How to Accept Credit Card Payments

Many entrepreneurs today are too young to remember the bulky plastic machines that carbonized credit cards next to handwritten receipts in the past. Fortunately for us, advancements in payment processing technology over the past 30 or so years have made accepting credit cards simpler. Furthermore, many top credit card processing firms now combine payments with other capabilities like inventory control and e-commerce.

In just a few easy steps, we'll show you how to accept/take credit card payments. We'll give you an overview of the fundamental procedure and a few alternative payment processing options so you can choose the solution that best suits your requirements and price range.

How can Credit Card Acceptance help Small Businesses grow?

Maintaining strict control over cash flow is essential to running a small firm. Adding credit cards to your list of accepted payment methods is one way to make money flow in and out of your company easier.

Giving clients the option to pay with a credit card may ease the strain of managing cash flow and end the wait times for checks to clear. If your company doesn't already, it may be easier than you think to start accepting credit card payments.

Advantages of Accepting Credit Cards

Giving credit card payment options to your clients may benefit your company in various ways and promote expansion. The National Federation of Independent Business claims that taking credit cards has several advantages.

Important justifications for accepting credit cards include the following:

• Enhancing cash flow since may shorten payment delays and expedite payments.
• Gaining consumer confidence in your company.
• An increase in sales volume occurs because more payment options will be available to your clients.

Consider the increase of other payment methods if you're still not convinced that accepting cards is a good idea. According to Deloitte research, using credit cards, approximately $4 trillion in payments were made in the US in 2018. Credit card transactions rose between 2016 and 2018, while the proportion of Americans who paid with cash fell.

The trend may continue if demand increases for digital and contactless payments. For instance, about 64% of small firms said they were attempting to sway customers away from utilizing cash and cheques in favor of electronic payments like credit cards due to the 2020 economic crisis. Since Americans do more of their transactions online, including when purchasing from brick-and-mortar establishments like neighborhood eateries that provide delivery services or shops that allow curbside pickup, credit cards are becoming even more popular as a form of payment.

Which kinds of companies are able to accept credit card payments?

In a nutshell, almost any type of company can accept credit card payments. You could decide to take credit cards, for instance, if:

• You manage a physical establishment.
• Your company runs entirely online.
• You run a conventional small business with staff members.
• You operate as a lone owner with no staff.
• You work as a freelancer or independent contractor.
• Your company is mobile (such as a food truck or dog grooming service).

Accepting credit card payments in any of those situations could be advantageous if it is simpler for customers to make payments. Instead of being based on the sort of business you run, choosing not to take credit cards in your place of business is typically a matter of personal preference.

How to accept payments made using a credit card?

You must take a few actions if you want to start accepting credit card payments for your small business. But once a system is in place, it's rather simple to monitor and control.

1. Select a Method for Accepting Credit Card Payments

Choosing when and how to take credit card payments is the first step. You can accept payments made by credit card, for instance:

• In-person.
• Using a portable card reader
• Through telephone.

You could select a different alternative depending on the kind of business you run. For instance, if you own a physical retail business, you may accept credit cards at the register in person or online if you've set up an e-commerce site. However, employing a mobile card reader could be your best bet if your company is mobile.

2. Select a System for Processing Payments

There is more to accepting a customer's credit card payment than just swiping or inserting the card. An electronic evaluation and processing of the customer's card and account information are required to approve the payment to you. All of this takes place instantly behind the scenes digitally, but to make it all happen, you must cooperate with a payment processor.

If you wish to accept credit card payments, you have two options: merchant accounts or payment service providers. You create a merchant account with a bank to receive payments made by credit card. Companies called "payment service providers" let you take or accept credit card payments without opening a merchant account.

A payment service provider could impose cheaper processing and transaction costs out of the two. Therefore, if your company is newer or receives a limited amount of credit card payments, it can be a good fit for you. A merchant account, however, could be a simpler method to manage credit card payments if you make many transactions using credit cards.

3. Install the Hardware and Software necessary for accepting Credit Cards

You may need to upgrade your point-of-sale hardware and software to take credit card payments after you have a system for processing credit card payments.

