Some small business owners are reluctant to accept credit card payments because of the assumption that this form of payment is difficult and expensive to set up and run. However, if you do some research you will realize that many businesses are now taking full advantage of credit card processing platforms through payment gateways and merchant accounts. They’re not incurring the outrageous fees and charges that people have associated with accepting credit card payments for so long. But how are they doing it?
We’ll break down what you need to know and provide fresh insight for you and your business. You should start by picking the best merchant account provider that enables small business credit card processing in your area, and understand their plans and rates.
There are many different ways to collect credit card payment from your customers. These include collecting online payments, mobile payments on your phone, credit card readers/terminals and more. Take note that these transactions will require you to invest in different types of hardware and software. Many merchant account providers will give you a free EMV credit card reader with signup, or offer discounts on the required credit card processing terminals for your small business.
The security of your transactions
To accept credit card payments for your small business, you’ll need to agree to PCI requirements otherwise known as Payment Card Industry Data Security Standards. Any method or transaction will require some vigilance that goes towards ensuring the hardware/software used is secure — although some will be more security-intensive than others.
If you’re using a card imprinter, you will be required to document and implement procedures for handling and destroying imprinter slips. This will make it harder for anyone to get hold of credit card information through whichever means.
Infringing PCI requirements will result in hefty fines and the possibility of losing your ability to process payments using credit cards.
The steps involved in collecting and processing credit card payments
When it comes to thinking about how to start collecting credit card payments, you’ll need a basic understanding on how the whole setup works. Here are the steps:
(a) Collect credit card information
You’ll obviously need to collect credit card information from your customer and transfer it either electronically or manually to a platform that can process them. There are 3 ways of doing so. You can feed the information into an online virtual terminal, collect the information via swiping the card through a terminal (card reader), or write down the information manually.
The moment information has been entered as described above, the merchant account provider will run a check to see if the account exists and has enough money for that transaction. If everything looks good, they’ll charge the card.
Also, regardless of which method you use, a credit card payment-processing specialist will be involved in managing the flow of money electronically through the system. This specialist also works with other systems that provide the interface to enter payment information.
(c) Depositing money in the bank
This is the most critical step as it involves receiving the money from the transaction. Your payment processor will deposit the funds in an account called your merchant account. Once this step is completed, the funds will automatically reflect in your bank account.
Your payment processor should recommend which banks to work with. And like any other service out there, you’ll be required to shop around to get the best rates. Take note that credit card companies will charge fees on a per transaction basis. Generally, the fees you pay vary with their terms and size of transaction. If you conduct low volume transaction, a payment processor that targets large volume transactions may not be the best for you.
Methods for accepting credit card payments
Swipe terminals / card readers
If you plan to receive high volume payment of goods and services, then consider the first method, which involves setting up a swipe terminal. This terminal allows the customer to swipe their card in order to complete the transaction. Many credit card readers and terminals will even print out a receipt after the transaction is complete. Also, take note that these credit card machines will work on an in-built battery or require a power source. They will also require a phone line for processing information in real time, although some will store this information until a phone line is available for transferring that information.
Mobile devices – iPad POS & mobile credit card readers
The world of mobile phones and tablets has made it easier to accept credit card payments and transfer that information over 3G or 4G networks. You can either enter that information manually, or swipe the card with your mobile credit card reader.
The obvious advantage of this method is that it allows remote processing of information as long as you have a mobile device. Mobile devices even require less hardware to use when collecting payment information, thanks to a number of merchant account apps that allow online credit card processing.
Virtual terminal & online payments
With this method, you will just enter that information in an online form and process it over the web. The advantage of this method is that it doesn’t always require any hardware to work, and you can accept payments from anywhere at anytime.
There are many more ways to process credit card payments for your small business. You may only choose one method based on convenience and cost associated with that particular method, but don’t look solely at the cost. Having more payment options can increase your sales by attracting more customers and delighting them in the payment process. Also, most of these methods are straightforward, and you should be able to find one that works for you. Feel free to comment below and mention what works best for you and your business.