As individual consumers and users of credit cards, we have a strong motivation to learn everything we can about getting the best deals on credit cards, improving our personal credit card scores and using our “plastic” the right way.

But what about credit card processing?  Should we be concerned about the ways businesses process our cards when we make a purchase?

In most cases, consumers don’t give credit card processing a second thought—and they usually don’t suffer as a result of that.  While there is some value to understanding credit card processing, it isn’t really essential to those of us who spend with cards but who don’t accept them for payments.

However, there are a few things worth knowing.
First, realize that everyone who takes credit cards pays a percentage of the money they bring in on credit card purchases to the company that handles their processing.  In some cases, that percentage can be under one-half percent.  In other situations, however, it can account for more than two percent.  The variance is due to the merchant’s sales volume, history and a series of other factors.

That can be important to consumers who are looking for the best way to curb their expenses.  In some cases, it may be possible to negotiate a lower price on a high-ticket item if you’re willing to use cash instead of a credit card.  The vendor isn’t paying anyone an automatic percentage for “cash processing”, after all.

Second, consumers need to be aware of the role of pre-authorizations as part of credit card processing.  When you pull into a gas station and pay at the pump, you receive an authorization before the first drop of fuel hits your tank.  The gas station isn’t just hoping that you have enough room on your card for five gallons of unleaded.  It already knows that you do.

That’s because the merchant “runs” your cards to make sure you have enough funding on hand to cover at least a full tank of gas.  Their machines check with your bank to be sure you’re “good for it”.

While pre-approvals aren’t actually subtracted from your available credit, they will show up on reports and can cause some confusion.  In some cases, the pre-authorization may linger for days, making it hard for some people to discern how much money they really have at their disposal.  If you’re confused about your online statement, make sure pre-authorizations aren’t part of the problem.  They can be confusing, but they’re an unavoidable part of credit card processing.
Third, consumers should take some care to make sure that their cards are being processed in a secure way. This is obviously an issue for those who make purchases online, but it can also be a problem in traditional retail environments.  Pay attention to how your card and receipts are handled.  You don’t want to find yourself a victim of card or identity theft because you dealt with a merchant who wasn’t using a secure system for credit card processing.

As a consumer, you don’t need to spend too much time or energy on learning about the way businesses process your cards.  A little safety, a knowledge of pre-authorization and how it affects your statement and the opportunity to negotiate better cash deals to help merchants escape processing fees should be more than enough information for most people.