For instance, if you own a physical store, you might need to install an EMV chip-enabled card reader at the register or buy checkout software to take card payments. Some payment service providers will also provide you with the tools you need to start collecting credit card payments in-person or on the go.

How to accept Payments via Credit Card online?

Nowadays, a lot of small firms operate entirely or mostly online. Giving your consumers the option to pay with a credit card online, regardless of the sort of business you run, may increase sales and provide them additional convenience. Without it, e-commerce businesses, restaurants that take online orders, and providers of digital services could not operate.

It's simple to offer this service to your clients. You'll also need to set up a payment gateway if you intend to accept credit cards online. Once more, your merchant account or payment service provider coverage may cover this.

You'll require a digital storefront, and the most popular method to get one is to open an account with an e-commerce platform provider. Due to the significance of credit card payments in modern e-commerce, all of the main platform providers will let you accept credit cards as a means of payment.

Just keep in mind that there is always a payment involved. Processing costs for credit card transactions made online are often greater than those made in person.

Tips for Small Businesses on how to use Credit Cards safely

Despite the benefits, there are certain hazards associated with allowing clients to pay with credit cards in your small business. The following are some such instances:

Fraud: There are credit card systems that are safer than others, and there have been occasions where credit card fraud has harmed organizations.

Transaction Costs: The processing costs of taking credit cards can quickly mount up to a significant business expense if your margins are extremely thin. Small businesses with narrow profit margins must determine if taking credit cards is profitable.

Chargebacks: When customers are dissatisfied with a purchase, they challenge the transaction by initiating a chargeback. Even if you are correct and the consumer is wrong, disputing chargebacks is time-consuming and expensive.

Small businesses should be cautious and adhere to the following recommended practices for credit card payment systems if they wish to take credit cards but also want to minimize these risks:

• Use only reputable, recognized software and hardware. There are many different payment processors available nowadays, but you should always verify the credentials of the business you want to cooperate with.
• Keep consumer credit card information off-site. You are free to do so, but doing so leaves you extremely open to attack. Having a use-and-delete procedure is preferable.
• Your staff should get training on handling credit card information and identifying potentially fraudulent transactions. In the long term, this can save you a tonne of time.
• Check the billing and shipping addresses. This can significantly lower the likelihood of fraud.
• When taking credit card payments online, be cautious. If your business accepts a bad or stolen credit or debit card for this type of payment, you are fully responsible for the loss.

Pay Close Attention to Credit Card Processing Costs

Both a merchant account and a payment service provider have service fees that must be paid in order to accept credit cards. It would be best if you think about how such fees will affect your operations and administrative costs as you prepare to accept credit card payments.

If the fees are likely to significantly reduce your profit margin, you may make up the difference by raising the price of your goods or services. Alternatively, you might charge a convenience fee or extra for processing credit card transactions that are less than a particular amount. To avoid any unethical acts, ensure you are informed of all state and federal laws pertaining to credit card fees.

Can businesses refuse credit card acceptance?

Yes. It's a bad idea for the company, though. Any company has the right to reject a payment method. The issue is whether doing so will impact their consumer base, especially given how increasingly non-cash payments are being used.

Is it possible to accept credit cards without a merchant account?

Yes. Using a third-party processor allows you to accept credit card payments without having a merchant account. You can accept these payments into a typical company account thanks to third-party processors, who operate according to a distinct business model. Very tiny businesses may find this to be a simple method to take credit card payments.

How much are credit card fees for small businesses?

A firm will normally pay 1.5% to 3.5% with each transaction's total in credit card processing fees.

You could have to pay between $1.50 and $3.50 in credit card processing fees for a $100 sale. These costs may be a considerable outlay for a small corporation.

The Bottom Line

These days, it's rare to find a small company that doesn't accept credit cards. This is due to the notion that offering clients as many payment choices as possible will increase customer satisfaction and drive more sales. Accepting credit card payments entails some risks and expenses, but these are typically more than offset by an increase in convenience and sales.