Tag Archives: processor

How payment systems work, and setting up a payment system – part 1

There are lots of ways to get value for one’s own labour or servicing. That’s the more abstract way of saying “there are lots of ways to get paid”…. Cash, trade/barter, cheques/checks, credit. Most times, money goes into a bank account. That’s if you want to keep the money in a safe place. Also by storing it in a bank, the bank’s communication services can help make it easy for you to pay for stuff. And, for you to be paid, for stuff.

Background of this post
I’m sharing information, trying to make this post a short reference document out of my recent experience.  There are sometimes a lot of fees to chip away at your profit. The fees are most often ignored by people, called “a necessary business expense”. That’s true but they shouldn’t be ignored, or taken lightly. Today I saved one small business client $400, by looking at a different provider of credit card terminals than previously considered. And I’m now on the path to save him another $600 for a separate payment card terminal. I have a merchant account myself, and every month there are more fees, but I’m quickly learning the different fees for everything, so I’ll be saving my own self 400-1000 soon.

What is a payment system
A payment system handles money going from one place to another.  For the purpose of this article, I’m limiting discussion to the moment of payment to the money being in one’s account.

Security and Signatures
Cheques are cheap methods of payment, but the payer has to pay up front for the little pieces of paper, custom printed with security codes and what-have-you, to make the payer and payee/seller more comfortable. And that’s what a lot of the fees go to: comfort. Comfort brought by security. And the security is usually good, but sometimes unnecessary, thus an unnecessary expense. But the most useful security system is the personal identification number (PIN) associated with an account. The account is encoded on a magnetic strip on a swipe card, and read by a stripe reader. I’m ignoring the chip card technology for the moment.

The general retail stores are slowly converting to use a chip with PIN on Visa/Mastercards, and that saves the signature. The signature is being replaced by the PIN at the physical terminal, and the signature is already replaced by the security code on the back of the card, for online transactions. A person can also deposit into a bank account at an ATM/ABM without signing or stamping the cheque because the PIN used with the card represents the signature… that’s the general policy at my bank anyway.

The security is often end-to-end, meaning the merchant is locked-out of the electronic communications between the payment terminal and the payment processor company.

Further sections to be written:

Payment Terminology
Tons of hardware, lots of software, so what is the best approach?
What fees are involved with a payment system?
How is a transaction made?
What are reasonable processing fees of a transaction?
Where the money goes… and how to get it!





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POS (point of sale) custom setup with hardware

Nearly complete is one of my recent projects: setup a new store in town, in whatever ways I can help.

What it has involved, includes website, printed products (loss-leader notepads, business cards, etc), cellular network payment processing, point-of-sale payment processing and inventory and account management, plus media hardware and software, and multiple security systems and redundancy systems.

What that boils down to is: a lot of work, a large amount of little bits that all need to be collected from a dozen sources and assembled into one clean solution.

Most is not too difficult. Security system? well, the business location will have metal bars welded across the windows and doors, and security mesh wire along the warehouse door. But the cameras I’m buying will need to be placed in good locations, installed and wired to the main box, and that hooked into the network. Not so big of a problem.

But getting the point of sale software and hardware is a big confusion. Because there is a lot of unknown variables. Right now I’m struggling to find an Ingenico 3070 device, or a similar product. Also setting up the accounting is not too tricky, but the software being used is Simply Accounting, and it has no built-in point-of-sale functionality, but requires a third-party application.

So this third party application must have all the connectivity to hardware like a barcode scanner and cash drawer. Unfortunately, there is no way to test it because there is no trial version of the software.

So in a nutshell, this post is a bit of a rant (for the moment), about point of sale operations and hardware being confusing, fractured and such.

However, I have found a couple good resources out there.


While typing this blog post, I searched for “open source pos software” and found, among others, the following:

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