How To Take Card Payments With A Card Reader
To take card payments with a card reader, youll first need to decide on whether you want to use a bank or a payment facilitator. Theyll be able to offer you card readers that are compatible with their payment system. The table below outlines the main differences:
|Traditional card reader|
|1. Usually supplied by payment facilitators, including SumUp, Square, and Zettle by PayPal2. Accepts contactless and chip and pin payments3. Wifi-enabled, mobile bluetooth 3G connection, SIM card 3G connection|
To take card payments using a card reader, youll need to make sure you have wifi or mobile internet connection. Just make sure you check with your provider as to which method of connectivity you need before you commit.
Instructions for configuring your card reader with your payment software are usually fairly simple. Once its configured, all payments will be processed through the software, meaning youll have access to data on all of your payments.
The majority of payments taken with a card reader will be taken using contactless payment methods the transaction limit of contactless payments is currently £45. After £45, customers will need to input their pin number.
If you need more information on card readers in general, head on over to our guide to chip and pin machines. We explain the differences between traditional and mobile card readers in more detail and clue you in to how they work.
Popular Credit Card Processors For Small Businesses
There is no shortage of options for payment processing companies, each with its pros and cons. You can shop around to find the company that best suits your credit card processing needs.
Some companies may excel at handling in-person transactions, offering top-notch card readers and POS systems. Other providers may specialize in e-commerce payments and integrate seamlessly into your website.
Here are a few of the more popular providers:
While comparing your options, be sure to explore how — and how much — each processor charges for credit card transactions. For example, some processors may rely on a per-transaction fee structure, while others charge a flat monthly fee.
Make Sense Of Why It Costs
Ok, we are going to tell you to suck eggs here but bear with us. Most providers of card payment terminals will quote you a basic rate for credit and debit card processing which is based on a chip and PIN transaction using a card issued in the same country it is being processed .
That means the customer uses a card that has an electronic chip embedded into it and they validate they are the genuine owner of that card using a PIN . This greatly reduces the chance of plastic card fraud and these types of transactions are now the norm in the UK. They are also considered to be the most secure and, as such, attract some of the lowest fees, which is why most providers use them in their quote.
Expect to get quotes such as 15p per transaction or x percentage of each transaction. Whats best value for you depends on how many transactions you carry out and what the average value of them is.
The fees you will pay are dependent upon several factors including your turnover and your risk. Higher turnover businesses should be able to obtain a lower fee.
Regarding risk, the banks will look at your trading risk in two ways. Firstly, are you selling a high-risk product in a high risk industry, such as travel or gambling? And secondly, are the payments you accept customer present or customer not present ?.
In all cases I recommend that you ask the suppliers to support their service-offer with an estimation of fees and based upon your payment history and if they dont, dont use them.
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Online Payment Methods For Small Business
There are a range of online payment methods for small business that allow clients to pay their invoices online, in the way thats most convenient for them. Accepting a range of payment methods, including online payments, can help small businesses attract new clients and receive payment faster from existing customers.
These topics will outline the range of online payment methods for small business:
A Name That Everyone Recognizes
PayPal is a name that everyone recognizes, and for good reasons. It’s one of the top online payment processors, making it easy for small businesses to accept both in-person and online credit card payments.
First, PayPal accepts credit card readers that you can keep at your place of business or take with you on the go. Another option for in-person payments is a QR code, which your customer scans. This contactless payment method allows the customer to pay from their phone. Finally, PayPal provides payment processing for entirely online transactions.
PayPal has recently updated its fees, and the new pricing will be in effect on August 2, 2021. As of that date, the fees will be as follows:
- Digital PayPal payments: 3.49% + $0.49 per transaction
- Online credit card payments: 2.59% + $0.49 per transaction
- In-person QR code payments: 1.90% + $0.10 per transaction
- In-person credit card payments: 2.29% + $0.09 per transaction
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Potential Credit Card Transaction Risks
This isnt to say credit cards are a perfect solution. As with any payment method, there are some potential disadvantages and risks for example:
- Risk of fraud. Some credit card processing methods are safer than others which well discuss later in this article but theres always the potential for fraud. This can be costly, and it usually involves a lot of back-and-forth with multiple parties.
