Credit Card Processing: How the System Works

Establishing a merchant account for your business enterprise is the wisest financial decision you will ever make for the growth, expansion and success of your business. Once you've set up a merchant account, you can accept credit and debit cards payments from your clients for your products and / or services. You can also arrange to accept online and mobile banking payments for your products and / or services.

A merchant account opens up new avenues for your business; therefore, giving your business many more opportunities to flourish. But, have you ever understood how the credit card processing system works? Have you tried to perceive the complexities of the players involved in the process and the intricacies of the system?

While it is not entirely essential for you to know the inside and outside of the card processing system because your Merchant Service Provider will do the needful for you; it is good for you to acquaint yourself with the system on a general basis.

The Participants Involved in a Card Transaction

A typical credit or debit card transaction involves the following players:

• The customer
• The merchant
• The payment gateway
• The customer's credit card issuer
• The credit card interchange
• The processor at the acquiring bank
• The merchant's acquiring bank

The Route the Money Takes from the Customer to the Merchant

Let's take an example to understand how the card processing system works.

Suppose that a customer walks into a clothing store and she finds a bag that catches her eye. She immediately proceeds to the payment counter and makes a payment of $100 towards her purchase with her cards.

The cashier at the merchant's store accepts the cards and uses a card swiping machine to set the process into motion.

• The $100 amount makes its first stop at the payment gateway where the payment is first authorized with a minor deduction in the amount.

• Now, $99 travels to the appropriate processor and after a minor deduction is submitted to the card interchange as $98.5.

• Once the transaction gets a clear at the interchange, it moves on to the issuing bank with a further deduction where the issuing bank verifies the availability of funds in the customer's credit / debit card.

If the transaction is declined, it makes its journey back to the customer from here.

• If the transaction is approved, $98 reaches the processor at the acquiring bank, just one step closer to the merchant account.

• Once authorized, $97.5 gets deposited into the merchant's account, which is now at the merchant's disposal.

(The figures and fees involved in card processing are based on the number of players in the process, merchant type, card type and risk factors)

In the present age, quite a number of payments are made electronically, especially with the extensive use of credit and debit cards and online funds transfer. Although typical card processing takes seven participants, the entire transaction amazing takes a maximum of five seconds for approval.

Plastic money has certainly established a place for itself in the industry, and establishing a merchant account to avail of its benefits is beneficial to the growth of your business.

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How To Avoid Rejection of Your Personal Loan Application

This article particularly deals with looking into the various issues surrounding the rejection of a personal loan application. Once the application has been logged in, there are several background processes that occur based on which the loan application is approved or rejected.

1) CIBIL Score

Your cibil or credit score should be a minimum of 750 in order to be considered for approval. This is the reason why every individual must purchase a credit information report prior to their application, because if your loan is rejected once, it might take a while before you will be able to apply for a loan again (i.e. after a minimum of 6 months)

2) Documents mismatch / document fabrication

When people are in desperate requirement of money, they tend to lose sight of what's at stake when they fabricate documents such as pay-slips in order to be eligible for a higher loan amount. Apparently, banks are not that easy to fool around with. The moment a documents mismatch is noticed by the bank where you've applied, the information will be passed on to every other bank, there ends your chance of even applying for loans elsewhere, for the rest of your life.

3) Exceed repaying capacity Limit

This happens when the individual applies for a loan, however his ability to pay the emi is a big question. For every individual, only a certain portion of his income can be spent towards paying emis while the remaining is required for living expenses. If the customer is already paying for either a credit card or loan emi, then banks tend to view such cases warily.

4) Customer Profile Score for each loan portfolio presented, the bank rates the profile on various aspects such as the income, residential stability as well as previous financial records. Every bank puts forth a cut off score which needs to be fulfilled by the individual.

5) Even the smallest of details matter, for instance, if there is lack of cooperation during the verification process (office verification, residence status verification so on), or sometimes the details provided by the customers are not 100% correct.

6) Having no loans or credit cards also make lenders wary, in this case the cibil score is usually a -1 or 0. Where -1 indicates no credit history whatsoever and 0 indicates transactions yet to be updated in your report.

Now that you have had a look at the primary reasons behind personal loan application rejection, let's take a look at the solutions or rather best practices tips to help improve your chances of approval:

1) Maintain a positive credit record whether it's your loan or credit cards, ensure that you repay promptly, to have an acceptable credit score. Avoid late payments or credit card settlements as these are some of the most common reasons for your loan application to be rejected.

2) Proper documentation

It is true that minimum paperwork is involved when it comes to personal loans, but even the minimum needs to be absolutely perfect. Apparently, banks are not that easy to fool around with. The moment a document mismatch is noticed by the bank where you've applied, the information will be passed on to every other bank, there ends your chance of even applying for loans elsewhere, for the rest of your life.

3) Never exceed the repaying capacity

It is always a good idea to not be knee deep in the debt pool, never engage in too many loans and then end up not repaying them. Although banks ensure you stay within the FOIR limit, being proactive and wise in your spending habits will definitely give you an advantage.

