The Evolution of Credit Card Processing and Merchant Account Terminals

Jul 31, 2017

A Payments Journey

With remote POS terminals and online shopping as the norm today, it may be tough to remember when commerce was facilitated exclusively by cash and paper checks. In fact, even the days of machines taking card imprints to verify transactions are steadily waning. To appreciate what merchant accounts can offer today, however, it’s essential that we don’t forget where the industry started.

Humble beginnings

The use of non-cash methods for purchase started earlier than you might think. Financial analysts trace the first instance of card transactions back to 1914 when Western Union employees got metal cards instead of a paycheck. Although only usable at selected stores, these metal cards laid the foundation for the great card-payments revolution.

Plastic credit cards emerge

Things started picking up steam in the 1950s when Diners Club unveiled the first Travel and Expense (T&E) credit card; a cardboard charge card that allowed users to enjoy transportation, dining, and lodging services without having to carry large sums of cash. Towards the end of the decade, American Express jumped on the wagon with the first plastic T&E credit card.

Simple credit card processing

Early credit cards meant customers no longer had to pay off their bills in every transaction. However, payment processing only involved the merchant, the consumer and the card-issuing agency, such as American Express, Visa, and later MasterCard.

Because the system didn’t have merchant accounts or payment processors, it was impractical for large-scale credit card use. Credit card processing was done directly by merchants using a mechanical imprint reader which resulted in time loss, frequent human errors, and security concerns.

The 1970s: Major turning points

To replace the manual imprint system, Visa introduced the first modern electronic POS terminal, which albeit highly cumbersome, significantly reduced credit card processing time. Imprints also paved the way for magnetic stripes, which made cards quicker, easier and more efficient to process.

Another milestone was the birth of MasterCard, which would later become a major global credit card company.

The 1990s: Enter merchant accounts

As credit card processing became increasingly sophisticated, outside firms joined in to offer processing services to businesses. These companies became the savvy middlemen that streamlined the payment process for both merchants and card networks. Merchant accounts became highly sought after the wireless credit card terminal was introduced in 1995.

Modern credit card processing

Today, the world of payment processing is as complicated as ever. In just two decades, it has become standard practice for a merchant to accept credit cards for even simple transactions. Moreover, with more customers shopping online, merchants now have access to virtual payment processing gateways, which allow for authorization of sales to be done instantaneously through an e-commerce website. To curb fraud and chargebacks in the online scene, some processors are now offering high risk credit card processing with all necessary security measures in place.


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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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