Merchant Account + Payment Gateway
The traditional method for accepting payments online has been a combination of a merchant account and a payment gateway. Providers like SecureNet , Authorize.Net and eWay fall into this category.
A merchant account is a special kind of business bank account that lets you accept credit card payments.
An online payment gateway connects your store and your merchant service account, and facilitates the processing of the payment transaction between the various parties involved, including your bank and the card issuers bank. Think of it as the digital version of a used in brick-and-mortar stores.
There are fees associated with both the merchant account and payment gateway, but there are a lot of options out there, and some have more competitive transaction fees or dont charge setup fees.
Payment gateways can also offer greater control over security rules and customization they may be a better fit for large businesses needing a more tailored solution.
One thing to note about using a merchant account/payment gateway combo is that youll need to apply for both, usually filling out forms and providing some financial information. Processing your applications can take a few days, so you wont be able to jump right into accepting payments. After both have been approved, youll need to connect your account to the gateway and then your gateway to your store. Usually this involves configuring your store with API keys, shared secrets and tokens.
How Much Does It Cost To Process Payment Over The Phone
Payment processing fees vary based on the payment providers markup. There are credit card processing fees to consider, too. These include interchange, assessment, and risk and PCI compliance fees.
It is also important to note that because of the heightened risk of fraud with card-not-present transactions, processing fees tend to be higher than with card-present transactions. However, the commercial benefits of CNP transactions can be considerable in a variety of circumstances. For instance, these include the aforementioned scenarios of when a customer calls to enquire about a product and decides to make the purchase while on the phone, for customers who prefer to speak directly to a human rather than pay via an online payment interface, or for merchants to take a deposit as a means of protection on orders.
Choosing A Payment Processor
Before you decide how to collect payments, you need to choose a payment processor. Processors make debit and credit card transactions safe, secure, and valid. You may not have realized it, but you use a payment processor whenever you enter your credit card information online, or use your card at a store.
Payment processors can help you to:
- Receive payments quickly and easily
- Offer different payment options to clients
- Improve accounting and financial record-keeping
- Collect payment in installments via consumer financing
Some payment processors also allow you to accept payment through Apple Pay and Google Pay. You can also issue refunds, collect deposits, and get support during the event of a disputed payment
Most good payment processors work with major credit cards like Visa, Mastercard, and American Express.
Costs for payment processors vary depending on the processor and plan that you choose, but most charge a base interest rate on each invoice and an additional fee per transaction. For example, youll see rates written as 2.5% + 30¢.
When choosing a payment processor, carefully review the plans that they offer and how well theyll work with your existing accounts. For example, Jobber can sync with Quickbooks, allowing you to book jobs, send invoices, and receive payments using just one software.
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Save Transaction Records And Take Notes
Just as you would for any other type of transaction, youll want to keep records and receipts of any credit card payments you take over the phone. Because payments over the phone are typically riskier than in-person payments, you may decide to take more detailed notes and store them with the transaction records. You might include the name of the customer you talked to on the phone, what time the call was made and anything else you find relevant just in case you later find yourself having to deal with an instance of fraud.
Set Up Delivery Confirmation
Finally, if youre shipping orders to customers after youve taken a credit card payment over the phone, you might consider purchasing tracking or insurance for the shipment, especially if its a particularly costly purchase. Similarly, you might require a signature from the customer when they receive the shipment, or you might require your shipping service to provide you with proof of delivery.
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How To Choose Your Credit Card Payment Mechanism For E
As you can see, there are pros and cons to each type of payment system. Merchant accounts are more time-consuming to set up but will likely end up costing you less down the road, whereas payment service providers and e-commerce sites are easier to set up but come along with higher fees.
Understanding how credit card transactions work can help you make a more informed decision.
Here are a few questions to research regarding the various choices in e-commerce credit card processing companies and methods. Discovering the answers to these questions can help you find the best e-commerce credit card processing solution for your business.
- What features does this service offer?
- How much can I expect to pay in fees based on my volume of transactions?
- What level of customer support can I expect to receive?
E-commerce credit card processing is complicated, but that shouldnt keep you from doing business online.
Armed with knowledge about how credit card processing works, you can make a more informed choice about the most affordable, most effective way to accept credit card payments from your online customers and deliver a seamless experience to your shoppers or clients.
CO aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
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How To Take Card Payments Over The Phone
Whether its requesting a deposit or chasing an invoice, taking payments over the phone can save you valuable time. People are busy, but that doesnt stop you needing things to move fast.
