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If you want your business to thrive, you need to be able to accept payments from your customers in any way you can. Cash-only businesses are rare these days, and for good reason: A lot of people have no cash at alleven when you’re shopping for hours.
So how can you accept credit cards as a small business owner? In total, there are three relatively easy ways to accept credit and debit card transactions.
However, as you probably know, there are additional responsibilities and costs associated with accepting credit cards, such as minimum monthly fees, PCI compliance fees, and customer disputes over credit card fees. So why even bother?
Why you should accept credit cards as a small business
Given the hassle of setting up credit card stations or opening a merchant account, many small business owners might be wondering whether it is worth it to accept credit cards online. first place. There are many benefits to accepting credit cards from your customers, including:
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Faster Payments: Other than cash, there’s no way to get paid faster than through debit or credit card transactions, where the money is typically deposited into your business bank account within 48 hours.
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Increase in income: Cardholders typically spend more money when they’re not limited to using cash.
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Increase in customer satisfaction: Customers will be happy with your business for its convenient service and easy way to pay.
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No control: Small businesses that accept credit cards don’t necessarily have to accept checks. Credit or debit card transactions draw funds directly from customers’ checking or expense accounts.
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Positioning on the online market: Accepting credit card payments is essential if you want to start selling online or starting an online store.
In short, credit card payments will allow your small business to take more money, take payments from more customers, and grow your business with flexibility.
How to Accept Credit Cards as a Small Business
Consider the merchant service providers available in your area. Different vendors may offer different benefits, require payment of different fees or charges, or have different point-of-sale hardware and software.
To get started, open a merchant account with your bank. Then choose from the three options below to accept in-store credit card payments.
In-store credit card payments
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What you will need: MSP, point of sale system, software, credit card reader
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What is accepted: Credit / debit cards, cash
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Who is best for: Retail stores or small businesses with online and in-person storefronts
In-store credit card payments require a point-of-sale or point-of-sale system, which typically includes hardware like a credit card reader and software to process customer credit card payments.
With a point of sale system, your customers physically insert or swipe a credit or debit card, depending on whether it’s a chip card or a magnetic stripe card. Transactions are quickly approved or declined, and you will then receive the funds deposited into your business bank account in as little as 24 hours. However, keep in mind that some payments take up to 3 days to process, depending on the financial institution.
This method is great for physical retailers or small businesses that generate significant percentages of revenue from in-person transactions. For small online businesses, you will need a different tool to process customer payments.
Online Credit Card Payments
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What you will need: A payment processor and a payment gateway, not to mention a website to list and sell your products
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What can he accept: Credit and debit cards, ACH and eCheck payments, and digital wallet payments
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Who is best for: Small e-commerce businesses or primarily online stores, as well as restaurants that deliver
Online credit card payments are naturally the best way to receive credit or debit card transactions for small businesses online.
To accept these types of payments, you need to sign up with an online payment gateway like PayPal or Stripe. These services process customer payments for you over the Internet and then charge a processing fee for each transaction you accept.
Many integrate cloud-based accounting solutions and other credit card payment software applications and technologies. So if you have online accounting or tax software, you will be able to get the most out of this method and simultaneously secure your information and profits.
Mobile credit card payments
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What you will need: Smart device like phone or tablet, mobile credit card reader, and pairable software
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What can he accept: Cash, credit / debit cards
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Who is best for: Small businesses or occasional businesses, mobile businesses like contractors, food trucks, etc.
Mobile credit card payments are a newer method of online payment. They are ideal for small business owners or contractors who transact on job sites or at their clients’ homes.
Mobile credit card payments involve the use of a mobile card reader, including gadgets like Square. These portable devices plug into a smartphone or tablet and pair with a primary (or branded) credit card app to accept debit or credit card payments from anywhere, as long as you had a strong internet connection.
These can also be a good choice for small businesses who don’t want to pay for a dedicated point of sale system.
How exactly does credit card processing work?
Here is a general overview of each process involved:
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A customer hands you a credit card and you use a credit card terminal (if it’s a physical store) or a payment gateway or virtual terminal (if it’s a store online).
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You take credit card information or card data presented.
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The card data goes to a payment card processor – the subcontractor’s network checks with the cardholder’s issuing bank that the funds are available.
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Many processing networks also perform anti-fraud checks to detect suspicious transactions.
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The transaction is approved.
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At the end of each business day, the provider (you) downloads all credit or debit card transactions over the processor network.
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Your credit card processor charges a trade-in and mark-up fee for every transaction, and you get the benefit of whatever is left over.
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Funds are deposited into your account within 48 hours on average.
Small business owners carefully consider their options, as the fees and other inconveniences associated with credit card transactions can sometimes mean they make less or even no money from credit card payments.
What are interchange and markup fees?
These are fees collected by your processing network company. Card networks set interchange fees, so merchants cannot negotiate them. Fees are in place to pay banks and other financial organizations involved in setting up the credit card processing network.
During this time, the mark-up fee is what your payment processor charges you for using its services. These fees are sometimes negotiable, but not always.
Do you have to have a merchant account to accept credit cards?
No, although it was previously necessary. In short, a merchant account is a bank account that you specifically use to deposit funds from credit or debit card transactions. Merchant accounts can be expensive, but they can offer discounts or other benefits if you process a lot of credit card transactions each month.
If you plan to accept many types of credit card transactions, open a merchant account so you have more options when selecting how to process those payments. You can usually open a merchant account through a network of processors.
What about a merchant service provider (MSP)?
You need an MSP to accept credit card payments. MSPs can provide your business with the equipment and software you need to accept credit and debit card transactions. However, you should choose your MSP carefully by asking yourself questions such as:
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If the MSP offers protection against fraud
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What types of services does the MSP offer
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What types of payments they process (some will offer all three methods above, while others may be more specialized)
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What fees they charge for each transaction. Less fees mean more profit in your bank account at the end of each day
How to Choose the Best Credit Card Processing Method
Ultimately, there are three easy ways to accept small business credit card payments. If you want to make sure you choose the best method for your business, ask yourself the following questions:
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How many credit and debit card transactions do you anticipate per day? The more transactions, the more you will need to provide in-store or online payment options.
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Where do most of your place of payment profits come from? If they’re coming from your retail store, opt for an in-person credit card kiosk. If they’re coming from your online store, payment processing and gateway services are the way to go.
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How much money do you have to spend to set up a credit card processing station? Online and mobile credit card processing solutions are less expensive than in-person credit card processing solutions in general, as point-of-sale stations and software are often expensive, depending on the number of card readers. credit you need.
Once you’ve answered these questions, you’ll be able to choose the best credit card processing solution for your small business.
