Historically, merchants serving various markets such as retail stores, medical offices, veterinary clinics, auto repair shops, etc. accepted electronic payments via a dedicated terminal device. These devices consisted of a magnetic strip reader, LED display, and modem. Credit card terminals transmit the credit card number and purchase amount to large banking computers which verify available credit limits and return either an approval or decline message to the credit card terminal. If a transaction is approved, the Open To Buy amount on the credit card is decreased, the merchant bank account is credited with the purchase amount, and the card holder is billed for the purchase.
Although electronic payments have been a benefit for merchants and consumers, it comes with additional costs. Merchants pay a fee on each transaction for the privilege of accepting credit cards. Hard costs include equipment purchases, phone lines, supplies, fraud, time value of money for impounds, and fees. Soft costs include training, regulatory compliance, payment errors, and customer satisfaction rates.
The introduction of additional electronic payment types has compounded the costs of accepting these payments. New equipment and training are often required to accept debit cards, perform check guarantee services, and issue/redeem gift cards. The confusing array of differing hardware and interfaces often results in reduced merchant efficiency and lower customer satisfaction levels.
Today, electronic payment processing software can replace all of these dedicated devices. A single streamlined user interface provides the merchant with a user friendly screen that supports all of the various transaction types. Training is much more efficient as employees no longer have to learn different interfaces. Customer satisfaction levels increase as average wait time in lines are reduced due to faster communications. Electronic payment processing software is capable of bypassing traditional phone lines and communicates over faster internet connections. This results in instantaneous approvals versus the traditional 20-30 second wait time for modem connections on the dedicated devices.
Another recent development of electronic payment processing software is the ability to interface with vertical software applications. This feature allows a merchant to concentrate training efforts on the core software application used to manage their business. Payments become just another part of the process in operating the software and serving the customer. Customer satisfaction levels improve through more efficient and faster check outs. Rather than receiving two receipts (one for purchases, one for payment) a single invoice includes both the transaction and payment information. Merchant costs are reduced through the elimination of payment errors, dedicated equipment, supplies, dedicated phone lines, additional training, and improved customer satisfaction rates.
