Do you want to know the best ways how to accept cards for small businesses? When beginning your own company, one of the factors you’ll need to consider is how your clients will pay you. Cash is the most basic payment option, although it is only one of the most common.
Accepting credit cards for small businesses is unquestionably in your best interests. To assist you in getting started, we’ve divided the procedure into three manageable phases and highlighted the finest payment processors to utilize.
Credit Card Definition
A credit card is a tiny rectangular plastic piece of metal issued by a bank or another financial service company that allows cardholders to borrow money and use it to pay for goods and services at businesses that accept cards. Cardholders must repay the borrowed funds, plus any applicable interest, plus any extra agreement costs, in whole and on time by the billing date.
In addition to the standard credit line, the credit card company may provide cardholders a second cash line of credit, allowing them to borrow money in the form of a cash advance that can be accessed via bank tellers, ATMs, or credit card comfort checks. Cash advances offer different conditions than transactions that utilize the primary credit line, such as no time limit and higher interest rates.
Borrowing limitations are often determined by issuers based on an individual credit rating. Most companies accept credit cards, which are one of the most common payment methods for purchasing consumer products and services.
Types Of Credit Cards
Banks, credit unions, and other financial organizations issue significant credit cards such as Visa, Discover, Mastercard, and American Express. Many credit cards entice clients with perks like airline miles, hotel suite rentals, gift vouchers to big shops, and cashback offers on purchases. These credit cards are sometimes referred to it as rewards credit cards.
Several prominent retailers provide personalized credit cards to increase customer loyalty, with the store’s name emblazoned on the front. Although applying for a shop credit card is often easier than qualifying for a major credit or debit card, a store card may only be used to make purchases from the issuing retailer, which may provide cardholders benefits, including special discounts, promotion alerts, or special deals. Some large retailers also provide co-branded major MasterCard and Visa credit cards that can be used anywhere, not only in their shops.
Secured credit cards are a kind of credit card that requires the cardholder to pay a security deposit in order to secure the card. Such cards provide limited credit in the form of security deposits, which are often reimbursed if users demonstrate regular and responsible card use over time. Individuals with poor or no credit frequently apply for all these cards.
A prepaid debit card, like a secured credit card, is a secure payment card in which the available amounts match the money in a connected bank account. Unsecured credit cards, on the other hand, do not need security deposits or collateral. These cards frequently offer higher credit limits and lower interest rates than a secured card.
How to Accept Credit Card Payments
✅Locate a Credit Card Processing Company for your Small Business
Several payment processing companies provide comparable services. Consider how much credit card processing you will do in person, online, and via the phone. Consider which credit cards you will accept: Visa, Discover, Mastercard, American Express, etc. Processing costs vary depending on transaction type and card network. It is in your best interests to pick the supplier with the most inexpensive costs for the types of transactions & credit cards you will be processing the most.
You should also evaluate the number of transactions your company will handle since some providers provide better rates for handling more transactions. If you exclusively do business online, ensure the credit card processor you pick is simple to connect with your website. For physical stores, study what hardware you’ll need to buy, like payment terminals, to check whether they’ll work with your present point-of-sale system.
Beginning the research process might be daunting. To help you get started, we’ve chosen some of the most efficient and cost-effective methods to take credit cards for small companies later in this article.
✅Create a Merchant Account
Create a merchant services account with your credit card processor when you decide on one. While you may currently use popular providers such as PayPal for personal transactions, you will need to open a separate business account for your firm to accept credit card payments. Opening a merchant account typically entails submitting basic information about your company and connecting to the bank account where money will be placed.
✅Install Payment Terminals
The last step in accepting credit card payments is to install payment terminals across your organization. If you have a physical store, this phase entails acquiring and installing hardware, such as a card reader or a POS system, if you don’t already have one. Several card readers are on the market, including those that take payments through swipe, inserted chip, or contactless touch.
If you want to sell anything online, you’ll need to set online payments. When you’re utilizing an e-commerce platform like Shopify, their payment interface will be included. If you build your website, you may need technical assistance from your card processing provider and website developer to add credit card processing for small businesses to your website.
Don’t forget to check for training materials from your payment processor to learn how to get the most out of your gear and software.
✅Determine How you Will Receive Payment
To begin, choose how you will take credit card payments. The major alternatives are:
▪️Payments made in person
▪️Online transactions
▪️Payments using mobile devices
Depending on the nature of your company, it may be obvious what kind of payments you will take. For example, you will only take online payments if you offer online services.
