Credit Card Payment Options For Small Business – Home » Blog » Credit Card Processing » How to Set Up Credit Card Payments for Small Businesses
Learn how to make your business successful by getting a credit card with our tips on how to choose the right equipment and processor.
Credit Card Payment Options For Small Business
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You may have already heard that the use of cash as a payment method is declining. Few people carry a lot of cash (or any at all), preferring to use debit and credit cards when shopping. In addition, the spread of the COVID-19 pandemic has further reduced the percentage of cash payments, although it is not certain that this trend will continue when life returns to “normal”.
However, it is very important that your business can accept credit and debit cards, as well as other possible payment methods. You don’t want to miss out on all those special sales because disappointed customers walk away without making a purchase simply because they can’t bring their credit card and don’t have cash with them.
Unfortunately, paying with a credit card is complicated and expensive. In addition to the need to purchase the necessary processing equipment, you must go through an extensive underwriting process to be approved for a merchant account. (Note that payment service providers (PSPs) like Square offer simpler accounts that require much less paperwork.)
The payment processing industry is also notorious for charging mysterious percentages and other unexpected fees for each transaction. These are difficult to predict, making it almost impossible to predict the true cost of using your credit card in advance.
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We are here to help you. This article explains how to set up credit card processing for your small business. We will discuss the different options for card payments, including the hardware and software you will need. We will also show you some payment options that you may not be familiar with. Finally, we’ll point you to some additional resources that can help you learn more about the complex world of smart payment processing so you can make a more informed decision about accepting credit card payments for your small business.
Choosing a payment processor for your business requires a systematic set of steps. Before selecting a specific service provider for your processing needs, you should research your options carefully. However, once you get your account approved and start accepting credit card payments, it’s important to keep a close eye on your actual expenses.
Although exact numbers are impossible to arrive at, we estimate that at least half of small businesses in the United States are paying excessive fees for credit card processing. This is usually because they don’t follow the simple steps outlined below. Take the words of the first sales representative who walks in. At the door, if you don’t want to join this poor group, read on.
Your first step (and this will require a lot of research on your part) is choosing the right payment processor for your business. Most processors generally only offer one of two types of payment processing services: (1) true full-service merchant accounts, or (2) integrated accounts, where you can find payment service provider (PSP) accounts such as Square, Stripe. , or PayPal.
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Both methods of payment processing have advantages and disadvantages. Using a payment service provider will allow you to approve accounts quickly and easily. , small fees, and advance settings. However, you still have to deal with limited customer support options and a high risk of your account being closed or suddenly frozen. In addition, flat rate pricing becomes less expensive at higher monthly processing volumes.
Merchant accounts offer better account stability and generally lower processing rates, and require more underwriting to get the account approved. In addition to transaction costs, you also need to be aware of long-term districts, early cancellation penalties, and other significant monthly fees.
Unfortunately, there is no easy way to decide which option is better for your business. As a general rule, payment providers are best for businesses that do less than $5,000 per month; Those who do more than that are usually better off with a real merchant account. We recommend that you review both options and compare the estimated costs under each before making a decision.
Once you have identified a number of potential candidates (we recommend choosing at least three options), contact them and receive a quote. In addition to asking about per-transaction fees, don’t forget to ask about additional costs because these can add up quickly.
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Considering all the pricing models for card processing, it is difficult to make a like-for-like price comparison. However, if you make sure your contract can be canceled at any time, even if you make a mistake, you won’t be stuck with a bad processor for long. Remember that the basic exchange fees for processing transactions are passed on by your processor and are out of their control. However, the marks saved by your processor can be downloaded (reasonably).
There are four different types of processing rate plans, with markup switches and subscription pricing models that clearly reveal carrier tags, while flat rates and tiered pricing options do not. For a more in-depth discussion about pricing plans and how to determine which one you’re using, see our article, How to Determine Pricing Patterns in Your Processing Statement.
Unless your business is limited to e-commerce, you will need some equipment to manage your transactions. This can be a traditional credit card machine, a point of sale (POS) system, or even a mobile card reader that works with a smartphone or tablet. If you accept online sales, you’ll need a payment gateway to facilitate those transactions.
We describe these products and services in detail below. Now, note that none of this is free. You will need to buy, rent or lease your own processing hardware, and payment gateways and other software services will almost certainly cost you more. Also note that popular products such as Square’s line of terminals and card readers and Clover terminals and POS systems are proprietary and will not work with other vendors if you decide to change processors later.
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As far as hardware is concerned, we recommend buying the equipment outright and not renting it. Also, be very careful of the increasing use of “free” credit card readers, which require you to enter into a long-term contract.
This could be launching your business, changing processors, or perhaps moving from in-person cash sales to online sales. In any case, there are many aspects related to all this, from physical purchases / online stores, through hiring employees, preparing all legal documents. We have covered some of them on this website, but we have not covered most of them. In fact, there are so many things involved that we won’t try to cover them all here. Let’s say you get the best referrals from available sources, your grand opening is a huge success, and you need to apply for a new credit card.
In the process of running a business and starting to use payment cards, you will find that you will deal with duplicate customers, fraudulent charges, failed transactions and more. When dealing with these problems starts to become a real pain, take a deep breath and remind yourself that these are just normal problems associated with credit card processing. In the end, your reward in the form of increased sales will outweigh the inconvenience.
Unfortunately, starting a business is not the last step, and not even the most important. The most important step is to continue to monitor your monthly statements and double-check your credit card sales numbers on a regular basis.
A How To Guide For Small Business Credit Card Processing
Sometimes processors charge per-event fees to the wrong vendor. It is not necessary because your processor is broken. This could be a simple data entry error. But if you do not follow your words and speak, no one will correct the mistake. When you notice these additional charges months or years later, the manufacturer may refuse to refund you 100% of the overpayment. We see a lot of complaints about this on the Better Business Bureau website.
We will also remind you that some providers want to increase your rates and fees after you have been with them for a while (usually six months to a year). Unfortunately, this often happens without you being notified, so check your processing report closely.
Sellers can accept credit card transactions in person or online. Another type of transaction, mobile payments, has grown in popularity in recent years, with wireless hotspots and mobile card readers allowing businesses.
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