Most consumers expect that every business will accept credit and debit cards – a standard you are all too familiar with if you must repeatedly explain to customers that your business accepts cash only. Luckily, accepting credit and debit cards is as easy as partnering with a credit card processing company. Show
This guide will walk you through the ins and outs of the credit card processing industry and highlight the factors you need to consider when choosing a processor. How do you accept credit card payments for your small business?Accepting credit and debit cards begins with selecting a processor, followed by considering which piece of payment technology you’ll utilize to accept payments. 1. Determine the type of processor you need.Choosing the type of credit card processor you want to work with comes down to what you value from this type of company. Our PayPal review and Square review, for example, show that they are great for businesses that are just starting out and process a low transaction volume, thanks to their lack of fees. Because their credit card processing rates are higher than those of other options, though, they’re not always a cost-effective choice for high-volume businesses. When choosing a processor, consider what you value, such as rates, service, and technology.
2. Consider how you will accept credit cards.When you begin accepting credit cards, it’s generally because your customers prefer using them or because doing so makes accounting easier. So, it’s important to consider how your customers use their cards. If the vast majority come into your physical location and swipe their cards, perhaps that’s the only method you need to accept. However, you might also want to accept credit cards online, over the phone, on a mobile device or across multiple channels. Determining the methods of payments you will accept can help you understand what type of credit card processing equipment you need. The COVID-19 pandemic made it essential for merchants to have a card reader with near-field communication (NFC) technology that can accept contactless payments such as Apple Pay, Google Pay, and contactless credit cards. Consumers don’t want to touch payment technology; they want the convenience of tapping their card or phone on a payment terminal, then being on their way. NFC payments also make checkout faster, are easy to implement, and can help deepen consumer engagement. 3. Examine pricing models and fee structures.Pricing models and fee structures vary greatly by processor, so this is one of the more arduous parts of the buying journey. There are multiple pricing models available that determine the rates you will pay on certain transaction types. Most processors charge 2% to 4% of the transaction value, plus a small transaction fee based on your monthly processing volume, average ticket size, industry and processing history. In addition, processors often charge several fees. 4. Compare quotes.Using the criteria above, narrow your list of candidates down to three. Then, contact each of these three credit card processors to request a quote. A processor’s rates are negotiable sometimes, so don’t be afraid to haggle – especially if you’ve already received estimates from other companies. After comparing quotes, request a contract from one or two companies that offer the most competitive rates. However, keep in mind that the lowest rate is not always best. Consider what else each company offers to add value to your service. Do not complete an application until you are ready to sign up with a company. If you read the fine print, you’ll discover that the application is part of the contract, and by signing it, you’ve agreed to accept the company’s services. 5. Review contracts.As always, review these contracts very carefully – some companies try to hide fees. If something does not look right to you, ask about it. When possible, have legal counsel look at the contract as well to ensure everything is aboveboard. Consider whether the contract includes automatic renewal clauses, early termination fees and other binding clauses. Once you are satisfied that the contract is fair, sign with the company you believe is the best fit for your business. Once you’ve completed these steps and decided which credit card processor you’d like to partner with, you are ready to apply. Generally, applications can be submitted online and take two days for the processor to review. Once your application is approved, the processor will set up your account and walk you through the process of selecting any hardware you might need. Once the hardware arrives, the processor will help you set it up and test it. Editor’s note: Looking for the right credit card processor for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs. Recommended credit card processorsWhen looking for the best credit card processing services, we found these processors were best for different use cases and business types.
