How Can A Small Business Accept Credit Card Payments
As a consumer, the process of paying with a credit card seems simple you swipe or tap the card, and voila! The transaction is complete. But the back end is a bit more complex, involving monitoring credit card balances and checking for fraud. And since small businesses lack the infrastructure required to monitor and verify every transaction, most prefer to work with payment processing companies.
Every payment method has fees associated with it. This includes application fees, startup fees, monthly fees, per-transaction fees, and cross-border fees. Thats why you need to shop around. Look for a payment processing provider who can accommodate the transactions your business will deal with conveniently and inexpensively, if possible.
Determine What Type Of Payments You Need To Accept
Before you set up credit card payment accounts, you will need to determine what your business needs are. Will you offer in-store payment, online payment, mobile payment, phone payment, or some combination of these options? The answers to these questions affect what hardware and software you will require and what providers would be easiest for you to work with.
To accept in-store payments, you will need a merchant account or payment service provider and a credit card terminal or point-of-sale system. Credit card reading hardware and software can range from small card swipers that work with your mobile device to standalone terminals. Some systems can also track inventory and help you manage employees.
Some payment service providers or merchant accounts will include hardware and software with your account, while others will require you to lease or purchase it. Its important to consider whether a payment processors terminals work well with your existing POS system, if you have one.
Online payments require an online purchasing system, a merchant account or payment service provider that accepts online purchases, and a payment gateway. Payment gateways connect with credit card companies to authorize online purchases. Some providers may charge for use of the payment gateway service, while others include it automatically as part of their services.
Easy Ways For Small Businesses To Accept Credit Cards
Accepting credit card payments for your small business is easy with these three easy steps.
Are you starting a small business? The good news is that there’s never been a better time to start your own business. The bad news, of course, is that there’s a lot of work and planning that goes into it. One of the things you’ll have to plan for when starting your own business is how your customers will pay you. Sure, cash might be the simplest payment method. But it’s not the most popular. In fact, a 2019 Federal Reserve study found that only a small percentage of payments today are made with cash, and about 34% are made with .
It’s definitely in your best interests to accept credit cards for your small business. To help you get started, we’ve broken the process of accepting credit cards down into three simple steps and have shared the three best payment processors to use.
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Determine Your Pos Needs
Even a cursory search will turn up multiple POS systems for businesses of all sizes. That’s why you must first assess your current needs as well as look ahead to the future.
Tips for determining your POS needs
Knowing exactly what you do, and don’t do, will keep you from overpaying for features you may not require.
- Determine the scope of your POS use: How many physical locations do you need to do POS sales simultaneously? How many employees will be using the system? Do you have, or want to have, a website with sales capabilities integrated into your POS?
- Project your sales: Looking at your current sales, how many transactions do you currently have per day? How many could convert to credit card sales? How many additional sales do you anticipate generating?
Identify How You Plan To Accept Credit Cards And Evaluate Equipment Options
You’ll want to accept credit card payments wherever and however customers want to pay. That’s the case no matter what type of credit card transaction you accept, including: in person at your business or another location, online, over the phone and through mobile apps.
Once you decide how to accept credit cards, address what kind of credit card processing equipment you’ll need. The best processing equipment will meet these standards.
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Guide To Accepting Credit Card Payments For Your Business
In a digital world where most people are moving their daily activities online, its become necessary for small businesses to offer flexible payment options. The 2019 Diary of Consumer Payment Choice reported these findings:
- Cash payments accounted for only 26% of transactions.
- Debit cards were the preferred option, accounting for 28% of the payments.
- Cash was the preferred option only for transactions under $10.
As you can see, unless your business only deals with small transactions, youll need to offer different modes of payments. In todays world, convenience is the main criteria for customer experience. Make sure you offer convenience throughout the customer life cycle.
There are pros and cons to each type, and some are better suited for small businesses, freelancers, or contractors, such as yourself. Depending on the number of credit card transactions you expect to process and if you need in-person payment processing, online transactions, or both, there is a method of credit card payment processing right for you. Dont worry if you are not technologically savvy getting these set up is a lot easier than you think.
In this guide, we discuss the different modes of payment you can utilize in your small business.
Choose Your Payment Processor
It used to be that to accept credit card payments for your small business you would need a merchant account. Your merchant account would provide payment processing, point of sale systems, and credit card terminals.
And while merchant accounts are still an option, they often require high fees and lengthy contracts. And thanks to technology, there are plenty of other simpler and more affordable options available today.
A payment processor or payment service provider provides a similar service as a merchant service without opening your own account. They allow for credit card processing and can provide any hardware you need without the costs and complications of a merchant account.
Once you know how you’ll accept payments, it’s time to choose a payment processor. There are plenty of payment service providers to choose from, and it can be difficult to decide which one is best.
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Get Your Credit Card Payment Software And Hardware In Place
Once you have a method of processing credit card payments in place you may need to update your point of sale software and hardware to actually accept them.
For example, if you run a brick-and-mortar business you may need to purchase checkout software to accept card payments or install a card reader that’s EMV chip-enabled at the checkout. Some payment service providers will also supply the equipment you need to get set up for accepting credit card payments in-store or via a mobile card reader.
If you plan to accept credit cards online you’ll also need to set up a payment gateway for that. Again, this may be included with your merchant account or payment service provider plan.
What Fees Do You Charge Each Month
This question is deceptively simple since some processors might provide you with a seemingly small upfront monthly fee. But be sure to dig deeper some additional fees might be hidden in the fine print. These can include fees for batch processing or fund transfers from a merchant account to your bank account, as well as statement fees. Processors might waive some of these fees to get your business, but could add them back in after a promotional period.
