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Credit Card Fees For Small Businesses – Home » Blog » Credit Card Processing » How to Set Up Credit Card Payments for Small Businesses
Learn how to set up your business for credit card success with our tips on how to choose the right equipment and processor.
Credit Card Fees For Small Businesses
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With cash payments declining in popularity and more people using credit and debit cards than ever before, accepting these payments is essential for most businesses today. Simply put, being able to accept credit and debit cards will increase your sales volume.
Fortunately, adding credit card processing to your payment setup is easier than ever. A payment service provider (PSP) like Square can approve you for an account and let you start processing payments within a day or two. Traditional merchant accounts, while requiring additional time and paperwork to set up, are still a viable option and can save you money overall on high monthly processing volumes.
In this article, we’ll discuss the various options for card payments, including the hardware and software you’ll need to get started. We’ll also explain how to set up credit card processing for your small business. Finally, we’ll show you some additional resources to help you learn more about the complex world of payment processing, allowing you to learn more about how to accept credit card payments for your small business.
Merchants can accept credit card transactions in person or online. Another category of transactions, mobile payments, has become more popular in recent years as wireless terminals and mobile card readers enable businesses to accept payments almost anywhere.
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For businesses with physical locations (such as retail stores or restaurants), you need at least one credit card machine per location. Today, you have a choice between traditional countertop credit card terminals and POS systems.
Countertop terminals can process transactions, but most traditional models offer little or no additional functionality. On the other hand, a POS system can handle inventory management, employee scheduling and many other functions. Naturally, POS systems cost more than most countertop terminals, although tablet-based systems are more affordable (and mobile) than stand-alone POS terminals.
All modern processing hardware must at least support EMV card payments (Europay, MasterCard and Visa). EMV (or card “chip”) is now the standard method of accepting credit and debit cards in the United States. Because of the EMV liability shift in 2015, you may be liable for fraudulent transactions if you receive an EMV-enabled card using a magstripe instead of a chip. Although the old magstripe technology is slowly being phased out, it is still used to process hardware that can also process magstripe-only cards.
Most new terminals, card readers and POS systems also accept NFC-based payment methods. NFC (Near Field Communication) technology is used by digital wallet payment systems such as Apple Pay, Google Pay and Samsung Pay. It is now built into most modern smartphones, tablets and smartwatches. This technology came into use as more and more people became aware of its availability and convenience.
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QR code payments have become a popular alternative payment method for retail businesses. Interest in QR code payments has surged as businesses struggle to implement “contactless” payment methods to protect customers during the COVID-19 pandemic.
For ecommerce-only businesses, accepting credit card payments is easier because you don’t need physical hardware. However, you need a payment gateway or virtual terminal to accept payments from your customers.
A virtual terminal is a software application that turns your computer into a credit card terminal. Mail order and phone order businesses use them to manually enter their customers’ credit card data. It is combined with a card reader (usually Bluetooth or USB-connected) to accept card-present transactions. Virtual terminals can replace dedicated countertop terminals for retailers if you add a card reader.
A payment gateway is a web-based software service that connects your eCommerce website to your processor’s payment network. Payment gateways allow customers to enter credit card data from anywhere as long as they have Internet access. Most providers now offer a free payment gateway with your account as long as you use a proprietary gateway or Visa’s Authorize.Net. Note that you can generally use any gateway of your choice, but most providers charge a small fee per transaction in addition to the normal credit card processing fee if you use a third-party gateway with your account.
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For businesses that rely on invoices for payment, online invoice payment is the fastest and easiest way to send invoices and collect payments. It’s available from Square, PayPal, and many other accounting software providers. Many traditional merchant account providers now offer online invoicing services as well.
While sending an invoice via email is the quickest way to get paid, sending via text message is faster. SMS payment services allow you to send invoices to clients via text message, including a link they can click to send the payment.
When Square first introduced its original card reader in 2009, it was revolutionary. For the first time, merchants can accept credit or debit cards using their smartphone or tablet. Square was (and still is) a great choice for small businesses, startups, and seasonal merchants. Naturally, the company created many competitors and today, almost all merchant service providers offer some form of mobile payment system.
The system consists of an app for your smart device and a card reader that connects to it via Bluetooth or a headphone jack. Modern mobile card readers support EMV and NFC payments and generally cost less than traditional countertop terminals. Receipts are usually sent by email only, but some newer models can also connect to an optional receipt printer.
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For businesses that need to receive transactions in the field, mobile readers are lighter and cheaper than wireless terminals, which typically run at least twice as long as their wired cousins and require a separate wireless data plan. They are so popular that you may even see fast food restaurants using them as additional checkouts for the drive-thru line during rush hours. For more information on mobile payment systems, please see our article Why accepting credit cards with your phone is the easiest option.
A recent trend in the payment processing industry is the introduction of an integrated payment platform, which uses a payment gateway to integrate all your online and in-person transactions, consolidating sales processed using credit card terminals, POS systems, virtual terminals and payment gateways. .
Until a few years ago, retailers relied on monthly paper statements to track their transactions, with business owners doing manual data analysis. Today, almost all providers offer cloud-based online dashboards that allow you to monitor sales data in real time. Even a retail-only business without a website or online sales channel can benefit from this service.
The integrated payment platform also allows restaurants and other small businesses to accept online and phone orders from customers. An integrated approach to payment processing offers many benefits to business owners, not least when the service has the features you need and comes from a reputable provider.
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Interoperability between the many subsystems of a payment platform eliminates the need for merchants to integrate systems using the services of multiple providers, which may or may not work together. While PSPs (such as Square) have always offered this type of platform, most merchant service providers in the industry today use the same system.
While credit card processing isn’t cheap, it doesn’t have to be expensive — if you choose the right provider for your business. It is not only about choosing the right company but also the right one
Your first decision is between signing up with a Payment Service Provider (PSP) or a traditional merchant account provider. For small or newly established businesses, a PSP is usually a better – and more affordable – option. They offer an easy registration process, fully transparent pricing and minimal recurring fees. In most cases, you only pay for the transactions you process and the hardware costs.
At higher processing volumes, this situation is reversed for many businesses where full-service merchant accounts offer lower overall costs and better account stability. While you may have to submit more paperwork and wait for your account to be approved, full-service merchant accounts typically offer lower processing fees per transaction. If you process a large number of transactions per month, these savings are enough to make this an option
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More expensive than using PSP. Merchant account providers also typically offer a greater variety of add-on services than you’ll find with a PSP.
Each credit card processor must devise a way to charge you for processing your transaction. This fee must be sufficient to cover the exchange fees charged by the issuer
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