- Processing fees. Credit card processing isnt free. Youre going to have to pay one way or another. Most companies charge a percentage of every transaction, which adds up .
- Chargebacks. The dreaded chargeback is one of the painful realities of credit card processing. These are disputed transactions that customers initiate when they arent satisfied with a purchase. Even if youre in the right and the customer is not, its difficult and costly to override chargebacks .
The pros of accepting credit cards typically outweigh the risks, but your company needs to understand what its getting into. In order to stay safe and secure, youll have to be extra vigilant about how you proceed.
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More Costs To Consider
Not all payment forms are created equal. For example, debit card fees are lower than credit fees. Corporate or exclusive cards, as well as American Express, carry higher processing fees.
Card not present transactions those done online or over the phone also cost more due to a higher risk of fraud and chargebacks. The average cost for a card-not-present transaction is approximately 2.30% to 2.50% for Discover, Mastercard or Visa, according to Cardfellow.com . But for cards used in physical locations, the amount is about 1.95% to 2%.
To accept credit, youll need equipment, such as a point-of-sale terminal, a mobile card reader or, for e-commerce, a virtual terminal. According to PC magazine, its smarter to buy rather than rent even a free equipment offer generally means a lease agreement that could wind up costing your business money.
Some companies offer tiered or bundled pricing, a complicated system that lets processors juggle charges among several categories. Fees are not always fully disclosed, and the amount you pay can be manipulated so that you wind up paying more. Tiered pricing has played a big role in building the processing industrys shady reputation, notes Ben Dwyer of Cardfellow.com.
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National Processing Top Payment Processing Companies
This Utah-based private firm is called National Processing. The payment processing company was founded by Wayne Hamilton in 2007 and served hundreds of businesses around the country, contributing 10% of proceeds to charity. National Processing provides credit cards, electronic checks, and ACH services.
Pricing at National Processing is determined using an interchange-plus system. Customers must pay both the credit card networks interchange fee and a transaction fee to make a purchase. Businesses of all sizes benefit from this pricing system.
Nonprofits can save money by using National Processing, which offers special rates for qualifying groups. A payment processor that doesnt impose monthly fees or necessitate the use of a merchant account may be preferable for small firms, though.
Based on the volume of credit card sales and industry, National Processing charges anything from $9.95 per month to about $200 per month. There will also be transaction charges. These fees range from 0% to 0.29 percent plus 15 to 5 cents for each transaction, on top of the interchange fee.
As e-commerce clients often have the highest transaction rates with National Processing, small online shops may wish to look around. Regardless of your sector or sales volume, youll undoubtedly want to receive a quote from National Processing to discover precisely how much youll be charged.
- Early termination fees may be charged in specific circumstances
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Your Partner In Payments
Count on us to deliver an outstanding global payments solution that helps you stand out from the crowd in a competitive environment. Leverage our technology experience to maximise your payment potential, and draw on the expertise of your dedicated relationship manager to handle compliance challenges and identify new business opportunities.
What Is A Merchant Service
Merchant service providers are specialist companies that handle online payments for you. Generally speaking, some of them focus on debit and credit card processing, others focus on ACH processing, and a third category looks after direct debit. Itâs unlikely youâd need to offer all of these payment options.
Youâll need online invoicing software to make it work. Just find the section for add-on apps and pick your preferred provider. Thereâs generally a wizard to guide installation. Or if you have a tech-savvy accountant or bookkeeper, ask them to do it.
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Accepting Credit Cards With Quickbooks
Theres a lot that goes into accepting credit cards, but its a worthwhile step if you want to boost your sales, improve your customer experience and maintain healthy cash flow.
Fortunately, QuickBooks makes accepting credit card payments straightforward and painlesswhether you want to accept them online, by phone, on the go or even through recurring payments.
Ready to get started? Learn more here.
