Technology has made it easier for any business to accept and manage credit card transactions. Yet, 55 percent of the nation’s 27 million small businesses do not accept credit cards. Why? Many small businesses don’t know how to get set up to accept credit cards and don’t understand how credit card processing works.
The Benefits of Accepting Credit Card Payments
Small Businesses that accept credit card payments experience:
An increase in customers. Sixty-six percent of all point-of-sale transactions are done with a credit, debit, or gift card.
An increase in customer sales. A study by Dun & Bradstreet found that people spend 12-18% more when using credit cards instead of cash.
An increase in the average sales transaction size. The Federal Reserve Bank of Boston found that the average value of a cash transaction was $22, compared with $122 for non-cash transactions.
How to Set Up Credit Card Payment Processing for a Small Business Merchant
Choose a Credit Card Processing Company
A Merchant who wants to accept credit card payments must partner with a credit card processing company, known as a merchant services provider. Payment processors open a merchant account for merchants to receive payments from credit card transactions. Credit card processing companies also facilitate credit card payments between the customer and merchants.
The processor acts as the go-between by:
- Collecting card information from the customer’s card issuing bank.
- Validating the card and payment amount available to transfer the payment amount to the merchant account.
- Within 24 hours or a few days, payments are digitally transferred from the merchant account to the small business’s bank account at a financial institution.
Negotiate the Credit Card Processing Fees
Credit card processors charge fees for the services they provide. Businesses can choose a subscription-based payment processing service with a monthly fee or incur fees per card transaction.
Payment processors have transaction fees that are either interchange-plus or flat-rate.
The interchange-plus fee model is where the processor charges the fixed interchange fee and an additional fee on top of that.
Flat-rate fees are a fixed rate, usually above the interchange rate.
Fees vary based on several factors:
- The type of credit card accepted (Visa, Mastercard, American Express, or others.
- The portion of credit card transactions you will process in person, online, and over the phone.
- The volume of card transactions your business will be processing.
Credit card processing fees typically range from 1.5 percent to 3.5 percent per transaction.
Purchase Credit Card Processing Equipment and Software
Payment processors expedite card transactions, and payment gateways securely transmit data so they can transfer money from a customer’s issuing bank to a merchant’s account. All of this happens in seconds.
In-Store Credit Card Payments
If you have a physical business location like retail stores or restaurants, an innovative credit card processing terminal can help attract more customers and make transactions easier. These days you have the choice of traditional countertop terminals that allow instantaneous payment authorization or (POS) point-of-sale systems which offer multiple additional features such as integrated inventory management possibilities and reporting for your entire business cash flow.
If you are purchasing new equipment, make sure it has EMV compatibility so that your customers can pay with the newer “chipped” cards. These updated cards have a computer chip instead of just relying on magnetic stripes and provide increased security for both merchants and cardholders as they cannot be easily duplicated or skimmed to gain unauthorized access to funds like before.
To get in the flow of contactless payment trends, make sure whatever equipment you choose, its NFC enabled. Near field communications technology is revolutionizing payment methods with its easy-to-use convenience. Apple Pay, Google Wallet, and Samsung Pay are just a few of the services that offer NFC payments for their customers. Found in smartphones, tablets, and even smartwatches, this technology allows you to quickly pay without ever having to pull out your wallet or card!
Mobile Payment Processing Equipment and software
If your small business is mobile, such as food truck vendors, craft fair, or farmer’s market merchants, you will want to process mobile credit card payments. For that, you’ll need a mobile credit card reader. A mobile credit card reader is portable and can plug into your smartphone and pair with a credit card application to accept credit card payments anywhere, so long as there’s an internet connection.
Online Businesses require an Online Payment method.
Ecommerce shops, companies that provide digital services, or any small business that makes sales online will need to set up online payments. If you’re using an eCommerce platform, your payments portal will come with their eCommerce platform. If you’ve built your website, you may need technical support from your credit card processor or website developer to add credit card processing ability to your website.
Card-not-present transactions typically take place over the phone and are commonly used by restaurants to pay for takeout orders or online businesses. This process involves the customer sharing their credit card number with the merchant, who manually enters that information into their card reader. To process credit card payments over the phone, you’ll need a credit card reader and a POS or an online payments gateway.
When you evaluate credit card processing companies for your small business, it’s essential to choose one that suits the needs of your business and charges fees you’re comfortable paying. Finical offers significant benefits that appeal to small businesses:
Acceptance of many payment types, including credit and debit cards, contactless payments such as Apple Pay or Google Pay
- Secure, PCI-DSS compliant online payment processing.
- Free terminal equipment with each account.
- Low transaction costs and receipt of funds within 48 hours.
- No Long-term contracts or termination fees.
Finical partners with its small business merchants to deliver quality, secure payment processing services. Shouldn’t you be working with Finical? Contact us today to set up fast and quick.