Although the process is decades old, theres some unease surrounding how to accept credit cards via phone. Still, over-the-phone payments hold incredible potential for all businesses, so lets clear up some of the biggest questions and worries that merchants have.
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Understand Your Scope And Your Data Flow
Make sure you understand what the scope of compliance to PCI is. As mentioned, telephone transactions may traverse your network if you use an IP based phone system . Order-entry systems where the payment card data is entered are in scope as are the network segments they travel across and any connected systems that are not properly segmented.
Open A Merchant Services Account
To process credit card payments, youll need to apply for and open a merchant services account .
A merchant account is essentially the liaison between your business account and the customers bank account, where money is first transferred before the payment is authorized and moved over to the business account for withdrawal.
To get a merchant account through a bank, youll need to prove youre a legitimate business and generally provide the following documents as part of your application:
- Business bank account details
- PCI compliance
- Other supporting documents including business plans, marketing materials, and more
With the documents in place, youll be ready to shop around for accounts that best serve your business.
Did You Know?
According to the Cash Product Office of the Federal Reserve, consumers used cash for only 26% of all payments in 2019, with the rest being made up of debit cards, credit cards, prepaid cards, and electronic payments . Accepting credit card payments is a must-have in todays consumer environment, whether youre a small business owner with a brick-and-mortar store, a stall at the farmers market, or an online shop.
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Why Its Important To Be Pci Compliant
Having a strong, up-to-date security plan in place is not only good for your business, but also for your peace of mind.
Following the PCI DSS in your business will:
- reassure your customers that their card details are secure when they pay you
- maintain customer trust in your business, which is good for your reputation
- show your commitment to improving the shopping experience for your customers and protecting their data
- prevent others from accessing your payment system networks and stealing cardholder data.
Each payment card brand has its own compliance program. Check with your financial institution for compliance information.
Learn How To Accept Credit Card Payments By Phone
Credit cards and debit cards have become ubiquitous. Almost everyone carries them, and fewer customers are paying cash than ever. For most businesses, accepting credit cards is imperative. Partnering with a credit card processor and setting up a card reader at the point of sale is often just another cost of doing business for entrepreneurs. But what happens when a customer wants to use their credit card outside the point of sale?
Many businesses, from restaurants to retailers, take orders over the phone. It’s generally thought of as an added service to boost customer satisfaction in an increasingly card-centric society. If you’ve ever wondered how to accept credit card payments over the phone, this guide can help. We will also walk you through the pros and cons of accepting credit cards over the phone and how you can best ensure your customers’ data remains safe.
Editor’s note: Looking for a credit card processor for your business? Fill out the below questionnaire to have our vendor partners contact you with free information.
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What Does It Cost To Accept Credit Cards Over The Phone
Exactly what accepting cards over the phone will cost you depends on your credit card processor and the pricing model you select. For a breakdown of the common pricing models and how the rates apply to card-not-present transactions, see our best picks page for credit card processors. Generally, though, accepting credit cards over the phone is going to cost you more than accepting a physical card with a credit card reader.
Most credit card processors charge 2% to 4% of a given transaction. With card-not-present transactions, that number is likely to be on the high end because of the increased risk of accepting a payment without a physical credit card. In addition, it is common for credit card processors to tack on a per-transaction fee to the percentage rate for higher-risk transactions like payments over the phone.
Accepting Credit Cards Over The Phone Has Its Pros And Cons
In many cases, small businesses have no choice but to accept at least some credit cards over the phone. The modern customer seldom carries cash and, especially for delivery-based businesses, often expects to complete an order from the comfort of their own home. That means businesses are expected to accept payment over the phone, whether credit card processors charge more for the pleasure or not.
Offering your customers the option to pay by card over the phone is good for business, but it also carries a significant risk of fraud. Implementing best practices and policies to ensure your business doesn’t unknowingly engage in fraudulent transactions is an absolute must when you begin accepting cards over the phone. Always take down the customer’s complete information, invest in a highly secure POS system and credit card reader, and always confirm the receipt of goods with the customer to establish a paper trail.
In many cases, small business owners are caught in between customer demand and secure payment methods. In a perfect world, every transaction would be airtight. Unfortunately, customers expect your business to support their preferred payment method. To do so the right way, take the appropriate precautions and ensure your staff always adheres to the policies you’ve established.