Other sorts of companies may need a mix of payment options. For instance, suppose you have an online e-commerce website where you sell crafts, yet you also sell them in person at craft fairs. In such a situation, you would need both mobile and online payments. On the other hand, a new restaurant may need to take predominantly in-person purchases while simultaneously accepting online payments for to-go orders. You are the expert on your company, and only you can determine how to take payments.
✅Select a Payment Processor
You used to require a merchant account to take credit card payments for your small company. Payment processing, point-of-sale systems, or credit card terminals would be available via your merchant account. While merchant accounts are still available, they sometimes come with expensive fees and long commitments. And, because of advancements in technology, there are many more economical solutions accessible today.
A payment processor and payment service provider offer a comparable service to a merchant service without the need for you to create your account. They accept credit cards and can provide whatever hardware you want without the price and complexity of a merchant account.
When you’ve decided how you’ll collect payments, it’s necessary to choose a payment processor. There are several payment service providers to select from, making it difficult to determine which one is the finest.
✅Purchase the Necessary Gear and Software
Depending on the nature of your firm, you may need hardware or software. You must install a payment gateway on your website if you operate a fully online company. The actual hardware is required for companies taking in-person and mobile payments. Some payment processors would even provide you with the POS hardware you’ll need to take payments in person.
Credit Card Acceptance in Person, Online, and by Phone
There are three major ways to say, “we take credit cards!” Businesses may take credit card payments in person, online, or by phone. These approaches each have their own set of technical requirements and expenses.
👨💼In-person Payments
Brick-and-mortar businesses, on-site service providers (such as plumbers), and mobile business merchants (such as food trucks or farmers’ market vendors) may all benefit from in-person credit card processing.
The consumer presents the card and purchases these transactions. Because the cardholder & card are present for these transactions, the risk of fraud is reduced; hence in-person transactions often have lower costs than other sorts of purchases. To accept credit card payments in person, you’ll need a card reader and even a POS system.
💻Online Transactions
Businesses that depend on online credit card processing include:
- E-commerce stores.
- Restaurants that take online orders.
- Enterprises that offer digital services.
Processing costs for online purchases are often greater than those for in-person transactions. You’ll need an online storefront, like an e-commerce shop or website, and a payment gateway to take credit card payments online.
📞Phone Transactions
Restaurants routinely utilize card-not-present transactions to pay for takeaway orders which often take place over the phone. The consumer gives the merchant their credit card number, and the merchant manually enters that data into their card reader.
Because they represent the greatest risk of fraud, these transactions often attract the highest processing costs. A credit card reader, a POS, or an internet payment gateway is required to handle credit card payments over the phone.
What is the Cost of Accepting Credit Cards?
The cost of each transaction is determined by the type of card acceptance and the pricing plan you choose. You will most certainly come across three price models in your investigation: flat-rate, interchange-plus, and tiered pricing.
💰Flat Rate Pricing
Flat-rate pricing, often used by payment processors such as Square and PayPal, refers to predetermined fees for certain transactions. PayPal, for example, charges 2.7 percent for a card-present transaction, which means the card was swiped in person. PayPal charges 2.9% + 30 cents per transaction for internet transactions. It charges 3.5% + Fifteen cents per transaction for cards entered over the phone.
The higher fee is due to the higher risk of fraud connected with this payment option. With flat-rate pricing, there are often no extra costs or long contracts, making it suitable for firms that handle less than $3,000 a month.
💰Interchange Plus Pricing
This price model is based mostly on the interchange rate which all credit card processor pays, plus a markup fee charged by the processor. Because it is based on some kind of universal rate, it is the most transparent approach possible. In this price scheme, the markup, which is how the processor generates money, is frequently adjustable.
It is calculated as a percentage plus a transaction charge. For example, you may be billed 0.25% + 15 cents. Remember, that’s how you’ll pay in addition to the transaction’s interchange rate.
💰Tiered Pricing
This pricing model categorizes transactions as qualified, mid-qualified, or nonqualified. Qualified transactions are often done using simple debit, and credit cards scanned at a machine. In a tiered pricing plan, these are the lowest charges. Mid-qualified purchases, which often incorporate physically swiped rewards cards, are more costly.
Finally, the most expensive type of transaction is a nonqualified transaction, which includes premium rewards cards & card-not-present operations, such as when you input card numbers that your customers read to you on the phone.
