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Why do I need a credit card processor?



For many business people, payment processing is an abstract service. It can be infuriating when rates go up and mysterious charges appear on monthly statements. Merchants know that the credit card companies (visa, mastercard etc.) already charge a fee, so why would anyone need a processor? To begin to answer this question, we need to define the roles of a few characters within every transaction: the merchant, the customer and the processor. Of course there are other players in this drama (such as the issuing bank, technology companies and others) but for now, let’s focus on the three main ones.


Businesses need to be able to accept as many forms of payment as possible for their goods and services. Accepting card instead of cash is particularly important in light of issues such as covid-19. Whether a sale happens in person, on the phone or online, somehow money from the customer’s account needs to travel into the merchant’s account. This is where the payment processor steps in and does the heavy lifting. At the moment of a transaction, the processor has to have a system in place to verify that the customer has the funds required to make the purchase. Within seconds the processor lets the merchant know if a sale is accepted or declined. This protects the merchant from fraud and the customer from overspending. Once the processor approves the transaction, they ensure that money is deposited into the merchants’ bank account. Keep in mind that when the merchant is funded, the processor is the one fronting the money and vouching for the transaction. This is why processing applications can feel so intrusive. Deposits are, in many ways, a short-term loan to the merchant. If a merchant sells $10,000 of product on Monday, they want that $10,000 in their account on Tuesday morning. This can’t happen without a processor. If a customer or merchant engages in fraudulent activity; it’s the processor who is left to figure out the collection of the debt owed.  


Let me end this segment by assuring the reader that in no way am I justifying some of the practices of some processors. Many processors lie and borderline steal from merchant with hidden fees. Everything articulated above simply explains the why of a processor but it certainly doesn’t justify their daily practices.


At Create Payments, we don’t lock merchants into any contract. We fight for our merchants’ business every month with our prices and service. If a merchant is not happy, they can easily leave. As a business owner, be very wary of processors who promise low rates, yet want to lock you into a contract for one, two or three years.


At Create Payments – NO CONTRACT, NO HIDDEN FEES, NO EARLY TERMINATION. Contact us today for a free consultation on how we can save you money (