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How To Accept Credit Card Payments As A Small Business
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Love them or hate them, are a big part of the modern world. As such, having a successful small business these days means figuring out how to accept credit card payments from your customers.
In fact, according to the Atlanta Fed, nearly 80% of U.S. consumers have at least one credit card in their wallet. And more than a quarter of all payments made in 2020 were made with a credit card.
Still not sold? Here’s more on why and how to accept credit card payments as a small business.
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How To Accept In
To accept in-store credit card payments, youll need to purchase a point-of-sale system. A POS system includes hardware and software to process credit card payments in person. Customers can insert or swipe their credit or debit card using the card reader and the transaction will quickly either be approved or declined. If a transaction is approved your merchant account will then receive the funds and transfer them to your business bank account within a matter of days.
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:
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Know Who Youre Dealing With
To understand the process, every transaction you accept on a card involves a number of bodies and they all receive some payment from the merchant .
They are the card issuer , the acquirer and finally, the card scheme .
There are many card processing suppliers on the market. They range from your local bank to a specialist processing supplier. However in practice they all do the same thing.
Whats The Difference Between Credit Card Processing And Point Of Sale
Point of sale, on the other hand, often includes credit card processing, but it also includes a number of other features relevant to making a sale, like inventory management, rewards programs, and employee tracking.
Many credit card processing companies, like Square, also offer a suite of point-of-sale features that are often needed for customer purchases.
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Reasons To Accept Credit Card Payments
Although setting up your business to accept credit cards can mean some extra hassle and expenses, it can be well worth the trouble. Here’s a few reasons to consider it:
- Increased sales: You could be losing out on customers by insisting on cash payments. Cash is becoming less popular each year, and in its place, credit cards have become the preferred way to pay. A recent survey by The Ascent revealed that more than 45% of respondents prefer credit cards over debit cards or cash. That’s up nearly 10% from our 2019 survey.
- Efficiency: Credit card payments are often quicker and easier to implement than cash. This can speed up transactions and reduce wait times. Card payments can also help streamline accounting as they easily integrate with most software.
- Security: Having large amounts of cash on hand in your business can be dangerous for your employees. Also, cash is easy to lose, be it through theft or simple human error.
In addition to the above, adopting credit card payments can also help add a layer of credibility to your business. Shops and service providers that don’t accept credit cards can seem less professional or of lower quality.
Benefits Of Mobile Credit Card Processing
In addition to portability, a big reason to accept credit and debit card payments on your phone is that some mobile credit card processing apps include basic POS features. Besides accepting payments, a mobile POS system helps you manage your sales and inventory, which can be very helpful for small businesses that aren’t ready to invest in a full-fledged POS system.
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Determine Your Payment Processing Needs
One of the first steps to consider when deciding to accept credit card payments is figuring out what your payment processing needs actually are. The best processor for your business will depend on how you want to accept online payments, which tools and systems you already have in place , and the size of your business.
Below we walk through some scenarios where you can accept credit cards and contactless payments:
Select Flat Rate Or Interchange Plus Pricing Avoid Tiered Pricing
Before you decide to do business with a merchant services provider, make sure they offer flat rate pricing or interchange plus pricing.
Flat rate pricing guarantees the same low monthly rate for any type of credit card and makes it easy to see exactly how much youll be paying in processing fees each month. This pricing is a fixed percentage based on what the credit card processor, card brand, and issuing bank charge.
In addition to flat rate credit card processing, interchange plus pricing is another option that can benefit small businesses.
Interchange plus pricing offers more transparency and can lower your costs. This pricing model is divided into charges based on the cost of interchange and assessments and includes an additional markup cost all three will be visible and separated on your monthly processing statement, so there are no surprises.
Steer clear of any provider that offers a tiered pricing option. Tiered pricing is a red flag.
With tiered pricing, processors typically offer a qualified rate, which is very low but can hide their margin behind a much higher non-qualified rate.
With flat rate pricing and interchange plus pricing, you can process credit cards at the same low rate each month without having to pay any additional transaction fees.
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