Credit card processors that employ the interchange-plus & tiered pricing models levy account management fees in addition to the transaction rates. A monthly cost, payment gateway fees, a monthly minimum, a PCI fee, and different network fees are among them. Some processors may charge a startup cost and a payment gateway setup fee, among other things.
These prices differ for every processor, so seek a written breakdown of any pricing and fees, then read your contract carefully before signing to ensure you understand everything you’ll be expected to pay.
Benefits of Accepting Credit Cards
Accepting credit cards provides various advantages for your company. Here are some of our favorites:
📌Accepting credit cards will frequently increase your current sales.
According to studies, their volume almost immediately increases when businesses switch from accepting cash to accepting credit cards.
📌It will provide legitimacy to your company.
When you show credit card logos as an accepted mode of payment in your storefront or on your website, it creates a feeling of familiarity and confidence in the eyes of prospective clients. When a consumer believes in you, they will conduct business with you.
📌Accepting credit cards may help you enhance your cash flow.
Aside from higher sales, your company will profit from having the revenues of payment card transactions put into your bank account as soon as possible. There will be no more waiting on checks to clear or submitting time-consuming invoices and hoping for payment. We normally get your cash to you in 48 hours following the transaction at TSYS.
📌Credit cards are used for more than 90% of internet transactions.
If you sell ANYTHING on the internet and do not take credit cards, you exclude most prospective customers.
📌Credit cards encourage impulsive purchases.
Cardholders are more wealthy, buy more on impulse, and make greater purchases since they are not restricted to spending just the money in their wallet.
📌Convenience
Allow your customers to choose the most convenient method of purchasing from you. Aside from convenience, many customers want to utilize their credit cards to receive points such as airline miles, points toward merchandise, and cash back. Cardholders are much more likely to purchase from a business that accepts credit cards rather than one that only accepts cash. Don’t turn away a customer because you don’t accept credit cards.
📌Cardholders tend to spend more.
The typical order is bigger when buying with a card than when paying in cash or just a check. Larger orders equal more profits for you.
📌Competition
Take a look around; your competitors are already taking credit cards. To compete and thrive, you must accept cards.
📌A merchant account is reasonably priced for what it provides.
Because credit card processing is a competitive market, even the tiniest mom-and-pop shop may get the best credit card processing offer. When a firm begins taking credit cards, the boost in sales usually more than compensates for the processing expenses, so they come out ahead.
📌The setup is quick and simple.
Many business owners believe that setting up a merchant account & services to take credit cards is time-consuming and difficult. No way, not with TSYS! Within as little as 24 hours, we can get you up and running.
Frequently Asked Questions
As an individual, how can I take credit card payments?
Can I take credit card payments if I do not have a business? You do not even have to be a legitimate company to open an account with a payment processor like PayPal or Stripe. Using these accounts, you may take payments with credit cards from anybody, including friends, relatives, customers, and clients.
As a freelancer, how can I take credit card payments?
Accepting credit card payments using a platform such as PayPal, Stripe, or Venmo is a simple and safe method for freelancers to charge customers. Plugins may also create a credit card gateway on your website. This post will go through some of the finest credit card processing systems for freelancers.
What are the disadvantages of taking credit cards for a business?
Minimum monthly charges may be required. PCI Compliance fees will be levied against you. Chargebacks: Credit card charges may be disputed by consumers. You may face a chargeback if your consumer is displeased with your goods.
Is it necessary for my small company to take credit cards?
Your small company doesn’t need to take credit cards, but you may lose customers if you don’t. Many people now choose to pay for products and services using credit cards.
How long will it take for me to be able to accept credit card payments?
This is determined by the size & complexity of your firm and the equipment you have bought. In certain situations, an online-only business may be set up the same day it signs up, while setting up an established firm with numerous locations might take up to 48 hours, plus a few days for the POS or card reader equipment to be delivered & set up.
What is the most cost-effective method of accepting credit cards?
Using a third-party payment processor is the cheapest solution for most small companies to accept card payments. While transaction fees may be somewhat higher, you will save monthly fees, hardware expenditures, and setup fees. It may be less expensive to negotiate the transaction costs with a merchant account for firms with many credit card purchases each month.
Final Thoughts
Customers are increasingly using credit or debit cards to pay for small businesses. Accepting credit cards allows them to use the payment method that they prefer. Whatever payment processor you choose for your small business, you’ll stop wasting money and start putting it in your pocket. Do you want to know which home appliances use the most electricity? Click here!