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Using A Virtual Terminal
Overall, in order to accept credit card payments over the phone, youre going to need a virtual terminal. In essence, a virtual terminal is a piece of software, hosted online, that allows you to input and process a customers payment information when their card is not present. Therefore, if youre trying to accept credit card payments over the phone, youll use this application to input the information the customer gives you, process the payment to charge their card and eventually, receive the appropriate funds for the sale.
Typically, virtual terminals can be accessed with any internet-enabled device computer, smartphone or tablet and include security measures, the ability to send electronic receipts and sometimes the option to save payment information. You should talk to your merchant account or payment service provider to ensure it offers a virtual terminal and can work with you to accommodate this kind of card-not-present transaction.
The Best Way To Accept Credit Cards For Small Business
As a savvy merchant youre probably looking for the best and cheapest way to accept credit cards. The bad news is, there is no one-size-fits-all solution.
Heres the good news: if you weigh your businesss needslike the volume of transactions and where these transactions take placeyou should be able to narrow your search down to several providers that offer convenient solutions at favorable rates.
To help you get started, weve compared five of the most popular credit card processing providers for small businesses.
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Keep Your Network Secure
Network security is a big part of PCI compliance. Cardholder data must be protected from untrusted networks. Network segmentation is not strictly speaking required, however, the entire network and all system components are in scope if not segmented. PCI requires hardened configurations. Penetration testing is also likely to be required.
Ask For Additional Information
Any sort of inconsistencies in a transaction may indicate that fraud could be taking place. For instance, a different billing and shipping address should tell your employees to be extra vigilant. It is always a good rule of thumb to ask for as much information as possible, in addition to the mandatory credit card details to complete the transaction. This can include asking for date of birth, phone number, and an identification number from an official document such as a driving license or passport.
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Other Options To Accept Online Payments
Service providers and contractors often choose to accept or receive payments without using credit cards at all. ACH processing allows customers to pay directly through their bank account. This convenient and secure means of accepting payment may carry lower fees than debit or credit card payments, and its more convenient and secure than writing a check.
Monitored by the National Automated Clearing House Association, this payment method pulls money directly from your customers bank account and puts it into your business bank account after they have provided their bank account number, routing number and authorization.
Permitting ACH payments can help prevent late payments for recurring customers, which helps improve your businesss cash flow, not to mention a predictable stream of recurring revenue.
Similarly, you can establish acceptance of recurring monthly ACH, debit or credit card payments by setting up a subscription billing plan. Some e-commerce payment processors, including Paypal, allow this option through their payment platform.
Best Practices For Taking Credit Card Payments Over The Phone Safely And Securely
Its important to be able to accept credit card payments over the phone. The COVID-19 crisis has made it even more essential, as much in-store business is now being conducted online or over the phone.
When youre taking phone orders, you can be more at risk for credit card fraud and need to take additional precautions. You also need to take additional precautions to protect the security of your customers credit card information, as required to maintain PCI compliance.
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How To Accept Credit Card Payments
Small businesses can accept credit card payments by using an online merchant gateway like Stripe or PayPal, by setting up a POS system with a merchant account or by using a mobile card reader to accept credit card payments through a smartphone app. Learning how to accept credit card payments can help small businesses boost their sales, improve cash flow and provide a better experience for their clients. But a recent study found that 55 percent of small businesses in the US dont accept credit card payments.
These topics will show you how to accept credit card payments as a small business:
Advantages Of Accepting Credit Card Payments Over The Phone
Now that you have a better understanding of how virtual terminals work for phone payments, well take a closer look at the benefits of using them for credit card payment acceptance.
- Customer Convenience Phone payments make things much easier for your customers. It gives them more flexibility with how and when they pay for goods or services and eliminates bottlenecks in your transaction process.
- Faster Payments The ability to get paid over the phone often means faster payment collection for many businesses. This is especially true for field service industries and B2B services. Its much easier for someone to call and give you credit card information over the phone instead of mailing a check.
- Fraud Protection Lots of modern virtual terminals offer more than just the ability to accept payments. These solutions can come with fraud scoring methods and other tools to ensure the transaction is legitimate.
- Lower Costs Compared to a manually keyed transaction on a physical terminal, virtual terminals are usually cheaper. This will obviously depend on your processor, but its common throughout the industry.
- Safe Storage All payment data will be saved in the virtual terminal, so you wont have to worry about handling this on your own. This is crucial for different data security and standards and PCI compliance.
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