Credit card processing allows you to accept payments from customers who pay using a credit card, debit card or mobile wallet, like Apple Pay or Google Pay. You need to be able to accept these payment methods because that’s how most customers prefer to pay. Cash use continues to decline, particularly in light of the pandemic as customers and merchants opt for contactless and online payments. With contactless payments, consumers tap their mobile device, contactless credit or debit card, or wearable on the payment terminal to check out. This payment method is quicker and safer than handing cash to a cashier or swiping a credit card. Most of the top POS providers and credit card processors support tap-to-pay.
What Are the Benefits of Credit Card Processing for Businesses?
Accepting your customers’ preferred payment method comes with a couple of additional benefits. First, customers can spend more when they shop with a credit card than when they pay cash. Second, you won’t lose potential sales from customers who don’t carry cash.
What Are the Basic Concepts Business Owners Should Know About Credit Card Processing?
You have a lot of options for credit card processing, but some processors are accessible for nearly every business, even solopreneurs and freelancers.
If you are an entrepreneur or a freelancer who’s just starting out, consider a mobile credit card processing company such as Square, which has flat rates, no contracts, a free mobile credit card processing app, and affordable card readers that connect to a phone or tablet. Then, as your business grows and your processing volume increases, you can add more equipment and features, or you can switch to a more advanced payment processing service.
Here’s why we like mobile credit card processors for new businesses:
- Low startup costs. You already have a smartphone or maybe even a tablet; the only thing you need to buy to start accepting credit cards is a card reader. Some processors give you a free swiper when you sign up, but you want a model that accepts chip cards and contactless payments. These readers cost less than $100 (usually $20 to $50).
- Pay-as-you-go fees. Most flat-rate processors charge you only when you run a card, and you pay a flat rate for each transaction. This rate looks higher than what some processors advertise, but that’s because you don’t pay monthly account service fees. If you opt for a full-service processor, look for one that has interchange-plus pricing, which is more transparent and economical than tiered (or bundled) pricing structures.
- No monthly minimum. Some processors have a monthly minimum, which means you’re required to process enough sales each month to generate a certain dollar amount in processing fees. If you rarely accept credit cards, you don’t yet know how much you’ll process each month, or you have a seasonal business, you shouldn’t work with a processor that charges this fee.
- No contract. Standard credit card processing contracts have three-year terms and automatically renew for additional one-year terms with just a 30-day window at the end of the term to cancel. If you want to cancel your account but you miss that window and then cancel, you’re charged an expensive early-termination fee. If you choose a full-service processor, look for one that has month-to-month terms. The best credit card processors don’t make you sign a lengthy contract to keep your business.
Why Is Support for Offline Transactions Beneficial to Merchants?
The internet is usually reliable, but outages do occur. If you are a merchant that relies on the internet to process payments, you’re out of luck if your provider doesn’t support offline transactions. Thankfully, most do.
With this type of transaction, the customer checks out normally, with the card data encrypted and stored on the terminal until an internet connection is established. Once the merchant is back online, the information is sent to the merchant’s bank account and card network. That means your business won’t lose sales during an internet outage. If you want to accept card payments outside your establishment, this feature also proves handy.