4) Ensure you co-operate fully throughout the entire loan application process, because it is you who's going to gain or lose at the end of it all.

5) It is always a good idea to maintain credit cards, so as to have a credit history to show while applying for loans in the future.

Applying for personal loans has never been easier, whereas getting an approval has always been a bit tedious. As long as you do what is required of you, your loan will be disbursed before you know it.

Looking for more information? For starters, visit our site http://www.betterloansmutual.com/ you will find a whole lot of details on personal loans and to find out if you are eligible for availing best personal loans.

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How to Check Your Eligibility for the Harp Program

Over 3 Million Americans have already taken advantage of President Obama's Home Affordable Refinance Program (HARP PROGRAM). Thousands of dollars are being saved on a monthly basis because of the program. If your interest rate is in over 5% and you haven't looked into refinancing, now is the time to check your eligibility.

Because of the lack of Inflation and a less than stellar housing recovery, interest rates remain at historically low levels. All indications point to that being the forecast for quite some time. Consumers that are employed and have a credit score of 620 or better are encouraged to apply. There are Millions of homeowners who still have not taken advantage of this government program. The HARP program was established by the Obama administration to help homeowners who have been affected by the downturn in the U.S. Housing Market. Many consumers lost equity due to the crash in the Real Estate Market. The HARP Program was designed to allow homeowners who have little, no or negative equity in their properties to refinance regardless of whether or not they have equity. If there is no mortgage insurance on the loan being refinanced, there is no mortgage insurance on the new loan. Old guidelines dictate that mortgage insurance is required if there is less than 20% equity in the home (amount owed divided by value is over 80% or less).

There are many ways to check your eligibility for the HARP Program. You should select a Mortgage Banker or Broker who specializes in the program. Many consumers have gone to their current lenders and have been turned down. However, what homeowners must realize about the HARP Program is that the Guidelines set forth by Fannie Mae and Freddie Mac are somewhat lenient. Lenders often times put their OWN RESTRICTIONS on top of Fannie Mae and Freddie Mac's. Therefore, if you have applied before and have been turned down, it is imperative that you check your eligibility with a different firm that doesn't have their own restrictions to the program.

The HARP Program will not last forever. Currently, it is set to end at in 2015. However, there are many factors that may change that timetable. It is important that you check to see if you qualify for the program now. Interest rates are very low and now is the time to lock into what may be the lowest interest rate that has ever been available to homeowners in the United States.

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Tips To Get A Good Deal - Home Loans

Buying a home calls for a huge investment. However, buying mortgage of and the interest of a loan often exceeds the house's cost. Hence, a home buyer should try to get a good deal on the mortgage. However, getting a low-interest rate is not an easy job. One should buy a mortgage very smartly. This article offers some effective tips to get a good deal on a home loan.

Wait
Home buyers should wait until the rates of interest on home loans lower down. Interest rates vary to great extents. One can notice fluctuations in interest rates even in a single day. At times, the rates are far lesser than the rates at other times. However, when applying for cash back home loans, buyers should keep in mind that at times during which interest rates are low, prices of houses are often high.

Improve credit
Buyers should make loan payments and other payments on time, especially before the months of his loan application. Negligence in timely payments will lead to a low credit score. The better is the score; the better will be the deal. However, one should remember that improvement in credit takes around two years. One should not close accounts after making payments as credit ability is credit scoring's important part.

Get mortgage first
If multiple monetary obligations are likely to emerge in the future, one should get his mortgage first. Many credit inquiries, like new credit card applications, can lower down a borrower's score. The score will be much affected especially if the borrower files the applications at the time just before his loan review process. Moreover, if one adds new debt expenses just before filing his mortgage application, the loan underwriter will think whether the borrower can pay the loan on time or not. Hence, borrowers should avoid buying expensive things in the time before applying. Home buyers should save a large amount to pay as down payment. When the down payment is big, the buyer has large equity in the home right from the beginning. When the equity is large, the loan poses a low risk to the lender. Buyers making large down payments get a low rate of interest.

Lessen upfront expenses
Points and different other upfront fees can lead to a big increase in the loan cost. Home buyers should consider this when they shop for a mortgage. Points are a great way to get a low rate of interest.

Think small
Buyers should avoid the temptation to buy a large house by applying for a huge loan. At the time of approving loans, lenders think about "payment shock". If one switches over from a low housing payment per month to a very high one, he will end up paying a very big loan or will not qualify at all.

Research well
Mortgage rates vary from one lender to another even for the same borrower. Hence, it is important to shop around and research well to find the best rate. If the borrower has a cordial relation with a bank or belongs to a credit union, he is likely to get the best rates at those places. However, checking around is always a good idea. Borrowers can hire a mortgage broker to find great rates in fixed rate home loans.

With these tips, a home buyer can get a great deal in a home loan. These tips will also help buyers get no deposit loans.

Leaor Willem has written many articles on home loans. In her articles, she offers valuable advice on how to get cash back or fixed rate home loans.

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