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How To Set Up Credit Card Payments For Your Small Business
While we dont yet live in a cashless society, we are certainly on our way there. Credit cards heralded the beginning of the cashless revolution, with fast, secure and convenient digital payments following closely on their tails.
For a small business looking to make money in store and online, the ability to accept credit card payments is essential. But how do you get started, what are the benefits and which option is best for your business? In this article, well share the basics of setting up credit card payments and how to take your business to the next level.
How Do You Want To Accept Credit Card Payments?
Setting your business up to accept credit card payments is actually easier than you might think, but you need to decide what you need first. Credit card payments are usually offered in two ways:
Merchant Account or Payment Gateway?
You will also need to decide whether you want to set up a merchant account or payment gateway. There are distinct differences in functionality and cost between the two options:
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Locating The Best Services
To find the best credit card processors for small businesses, we began by polling business owners about which credit card payment processing companies they use or have worked with. We also asked business owners what they liked and disliked about these vendors, and whether they would recommend them to other small businesses and why.
What Are The Typical Credit Card Processing Fees
The assessment or service fee is another non-negotiable cost. Payment processors must pay it to the card networks, and they pass that fee on to the merchant.
The payment processor’s markup is the fee you can negotiate, depending on your vendor. This is the fee the payment processor charges to use its services.
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You Need All The Benefits From Accepting Credit Cards
If you weren’t convinced before, you should be by now: You need a POS system to accept credit card payments. That’s because you’ll be doing more than just adding another payment method, you’ll also be significantly increasing your overall sales and marketing capabilities, customer management, and inventory control.
Decide Which Type Of Processor Will Be The Best Fit For Your Business
There are multiple ways to integrate a credit card payment service into your unique business.
For example, you’ll need to choose between a card payment service that works with individuals or opt for a provider that serves only businesses. Additionally, you’ll need to factor in the average monthly volume of credit and debit card payments that you accept.
To get the job done right, start by evaluating the following credit card payment processing solution models.
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How Are You Accepting Payments
Its important to gather all the details on these rates and do some rough calculations with ~50% of your transactions falling into the higher tiers to get a clear picture of what you will likely be paying in fees.
- Other Merchant Account Fees. There can be many other fees associated with a merchant account beyond the transactional fees. Other fees to ask about include:
- Monthly minimum fees
- Batch fees
- Annual fees
Its important to understand all of the fine print pertaining to these fees up front so there are no surprise costs along the way.
- Evaluating Merchant Account Providers Beyond the Fees: Not all merchant accounts are created equal, so getting a holistic view upfront will be critical to your satisfaction and long-term success with your merchant account provider.
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Its important to consider the following factors:
- Does the merchant account provider offer all of the software and payment acceptance options you need, or will you have to supplement with other providers and incur additional fees? For example, are virtual terminal processing, email invoicing, recurring billing, website payments and mobile payments all included in one solution, or do you have to set these up separately? The more providers you need to go through, the more costly and complicated your experience will be.
Get The Right Hardware And Software
Depending on the type of business you run, you might need to have hardware or software in place. If you run an entirely online business, you’ll need to set up your payment gateway on your business’s website.
For businesses accepting in-person and mobile payments, you’ll need actual hardware. Some payment processors provide you with the point of sale equipment you’ll need to accept payments in person.
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How Can You Avoid Credit Card Processing Fees
Credit card processing companies rely on fees to make their money, so there’s no way to completely eliminate credit card processing fees. If you feel that you’re paying too much in fees, you can negotiate with credit card processors to reduce them. If you can accept cards in person instead of over the phone or online, you’ll also save money on fees.
Another option is to set a minimum transaction amount that customers must meet before they can pay with a credit card. By doing this, you can ensure you come out on top of the transaction, since it makes more financial sense to pay the fee on a $10 purchase than a $2 one. The major credit card networks have rules about minimum transaction amounts, so verify that your policy complies with their rules.
Similarly, you can move the fee to your customers entirely by using cash discounts or surcharging. Many gas stations use this method, where a gallon of gas is discounted if you pay with cash. Though this may cause potential customers to take their business elsewhere, it could encourage people who prefer paying with cash to frequent your store more often. If you go this route, check the credit card networks’ rules for surcharging to ensure you follow best practices.
What Is A Credit Card Authorization Form
A is the legitimate document that contains the credit card information signed by the cardholder. It is as good as the credit card itself authorizing the consigner to make payments on behalf of the client.
This form is efficient in collecting both one-time and recurring future paymentsâweekly, monthly, annually, etc.âso that no physical presence of clients is necessary.
Hereâs a peek at a sample credit card authorization form thatâs used by travel agents to collect booking details of their clients. See what it looks like to the consumer.
So you are now informed on how critical it might be for you to collect credit card information, that is, without the card. You might be asking, who and when to use this authorization form weâve been talking about? Then, read on.
Well, consumer preferencesâincluding those of your clientele â are shifting fast and industries like the travel agency and consultancy teams doing paid ads are the few users who need to evolve with this.
Travel agents, for example, need to collect the info so they can book travel tickets and hotels on their clientsâ behalf. Consultants, on the other hand, need to input cc details needed to set up and run Facebook ads for their clients.
In addition to that, a reveals some eye-opening updates.
- 83% of Americans aged 30 to 49 hold a branded credit card
- Americans have $2.92 trillion of available credit to spend
- Worldwide, 336 million people hold Visa cards
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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.
Online Credit Card Processing Services
The main ways you can accept credit card payments online are merchant accounts, payment gateways and direct debits.
What are the costs of setting up online credit card processing for a small business?
The fees you pay depends on the service youre using, but you may be charged set-up fees, account fees and payment processing fees.
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