Where and how do you sell?There are three main ways to sell to customers and accept credit card payments: in person at a fixed location, online or over the phone, and on the go. 1. In person at a fixed locationThis is when you have a brick-and-mortar business such as a retail store or medical office. You accept payments at one or several cash registers at your business location. Equipment needed: A point-of-sale (POS) system that includes functions such as inventory management and loyalty/gift card programs, or a hardwired countertop credit card terminal 2. Online or by phoneThis means you have an e-commerce business where people buy from you online (on a marketplace site like Amazon or on your own website through an e-commerce solution like Shopify) and/or accept payment by phone, with customers reading you their card numbers. Equipment needed: Back-end integration from your website to your payment gateway and/or a virtual terminal where you can manually enter credit card information 3. On the goThis means you have a mobile business, such as a food truck or an in-home pet grooming service, or sell at events like craft fairs and need to accept payments wherever you are. Equipment needed: Mobile card reader Tip: When you sign up with a credit card processor, for the most secure option, select an EMV-compliant chip card reader. If you want to accept payments from contactless cards and mobile wallets, such as Google Pay and Apple Pay, select an NFC-enabled reader. You can expect to pay less than $100 for this type of credit card reader.How to accept credit cards at a fixed locationWhen you have a brick-and-mortar business location, you will probably want a regular hardwired credit card reader or a POS system, although you could get a mobile card reader if your cashiers move around your location to accept payment. Hardwired systems tend to be more reliable than mobile systems, which require a good mobile signal. Fixed credit card processing equipmentThe best POS systems are a complete set of hardware and software that gives you a range of useful tools, such as the ability to track sales by product, time period, and promotion. A POS system also keeps track of inventory levels and allows you to institute a loyalty program with any associated discounts, all in addition to processing credit card transactions. Since they give you so much functionality, POS systems tend to be the most expensive option for credit card processing. If you don’t need all the bells and whistles, or if you have an existing POS system that doesn’t include payment processing, you could get a stand-alone credit card reader. Most modern fixed credit card readers accept both swipe and chip (EMV) transactions, and some also accept contactless payments (NFC). How to accept credit cards on a mobile deviceMobile credit card readers are useful for businesses that travel, often sell at trade shows, or simply want the ability to accept payments anywhere within their establishment. Benefits of mobile credit card processingIn 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. Mobile credit card processing equipmentTo accept credit card payments on your phone or tablet, you will need a mobile credit card reader or app. Many readers plug into the headphone jack of the mobile device. More advanced mobile credit card readers connect to your mobile devices via Bluetooth. Mobile card readers can accept swipe-only, swipe plus chip (EMV), or swipe, chip, and contactless (NFC). A mobile credit card reader doesn’t limit you to accepting payments on your mobile device. These readers can be used as part of a larger system with additional hardware. How to accept credit card payments onlineAccepting credit card payments online requires a payment gateway. Credit card processors often provide payment gateways, either directly or through a third party. Payment gateway costTypically, a credit card processor charges you an additional monthly fee for this service, so you should only set up a payment gateway if you sell online or if your online sales, though infrequent, are large enough to cover the cost. In addition to the monthly fee, some credit card processors charge a gateway setup fee and a per-transaction fee, so review each processor’s terms and conditions before signing up. Different ways to accept credit cards onlineDepending on the gateway, to accept credit cards online, you’d have these options. 1. Sending your customers a direct payment linkGet the payment link from your payment service provider. Depending on your provider, you may be able to customize the link to your liking. Then, determine where to put the link on your website. The customer will then follow these steps:
2. Accepting credit cards with a payments pageSt. Jude Children’s Research Hospital is a good example of an organization that uses this method. The payment page is already generated. Contributors then:
3. Accepting credit card payments online with a shopping cartThese are the payment pages you’ve seen anytime you’ve shopped retail online. Customers browse e-commerce shops for products, then add them to their cart. When they are ready to check out, they follow these steps:
4. Processing payments manuallyIf your business accepts credit cards over the phone – for instance, if you have a restaurant that offers delivery or takeout – and you’ve been writing down credit card information on paper, then entering it into a terminal or POS after you get off the call, you are doing things insecurely. Instead, use a virtual terminal or your payment gateway to accept phone payments or to generate and process payments for invoices (if you run a service-based business such as a law firm or marketing agency).
With each of these methods, your funds will be processed to go into your account after you’ve batched out and will be posted to your dashboard. How much does it cost to accept credit cards?The price of each transaction depends on the method by which a card is accepted and the pricing plan you’ve chosen. You are likely to come across three main pricing models in your research: flat-rate, interchange-plus and tiered pricing.
