Credit Card Processing Companies:
11 Top Questions Answered

What are credit card processing companies?

Credit card processing companies facilitate electronic transactions between customers and businesses by acting as intermediaries in payment systems. They securely handle the transfer of payment data between the merchant, the customer’s bank (issuing bank), and the merchant’s bank (acquiring bank).

These companies enable card verification, payment authorization, and fund settlement while ensuring compliance with security standards like PCI DSS. Well-known processors include Stripe, PayPal, and Square, which offer services like fraud prevention, mobile payments, and point-of-sale solutions.

However, while these processors are ideal for B2C transactions, businesses managing B2B payments often face unique challenges, such as managing invoices, tracking vendor payments, and optimizing cash flow. This is where ArtsylPay excels. By automating accounts payable workflows, offering cashback and rebate features, and seamlessly integrating with ERP and accounting systems, ArtsylPay provides an end-to-end payment solution tailored to B2B needs.

With the rise of digital commerce, the role of credit card processing companies and complementary platforms like ArtsylPay has expanded, providing businesses with seamless, secure payment solutions tailored to various operational needs.

How many credit card processing companies are there?

The exact number of credit card processing companies is difficult to pinpoint, as the industry includes a mix of global, regional, and niche providers.

Major players include companies like Stripe, Square, PayPal, and traditional processors such as First Data (Fiserv) and Worldpay. Additionally, there are many smaller and specialized providers serving local markets or specific industries.

A 2023 report estimated hundreds of companies operate in the payment processing ecosystem, catering to diverse business needs globally. This variety ensures competitive options for businesses but also makes selecting the right processor a complex decision.

READ MORE: Understanding Payment Analytics and Payment Processing

How do credit card processing companies work?

Credit card processing companies work by enabling electronic transactions and securely transferring payment information between merchants, customers, and banks.

When a customer makes a purchase, the processor verifies the transaction by sending the payment details to the customer’s bank (the issuing bank) to check if sufficient funds are available.

Once authorized, the processor forwards the approval back to the merchant, and the funds are transferred to the merchant’s account (acquiring bank).

The process also involves several security checks, such as encryption and fraud prevention measures, to protect sensitive information. Leading credit card processing companies often offer additional services like mobile payment solutions, invoicing, and recurring billing.

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What’s the difference between credit card processing companies and payment processors?

The terms “credit card processing companies” and “payment processors” are often used interchangeably, but there are subtle differences. Credit card processing companies specifically handle the authorization, settlement, and transfer of credit card payments between the merchant, the issuing bank, and the acquiring bank. They manage the technical infrastructure for securely processing card payments and often deal directly with card networks like Visa or Mastercard.

On the other hand, payment processors are broader in scope, encompassing any company that facilitates electronic transactions, including credit card payments, as well as other methods like ACH transfers, debit cards, and digital wallets (e.g., PayPal, Stripe). A payment processor may handle all aspects of a transaction, including credit card processing, or it may focus on specific forms of payment, providing businesses with multiple payment options.

In practice, many credit card processors are also payment processors, but not all payment processors specialize in credit cards. For instance, Square offers card processing but also supports mobile payments and invoicing, whereas other payment processors like PayPal or Apple Pay may focus more on broader payment methods that extend beyond credit cards.

While traditional processors serve B2C needs effectively, businesses managing high-volume B2B payments require tailored solutions that streamline workflows and improve cost efficiency.

Why ArtsylPay Is the Smart Choice for Business Payments

While traditional credit card processors like Stripe and PayPal are great for B2C transactions, ArtsylPay is designed specifically for B2B payments. It automates accounts payable, integrates seamlessly with accounting software, and ensures vendor satisfaction with timely, secure payments. Key benefits include:

• Cashback and Rebates: Earn savings on every outgoing payment.
• Invoice Automation: Simplify invoice approvals and reduce manual errors.
• Seamless Integration: Connect ArtsylPay with your ERP or accounting tools for real-time reconciliation.
• Vendor-Friendly Payments: Eliminate check costs and delays with fast, electronic payments.

How do credit card processing companies make money?

Credit card processing companies make money primarily through transaction fees, which are typically a percentage of the total sale amount, plus a fixed fee per transaction. They may also charge merchants setup fees, monthly account maintenance fees, and additional costs for services like fraud protection or advanced reporting.

Payment processors may also earn from interchange fees, which are paid by merchants to the card-issuing bank as part of the transaction. In some cases, they may charge higher fees for services involving riskier transactions or international payments.

Some credit card processing companies also generate revenue through value-added services such as lending or financial reporting tools.

How to choose credit card processing companies for small businesses?

When choosing a credit card processing company for a small business, focus on key factors such as transaction fees, ease of integration, and customer support. Look for providers with low processing rates and transparent pricing, as fees can vary significantly across credit card processing companies.

Consider how easily the payment solution offered by credit card processing companies integrates with your existing point-of-sale system or e-commerce platform. Reliable customer service is essential, especially for small businesses that may need quick resolution of issues.

