Credit cards are everywhere all over. In the past, only a handful of companies accepted credit cards as payment alternatives. Today, most businesses accept credit card payments. What brought this trend from? What is it that makes credit cards an increasingly popular choice for payment? The answer is the low processing costs.
Credit card processing transactions are always accompanied by no risk. Any business that plays a role in the system is required to charge fees for their services. Since a card processor handles card transactions for businesses that it processes, it will charge processing fees for its service.
Origins of processors for credit cards
Credit extension to customers is a long-standing practice to increase sales. The United States saw the first credit cards at the beginning of the 20th century with hotels and oil companies being the first card issuers. Processing and the collection of invoices was handled by companies in-house.
In the following years, banks began offering credit cards and took over the burden of processing transactions with credit cards. Companies were no longer required to provide credit using the money they had. The responsibility in processing, and even collecting invoices was handed over to banks.
When banks began to take on the responsibility of processing transactions made with credit cards numerous companies began accepting debit and credit cards as payment alternatives. Visa and MasterCard came onto the scene with effective credit processing services, taking the work of processing payments away from companies. The credit card industry grew and so did card processing firms.
The arrival of the Internet
The advent of the internet has altered the entire market. The big players no longer dominate the processing of cards. The internet has helped facilitate small players' entry into this market by facilitating the quick and inexpensive transfer of data.
The lower costs of software and hardware allow small-scale businesses to manage electronic payments efficiently and with much lower costs than banks and big companies such as Visa as well as MasterCard. The price of payment gateways online has decreased dramatically, and many companies have made their products available online using e-commerce platforms.