In addition to the rates you pay for each transaction, the credit card processors that use the interchange-plus and tiered pricing models charge account maintenance fees. These include a monthly fee, a monthly minimum, payment gateway fees, a PCI compliance fee and various network fees. Some processors may also charge a setup fee, a payment gateway setup fee and others. These fees all vary by processor, so request a breakdown of all pricing and fees in writing, then read the contract before signing it to verify everything you’ll be required to pay. What is the cheapest way to accept credit card payments online?The cheapest way to accept credit card payments online comes down to your business’s situation. A small business with less than $3,000 in monthly credit card sales is in different circumstances from a larger-volume business, and the processor that benefits one might be a detriment to the other. For the low-volume merchant, using a processor that has flat rates and provides its services on a pay-as-you-go basis is more cost-effective than working with a processor that charges multiple account maintenance fees, even if that processor’s transaction rates are lower. Once a small business eclipses $3,000 in monthly volume, though, a processor with lower rates might be more cost-effective, even with the associated fees. No matter which type of processor you choose, avoid long-term contracts if you are unsure of the future of your business. Some credit card processors offer month-to-month terms and don’t charge early termination fees. Even though most processor contracts have a standard three-year term, many sales reps are eager for your business and will offer a month-to-month contract if you ask for it and their management team allows it. How do you accept credit card payments on Square Cash and other apps?You should accept credit card payments on mobile wallets or peer-to-peer applications only when you know and trust the people sending payment. It is much easier for a customer to dispute transactions and recoup money with these platforms, including Cash App (formerly known as Square Cash) and PayPal. Freelancers working with well-known clients, however, can benefit from peer-to-peer payment platforms. Simply set up an account and link your bank account to begin receiving payments or sending money to other users. For established businesses that want to accept payments from a customer’s mobile wallet, an NFC-enabled terminal or card reader is the way to go. NFC-enabled readers allow you to accept contactless payments, so your customers can pay with apps like Google Pay or Apple Pay and your business is more protected from chargebacks and transaction disputes. Accepting credit cards: A must for customer serviceIn the modern business landscape, it’s imperative to accept debit and credit cards. Cards have become such a ubiquitous payment method that many customers don’t carry cash any longer. Accepting credit cards is a means of boosting customer satisfaction and driving more sales. Choosing the right credit card processor for your business can ensure not only that your customers are happy but that it doesn’t cost you an excessive amount to accept credit and debit cards. Credit card payment FAQsWhat are the benefits of accepting credit card payments?Accepting credit card payments makes it more convenient for your customers to buy from you. This, along with the fact that cardholders generally spend more than cash buyers, means that accepting credit cards will help you increase your overall sales. Especially if you have an e-commerce business, accepting cards is a must, since 90% of online purchases are made with credit cards. What types of business can accept credit card payments?Nearly any type of business can accept credit card payments, including the following:
Will I get approved for a merchant account?Getting approved for a merchant account is not a guarantee, but if you have an existing business, it is likely you’ll be approved. Certain things make it easier to get approved and may lower your costs once you have been approved:
If you are missing one or more of these qualifications, you can probably still get approved, but with higher costs. How long will it take before I can begin accepting credit card payments?This depends on the size and complexity of your business and what equipment you have ordered. An online-only business can get set up on the same day it signs up in some cases, but the setup for an established company with multiple locations can take up to 48 hours, plus a couple of days for the POS or card reader equipment to be delivered and set up. Jennifer Dublino and Simone Johnson contributed to the writing and research in this article. How can small businesses accept credit card payments online?The traditional way to accept credit cards is to open a merchant account with a bank or other financial institution. A merchant account is a special type of bank account that allows you to accept payments. With a merchant account, you'll likely have to buy your own hardware and negotiate your fees.
How can I accept credit card payment for my business?If you want to accept credit card payments, you can do it one of two ways: merchant accounts or payment service providers. A merchant account is an account that you open with a bank to accept credit card payments.
How can I accept credit card payments instantly?You can set up an account with a payment service provider, like PayPal, Stripe, Square, Shopify or Clover, to get all the services you need to process credit card payments in one place.
How do I accept credit card payments on my website?The common methods of accepting credit card payments is either by using your own merchant account or by utilizing a payment gateway account, also known as a third-party merchant. An internet merchant account gives you the ability to process credit cards and can be obtained through a bank.
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