It’s important for any and every business to be able to accept credit card payments from its customers. Credit cards are often the first payment options people choose at checkout, whether in person or online. Accepting credit cards will result in increased sales and more satisfied customers.
Consider this: If an eCommerce customer comes to your website and finds that they have to call you in order to finish checking out, the likelihood of them finishing that transaction plummets. Customers shop online for convenience, and it’s important that you’re able to provide them with it.
Unfortunately, accepting credit cards for small businesses is more challenging than it may seem. Credit card associations like Visa charge an interchange or fee each time their cards are used. You’ll also have to sign up with a credit card processor to process the transactions and pay those fees.
A credit card processor will also add a markup to your charges to cover their costs. In this article, we’ll cover how you can begin taking credit cards for small businesses.
In order to accept credit cards, you will need a method for accepting your customer’s card information. This can be done with a credit card terminal or a payment gateway. Another option is a virtual terminal.
Once the customer’s data is input, it’s sent to your provider’s processing system. This network will check with the issuing bank to confirm that funds can cover the transaction. The processing network will also run anti-fraud checks.
Once the transaction is approved, you can complete the sale. After each day, you will upload all of the completed transactions to your processor’s network to continue processing. If you’re using a payment gateway, this will be automatic. It typically takes about two to three days for the funds to be transferred to your bank account.
A merchant account is an account where you’ll deposit funds from processed card transactions. A merchant account requires transaction processing services, equipment and software, security services, and other services depending on the needs of your business.
An alternative to merchant accounts that have lower costs is Payment Service Providers (PSPs). Some may argue that this is the best way to accept credit card payments.
These allow you to accept card transactions without a traditional merchant account. PSPs make the process easier and much more simplified. The downside, however, is that PSPs are more vulnerable to account freezes and terminations.
Merchant accounts are sometimes lower in cost than using payment service providers. Processing rates and monthly volume and ticket size will affect your costs. With a full-service merchant account, you may receive processing rates that are significantly lower than flat rates charged by PSPs like PayPal.
PSPs must charge an inflated processing rate to pay for the services you’re getting that they aren’t charging you for. However, a traditional merchant account will bill you for those services separately, resulting in a lower per-transaction cost.
Unfortunately, finding the best way for small businesses to accept credit cards is difficult. You’ll need to look at your monthly processing volume and average ticket size. You can then compare your current processing costs with a quote from a merchant account provider to determine which is the most affordable option for you.
Retailers will need at least one credit card machine for every store. You’ll have a choice between the traditional countertop terminal and the POS system. No matter what type of equipment you use, it must be EMV-compatible. This is the standard method for accepting credit cards in the US.
You can also find a terminal or POS system that accepts NFC-based payments. Near Field Communications (NFC) is found on payment systems like Apple Pay and Google Pay. It’s built into most smartphones and smartwatches.
If you have an eCommerce business, you don’t need a terminal or POS system. However, you’ll need a payment gateway or virtual terminal that allows you to accept credit cards online.
A virtual terminal is a software that allows you to use your computer as a credit card terminal. If you have a mail order or telephone order business, you’ve probably used these in the past to enter credit card data manually.
Unfortunately, virtual terminals don’t exactly help eCommerce businesses. Like our previous example, a customer shopping online is unlikely to call or mail in an order, especially since they are shopping online for their own convenience. If you lose them once, you’ll probably lose them forever – to a competitor who accepts credit card payments without having to ring you.
A payment gateway is a web-based software that connects your website to your processor’s payment networks so that you can automate the entire process. These gateways allow customers to enter their own card information.
Depending on how many products you sell online, you may need to use an online shopping cart with your payment gateway. These charts allow you to feature products and conduct transactions online. Your shopping cart needs to be compatible with your payment gateway.
Merchant accounts and credit card processing are complicated topics. PSPs offer a simple, transparent alternative to traditional merchant accounts. However, they can actually be more expensive than their counterpart.
Switching to a full-service merchant account may allow you to enjoy lower costs, improved stability, and better customer support.
When it comes to accepting credit cards, you should always do your homework to find the best merchant accounts available for your business.
Do you need help setting up a merchant account? We specialize in high-risk merchant accounts to help provide credit card payment options for small businesses and those who deal in high volumes. Apply for a High-Volume Merchant Account today!