Accepting credit cards is one of the most important decisions a small business will ever make. Credit cards open a world of opportunities, from increasing flexibility to boosting sales by giving customers a wider range of payment options. And as mobile payments increase in popularity, cash-only businesses are truly missing out.
"The world is moving further away from paper and more toward mobile and electronic," said Greg Hammermaster, president of Sage Payment Solutions, the payments division for Sage North America. By not accepting credit cards, cash-only businesses aren't just falling behind competitors that are on top of tech trends, but also significantly losing out on sales by failing to meet customer expectations.
"Many customers do not even keep cash on hand anymore because they expect businesses of all kinds and sizes to accept credit card payments," Hammermaster said. Although some businesses cite credit card processing fees as a reason for their cash-only policies, these businesses will nonetheless lose money from missed sales. "Credit cards can be more expensive to accept than cash or checks, but some customers prefer only to use credit cards," he said. "Asking customers not to use a credit card can mean sacrificing repeat sales."
The benefits of accepting credit cards also extend to business-to-business (B2B) companies, which can pick up new customers by being credit-card-friendly, Hammermaster said. "[They are also] well positioned as a first alternative when a competitor is out of inventory," he said.
Choosing a credit card processor, however, can be a daunting task. Hammermaster provided the following tips on what to look for in a credit card processing service.
Payment Card Industry (PCI) compliance is a requirement for any entity that touches sensitive credit/debit card data. A good payment processor ensures you are up-to-date on the latest best practices to protect your business and customers. PCI-certified payment platforms can improve your PCI compliance as a merchant and ensures all connected payment solutions never store or transmit unencrypted credit card data. In return, your PCI audit is more streamlined. More importantly, your business is secure, and your customers' data is safe.
Integrated payments with accounting solutions reduces both time and labor costs. In fact, a recent study sponsored by Sage revealed that businesses save almost 5 minutes per transaction by processing credit card and Automated Clearing House (ACH) payments integrated with the business's accounting and enterprise resource planning (ERP) systems.
As the recent data breaches at Target, Neiman Marcus and Michaels stores illustrate, payment security is becoming more challenging, and the proliferation of Web and mobile payment solutions increases these risks.
Software startups and smaller, independent payment processors may not be as savvy about payment security requirements and secure programming methods, so security holes can exist and be exploited by hackers looking for high-value targets.
Make sure your payment processor has a proven track record of handling payments from both a fraud and security perspective, as well as a good industry reputation for adequately handling all of an organization's payment-processing requirements. You should also make sure your payment processor is on solid financial footing and will be around for the long term.
Business News Daily's sister site Top Ten Reviews does in-depth reviews to help businesses find the best credit card processing services. Here are Top Ten Reviews' top three recommendations, all of which accept the major credit and debit cards, and include the following fraud-protection features: address verification, real-time processing, Secure Socket Layer (SSL) encryption and card verification value (CVV).
Customer service: Flagship has 24/7, toll-free phone and email customer support.
Internet-based features: Offers a merchant account, a virtual terminal and a payment gateway through the secure, industry-standard Authorize.net.
Costs: Flagship has one of the lowest estimated monthly credit card swipe and key-in fees available, charging $4, or 0.38 percent to 1.58 percent. Other costs include a monthly minimum fee, gateway fee (if applicable) and statement fee. Business News Daily readers can get a free quote on Flagship's service by calling (866) 522-3925.
Internet-based features: Offers a merchant account, a virtual terminal and a payment gateway service via Authorize.net.
Costs: Card-present transactions have a 20-cent fee and an average discount rate of 0.35 percent to 1.55 percent, while card-not-present transactions have a 22-cent fee and an average discount rate of 0.95 percent to 1.95 percent. Other costs include a $7.95 monthly gateway fee and $7.95 monthly statement.
Internet-based features: Offers a merchant account and stand-alone virtual terminal that can also be used with an e-commerce shopping cart. The company also uses the Authorize.net payment gateway.
Costs: Leaders' competitive rates include card-not-present discount rates of 0.89 to 1.99 percent with a transaction fee of 10 cents to 26 cents, or card-present discount rates of 0.35 to 1.58 percent with a transaction fee of 10 cents to 18 cents. There is also a payment-gateway fee of $8 a month, and a statement fee as low as $5 a month.