine sales chargebacks can be huge when a recurring subscription happens. (often referred to as recurring billing.)
  • Mail Order Companies – When something is ordered through the mail chargeback risk can go up.
  • Marijuana Dispensaries – As marijuana isn’t a legal substance in every state, this is considered high risk due to the legality of the product. Cannabis credit card processing is available through Shift Processing.
  • Matchmaking Services – Another branch of the dating tree, and often associated with the adult entertainment industry.
  • Medical Devices – If a medical device doesn’t do what’s promised the purchaser may chargeback the transaction.
  • Membership Organizations – This is another instance of where the transactions don’t have any tangible product and are easily charged back to the merchant account.
  • Merchants on the MATCH list – If you are a merchant who has been reported to the MATCH list (Member Alert to Control High Risk Merchants) or the TMF (Terminated Merchant File) you are given high risk status.
  • Merchants with Poor Credit – Merchant accounts are given based on the credit score of the business owner. It’s assumed that the business owner is going to be making the financial decisions for the business, and a poor credit score reflects on the viability of any business transactions.
  • Modeling Agencies – At many agencies models are promised the world and it doesn’t happen. The consumer then wants their money back.
  • Movie Downloads – Transference of a digital product is considered of higher risk. Also, rarely is a physical card present at time of purchase.
  • Multilevel Marketing Sales – Often associated with pyramid schemes, MLM sales are considered a risky business.
  • Music Downloads – Purchasing any digital product is considered to be of higher risk than a physical transaction. Most of the time the card is not present in a digital transaction using a shopping cart.
  • Not A US Citizen Doing Business In The US – It’s possible to get a merchant account without a US social security number, but not having a SSN will increase the risk the processor will have in issuing a merchant account for your business.
  • Online Adult Membership Sites – If you’re running a website that is adult themed and requires payment for access, this is a highly volatile account and definitely high risk.
  • Offshore Corporations (Offshore Merchants) – The international element is what gives the high risk tag when looking for domestic merchant accounts.
  • Online Gambling (Online Gaming) – Without a card being present and gambling as the activity, there are two reasons why this would be on this list. Online payment alone is risky even without the gambling element.
  • Overseas Exporting Services – The introduction of the international element is what gains access to this list.
  • Pawn Shops – There’s a general stigma that goes along with pawn shops, and it’s reflected in their assignment to the high risk processors list.
  • Penny Auction Sites – Even though the customers are usually bidding at only a penny more per bid, users will commonly charge back the transaction when they don’t win.
  • Pepper Spray – Considered a type of weapon, pepper spray vendors are considered risky.
  • Points Programs – Points programs that cost money can cause chargeback issues if points are not used.
  • Pornographic Merchants – If you’re a part of the adult entertainment industry in any way, you’re considered high risk.
  • Precious Metals – Counterfeit metals can be a problem in this industry, making it more risky to accept payments for.
  • Prepaid Calling Cards – Anything prepaid that a consumer may not use increases chargeback issues.
  • Prepaid Debit Cards – When they expire or are lost consumers want their money back.
  • Psychic Services – “Honey, did you visit a psychic? No babe, I don’t remember visiting a psychic.” I’ll just reverse that charge then.
  • Real Estate – A common target for scams and identity theft is how real estate makes this list.
  • Replica Products (Watches, Handbags, Wallets, Sunglasses, Etc…) – As the product being sold isn’t authentic to the original manufacturer, the percentage of requests for refund is much higher than a traditional merchant.
  • Rewards Programs – If rewards are not spent, the consumer wants the money back.
  • Self-Defense – Since the payment provided is for instruction and not a physical product, the self-defense industry makes this list.
  • Self-Hypnosis Services – Yet another instance where the goods being transferred are of a service and not a physical product.
  • SEO Services – With a high rate of request for refund, SEO agencies make this list.
  • Social Networking Sites – Just like a dating site, if a consumer does not get what they want from it, they always like to chargeback.
  • Software Downloads – The software industry makes their way on to this list because of the digital nature of the goods being sold.
  • Sports Forecasting – An example of paying for information and not for a product, and usually not in person where the card would be present for the transaction.
  • Startups – Every startup is considered risky, and the percentage of startups that make it is quite small compared to the number that fail.
  • Student Loans – With the cost of a college education continually on the rise, so is the percentage of loans that default and never receive payment.
  • Strip Clubs – Associated with the adult entertainment industry gains the strip club access to this list.
  • Stun Gun Sales – considered a type of weapon, which makes it a high risk merchant.
  • Supplement Sales – The request for refund in this industry is quite high due to the nature of the product.
  • Sweepstakes – “Hey, I entered a sweepstake and I didn’t win. I’d like my money back please.”
  • Talent Agencies – “I paid thousands of dollars for headshots and glamorous outfits and I haven’t gotten any paid gigs. Pay me back my money please.”
  • Telemarketing Services – Telemarketing services many times do not have the results the purchaser would like to see, so the services are charged back.
  • Telephone Order Sales – Anything ordered over the phone has a increased risk of chargeback.
  • Timeshare Companies – When timeshares aren’t used, people want their money back.
  • Travel Agencies – If trips are not taken, consumers would like their funds returned.
  • Travel Clubs – Many travel club discounts aren’t what they were promised, increasing risk for chargebacks.
  • Vacation Rental Brokers – Third party brokers on prepaid vacation can have issues when customers cancel their trips.
  • Vape Shops – The level of criminal activity and theft is higher with vape shop merchants and therefore carries a high risk label.
  • Vitamin Sales – If the vitamins don’t provide the results the merchant would like to see they chargeback the transactions.
  • Web Designer – Because this service is prone to chargebacks, it has been classified as high risk.
  • Weight Loss – Considered risky because the results aren’t really up to the company, but rather the individual has to stick to the plan to get results, often resulting in chargebacks.
  • Yahoo Stores – Since the goods sold through Yahoo can easily be returned, they are considered a risky merchant.

Turn Your Residuals into Immediate Cash Today

Selling your residuals doesn’t impact your merchants—they’ll keep processing happily. So, if you need extra funds, explore a credit card residual buyout. It’s fast, easy, and a smart move for your financial game plan.