We’ll look at the best ways to accept credit card transactions, how much it will cost, and the other factors you should consider. We’ll also provide you with ways for companies to accept credit card payments.
To begin accepting credit cards, you only require two items to be able to process credit cards: a processing service, and a method to gather your customer’s credit card details. In each one of these areas the above, you’ll have a variety of choices to make, which can be daunting. To make it easier to understand, we’ll break down each of them so you can think about what’s best for the needs of your small-scale company.
Another aspect you should be aware of is the business credit score. This offers lenders, credit bureaus, and suppliers a notion of how reliable you are in the case of borrowing money. Similar to your personal score, having a higher score for your business credit informs potential customers that you’re more reliable.
The perfect credit score of 850 is difficult to attain, however an outstanding credit rating is more doable. If you’re trying to get the top credit cards as well as mortgages with affordable loan rates which could save you money over the long run – having a good credit score can assist you in getting approved. “Excellent” is the highest grade of credit scores that you can get.
If you’re a business proprietor and are looking to establish solid business credit, 850 credit score could be as difficult to keep as it can be to attain. For instance, if you take care to pay off a loan completely – a great financial decision that will free your funds for savings or other purchases, you’ll lower your credit score which could drop your score by up to 15 points.
Even if you have an extensive credit mix over long periods, it’s crucial to keep in mind that credit scores are just a record of the credit you have at any time and therefore likely to fluctuate often.
To use a payment processing service, you’ll need to decide on either a merchant bank account or an external payment processor (think PayPal or Square).To collect information about your card, you’ll have to determine whether you’ll accept payment online as well as in person or through the telephone.
Let’s look at your options a bit more in-depth.
Merchant Account vs Payment Processor
The most common method of accepting credit cards is to create a merchant account at a bank or any other financial institution. Merchant accounts are a specific kind of bank account that lets you accept payments.
With a merchant account, you’ll probably need to purchase the equipment yourself and negotiate the charges. These charges will vary depending on the credit card company or card issuer, and even the way of the card’s entry.
The quickest and most efficient method to start is to utilize an external third-party processor for payments – such as PayPal, Stripe, or Square. These are often “payment service providers” (PSPs). These companies manage your merchant account on your behalf and may even provide an electronic card reader free of charge. The fees are usually somewhat higher than an account with a merchant, however, they do not change according to the credit card’s service or network. This makes it simpler to know the amount you’ll pay every month.
How do you determine which option is the best one for you? If you have a large number of transactions using credit cards and you want to reduce your costs, then negotiating with merchant accounts could help you save money over the long term. However, the majority of small-sized firms prefer the convenience and stability of the PSP.
How to Accept Credit Card Payments Online
To accept credit card payments online, you’ll require something called the payment gateway. A payment gateway is a piece of software that permits your customers to securely transfer their credit card data with your processor for payment.
If you’ve seen the PayPal icon on any site this is an online payment processor. If you purchase from the Shopify online shopping cart it’s also an online payment processor.
A majority of payment service providers provide the use of a payment gateway in their offerings. This could be connected to your site or connect to an off-site account portal.
How to Accept Credit Card Payments in Person
When you’ve established the merchant account or the payment provider (PSP) then you’ll need the option to collect your card information from customers. It will differ based on the kind of business you operate. Here are a few options to think about:
- Point of Sale (POS) System: The software will monitor your inventory, products, and sales historical data. It might include a credit card reader, or permit the user to enter credit card data manually. A POS system can be a great choice for retail stores or restaurants.
- Card Reader or Terminal: This lets your customers take a swipe, or even insert their cards. It could also permit them to pay using contactless.
- Mobile Card Reader: This tiny device transforms your tablet or smartphone into a terminal for credit cards. They are a great option for food trucks, farmers’ markets, and other businesses that travel.
- QR Code: You show your QR code that you can customize for customers to scan. Scanning it will take them to a payment application that allows them to input the details for their credit card from their smartphone.
A lot of payment service providers offer some form of payment entry service at no cost.
How to Accept Credit Card Payments by Phone
If you’re looking to accept credit card payments via telephone calls it is necessary to have a point-of-sale system that lets you manually input card information. Your customer will read the details of their card as you type it in. This is referred to as a card-not-present transaction, and it is typical for establishments such as restaurants and florists.
Be aware that transactions made with cards not present are subject to a higher cost because of the increased chance of fraud.
To accept credit cards with your smartphone you’ll require an electronic card reader. These are connected to your phone through a plug-in or Bluetooth. They are offered as a magnetic swipe (magstripe) or EMV chips or contactless. They are provided by payment processors such as Square and PayPal.
How Much will it Cost to Accept a Credit Card Payment
In general, when discussing the costs of accepting credit cards individuals refer to transaction fees. They are the percentage of the price you have to pay for each purchase. The fees for transactions are often confusing as they could change according to specific factors.
If you have a traditional merchant account, the transaction charges could change depending on:
- Credit card network (Visa, Mastercard, etc.)
- Credit card type (business, rewards, etc.)
- Payment method (online or in person, via telephone or in person, etc.)
In addition to transaction charges as well as transaction fees, there are charges for setup, hardware as well as monthly subscriptions. These additional fees are more typical for the traditional merchant account. The majority of PSPs do not include these charges or they will not charge these charges as part of promotions.
Customers are using debit and credit cards in increasing numbers. Accepting credit cards will allow users to choose the payment method they like. Pick whatever payment processor suits your business and you’ll begin collecting payments directly into your bank account. This will save from the hassle of visiting your bank to deposit cash proceeds you received from your customers.