Credit card payments have become so prevalent and convenient that it’s rare to find any small business that does not accept them. Accepting them can increase sales while simultaneously managing cash flow by faster transference of customer funds into your business account.
There are various methods of accepting card payments, from terminals or readers, POS systems or websites, or even over the phone. But how can you select an appropriate processor that best meets your business needs?
Choosing a Payment Processor
Business owners might not always view card processing services as essential elements to their operations, but remembering their importance can make or break their bottom line. A great provider will streamline financial transactions while improving customers’ experiences – setting the groundwork for growth in your company.
Payment processors act as intermediaries between your business, card networks and banks for authorizing transactions. Although many providers will claim they offer the best services available, you need to carefully compare fees and features in order to select one that best meets the needs of your company.
When selecting processors, it’s essential to evaluate both their fee structures and services offerings. Some will charge flat transaction fees while others might utilize an interchange plus or membership model; it is also wise to compare fees per transaction as well as total monthly costs before committing to contracts with each provider. Many merchant account providers provide calculators so you can estimate your expenses before signing any binding contracts.
Beyond fees, it is also important to determine whether a given processor can integrate with your accounting software, POS system and e-commerce service; mobile card readers for in-person or online payments as well as programs enabling merchants to add customer surcharges in order to cover transaction costs should also be considered when choosing your processor.
Finalize your evaluation by reviewing each processor’s security features. In particular, it’s crucial that you find out whether they support tokenization and PCI compliance – essential safeguards against breaches and fraud. Depending on your industry needs tools for fraud detection as well as tools for risk detection. It may also be beneficial to seek recommendations from other business owners or read user reviews and test processing so you know exactly what to expect from each provider.
Getting Started
Credit card payments are one of the easiest and most straightforward ways to increase sales, simplify accounting practices and deliver an improved customer experience. A recent study demonstrated this phenomenon – not accepting cards could cost small businesses substantial revenue opportunities; but before diving in headfirst into credit card payment processing for your business there are a few things to keep in mind before getting set up with this payment option.
There are two primary methods for processing credit card payments: merchant accounts and third-party processors. Merchant accounts allow businesses to open direct accounts with banks or financial institutions to process transactions; third-party processors handle those processes for their clients – often at reduced transaction fees for smaller volume companies.
No matter the mode of payment processing that your business chooses, certain steps must be taken in order to get started. A digital storefront (such as an online website or POS system) and payment gateway will allow your clients to enter their credit cards; once submitted, these systems will verify them before moving the funds from their account into yours.
If your point-of-sale system provides credit card processing capabilities, integrating that solution with your software should make the process even smoother. Some POS systems come equipped with their own terminals for in-person credit card payments while others only support remote ones.
No matter how you decide to process client credit card payments, it’s essential that you fully comprehend all associated costs. Credit card transaction fees can add up quickly and take a significant bite out of profits; to reduce them further, make sure that you shop around for the best deal and are clear about which fees your business may incur.
Security
Credit card acceptance provides many advantages to small businesses. It increases sales, accelerates transactions and helps streamline accounting responsibilities more easily – not to mention being safer for employees than keeping large sums of cash on hand which could become dangerous if stolen from or lost through other means. Plus fraudulent charges on credit cards may often be recovered quickly unlike cash payments that might not.
Security should always be the top priority when accepting credit card payments, and to protect customer data a company must become PCI (Payment Card Industry) compliant by following a set of guidelines to protect data securely as well as filling out an annual questionnaire.
Traditionally, businesses wishing to accept credit card payments needed a merchant account – however payment service providers such as Square and Stripe provide alternatives that allow businesses to do just this without needing one. While compliance requirements still must be fulfilled with these PSPs compared to merchant accounts in the past, they offer many of the same conveniences such as being able to move funds between PSP accounts and business bank accounts for refunds and deposits as they would do a merchant account.
Convenience
Credit card payment options are an effective way to increase sales. Although accepting cards carries some risks and costs, these are easily outweighed by increased customer convenience and sales growth potential. Cash is becoming less and less prevalent so providing multiple ways for your customers to pay you is essential; plus accepting cards expedites payment more quickly than checks or cash can boost cash flow for your business.
Merchant accounts are the traditional method for accepting cards, but setting one up requires opening a bank account, negotiating fees, and purchasing hardware to process payments. There are alternative payment service providers such as PayPal, Square and Stripe which enable merchants to accept credit cards without setting up merchant accounts; their processing charges typically cover their cut as well as Visa or Mastercard’s interchange and transaction fee charges.
Once you’ve selected a payment processor, the next step should be figuring out how you will collect card data from customers. Card readers provide this functionality; however, other possibilities exist as well such as mobile apps that allow customers to swipe or insert cards.
Mobile terminals allow your smartphone to become a credit card machine, enabling you to easily take payments anywhere with an internet connection. QR code readers allow customers to easily scan a unique QR code that displays on your website to input their credit card details via phone. Depending on your industry and needs, card readers may vary; make sure you shop around to find the best price – it may be more economical to partner with a payment service provider who provides their equipment free than purchasing or leasing it yourself.