Additional features to look for in credit card processing companies like mobile payment support, fraud protection, and advanced reporting tools can also enhance your decision-making. Popular choices include Square, PayPal, and Stripe.

LEARN MORE: Adoption of Virtual Credit Cards: CFO and Financial Controller Insights

What to look for in credit card processing companies for healthcare?

When selecting credit card processing companies for healthcare, it’s essential to prioritize several factors to ensure compliance, security, and ease of use. Here are key considerations:

• HIPAA Compliance: Choose a provider that adheres to the Health Insurance Portability and Accountability Act (HIPAA) to ensure patient data is protected. Providers like Square and PayPal have specialized features for handling healthcare payments securely.
• Secure Payment Processing: Healthcare businesses deal with sensitive financial and medical data, so look for providers that offer strong fraud protection and encryption to safeguard against data breaches. Look for features like tokenization, which reduces the risk of fraud.
• Integrated Billing Solutions: Many healthcare businesses need to manage recurring payments and insurance billing. Providers like Stripe and Braintree offer integration with medical billing systems to streamline this process.
• Ease of Integration: Choose a payment processing provider that easily integrates with existing Electronic Health Record (EHR) systems or practice management software. Providers like ArtsylPay offer solutions tailored to healthcare, streamlining patient billing and payments.
• Transparent Pricing: Healthcare providers need to avoid hidden fees, as medical billing can already be complex. Look for providers that offer transparent and predictable pricing, such as ArtsylPay or Square.

What are the most popular credit card processing companies?

Some of the most popular credit card processing companies for businesses include Square, PayPal, Stripe, and Shopify Payments.

Square is known for its ease of use, no monthly fees, and versatility for both in-person and online transactions.

PayPal is widely recognized and trusted, offering secure online payments and integration with e-commerce platforms.

Stripe is favored by tech-forward businesses due to its robust API and advanced features for online payment processing.

Shopify Payments, a top choice for Shopify store owners, provides seamless integration with the e-commerce platform and competitive fees.

Each of these companies offers various pricing structures and additional services, such as virtual credit cards, making them suitable for different business needs.

What government agency regulates credit card processing companies?

Credit card processing companies are regulated by several government agencies, each overseeing different aspects of the payment process.

Consumer Financial Protection Bureau (CFPB) regulates aspects of credit card processing related to consumer protection, such as transparency in fees, disclosures, and fair lending practices. They enforce rules about interest rates, billing practices, and consumer rights.

Federal Trade Commission (FTC) monitors practices related to fraud prevention and deceptive practices in the credit card processing industry. It also oversees advertising and marketing practices by payment processors.

Payment Card Industry Data Security Standard (PCI DSS): While not a government agency, PCI DSS sets data security standards that are required by law for companies handling cardholder information. Compliance with these standards is enforced by major credit card networks like Visa, Mastercard, and American Express.

Also, state-level financial authorities may also regulate certain aspects of credit card processing, particularly when it comes to licensing and consumer protection laws. For example, states may require processors to be licensed or registered.

Alternative to Credit Cards: Virtual Credit Cards

Virtual credit cards are digital versions of physical credit cards designed for online or remote transactions. They work by generating a unique, temporary card number linked to your actual credit card or bank account, which is used for payments instead of your real card information.

Virtual cards protect your main card details by providing a disposable number, reducing the risk of fraud. In addition, many virtual cards allow users to set transaction limits, expiration dates, or restrict usage to specific merchants.

Virtual credit cards are instantly generated and managed through online banking platforms or apps, without the need for a physical card. Once you have the Virtual credit card number, you can use it anywhere traditional credit card numbers are accepted online.

Virtual credit cards are especially popular for online shopping, subscription management, or one-time purchases where added security is essential. Providers like ArtsylPay and CapitalOne offer easy virtual credit card solutions.

Reasons to Switch to ArtsylPay

ArtsylPay virtual credit cards bring the much-needed security and efficiency in your accounts payable. Plus, to improve the bottom line, you can earn rebates on every payment made. Another cost-saving benefit is eliminating costs of issuing checks — all while improving payment experience (and lower fees!) to your vendors and suppliers.

Last but not least, simple file uploads and web service APIs, make your payment processing a breeze with ArtsylPay.

READ NEXT: Credit Card vs. Virtual Credit Card: The Pros and Cons

Final Thoughts: Virtual Credit Cards Is the Future — Try It Out

Now you are better equipped for considering virtual credit cards offered by some credit card processing companies with ArtsylPay being the pioneer. Virtual credit cards offer greater security than standard credit card processors by masking real card details with unique, disposable numbers for each transaction, reducing the risk of fraud or unauthorized charges. They also provide better spending control, allowing users to set limits, expiration dates, and merchant-specific restrictions, which are features not typically available with standard processors.

Additionally, virtual cards enhance convenience for online payments by eliminating the need for a physical card, making them particularly suitable for remote and e-commerce transactions. Go ahead and switch to the future-proof payment method!