How to Accept Credit Card Payments as a Small Business in 2024? Key Points:
Businesses can partner with the POS network and start accepting credit card payments. Types of credit card payments: In-person Online Over-the-phone Small businesses accept credit cards via Third-Party network providers: Square PayPal Venmo Stripe Shopify Benefits of accepting credit cards for small businesses: Increase in sales Smooth cash flow Trust over the business name Up-to-date with market and customers New businesses can avoid losing potential customers if they do not accept credit cards. This is true, the majority of customers carry either cards or wallets for transactions. So you wouldn’t want to lose the opportunity, right? Moreover, it will also help in rapid business growth .
Read this blog to learn how to accept credit card payments and all the workarounds of it.
How to Accept Credit Card Payments? If you are all prepared to set up credit card payments as a new transfer medium for your business, these are the steps you need to follow.
Step 1: Decide the mode of credit card payment Deciding when and how to take credit card payments is the first step. These are the three ways in which you can accept credit card payments:
Online In-Person Over the phone Your decision will be based on the kind of business you operate.
Step 2: Select a credit card processing network There’s more to accepting a customer’s credit card payment than just inserting or swiping it. To authorize the payment to you, the customer’s card and account details must be checked and processed electronically. In a matter of seconds, all of this occurs digitally behind the screens, but payment processors are required to make it all function.
Merchant accounts or payment service providers are your two options if you wish to accept credit card payments. You can open a merchant account with a bank to receive credit card payments.
The second way is to work with service providers. Businesses that enable you to take credit card payments without opening a merchant account are known as payment service providers.
Step 3: Set up the software and payment terminal You might need to upgrade your point-of-sale hardware and software to enable credit card payments after you’ve set up a mechanism for processing them.
You need to order and configure hardware, such as a card reader and point of sale system, that is necessary for physical businesses.
Payment gateways are included with e-commerce platforms such as Shopify. If you are the owner of your website, adding credit card processing for small businesses to your website may require technical assistance from your website developer or card processing provider.
This is how you can start taking credit cards for your business. Moving ahead, let’s look at the type of payment in the next section.
Types of Credit Card Payments There are mainly three paths by which small businesses accept credit cards as a payment: In-person, online, and over the phone. Let’s discuss each of them thoroughly.
In-person Brick-and-mortar stores and on-site service providers can all benefit from in-person credit card processing. The customer must present their card to complete these transactions.
In-person transactions typically have lower fees than other types of transactions because the cardholder and card are present, which reduces the risk of fraud.
Processing credit card payments in person requires a POS system and a card reader.
Online Businesses that rely on online credit card processing include e-commerce sites that take orders online and firms that offer digital services.
Processing fees for online transactions are often higher than those for in-person transactions.
Please note that a payment gateway and a digital storefront, such as a website or e-commerce store, are required to accept credit card payments online.
Over-the-phone Restaurants frequently use card-not-present transactions to pay for takeout orders, and they usually happen over the phone. The customer provides the merchant with their credit card number during this process, and the merchant manually enters that data into their card reader.
Since there is a higher chance of fraud with these transactions, processing fees tend to be the highest.
You will need a credit card reader, POS, or online payment gateway to be able to process credit card payments over the phone.
Now that you know how to take credit card payments, let’s discuss the benefits of accepting credit cards as payment methods for businesses in the coming section.
Why Should You Accept Credit Card Payments for Small Business? You can yield many benefits by incorporating credit card payments into your system. This can be easily neglected while starting, but it can give a boost from the first day and show significant results in the future.
Let’s discuss the reasons for small business credit card acceptance:
Better Cash Flow These transactions are settled in a matter of seconds and are processed electronically. The money automatically gets deposited in your bank account and will be reflected in your statement. This helps to carry cash flow seamlessly. Not only that, it will also cancel all the billing issues.
Stay Updated in the Market Imagine a customer comes in person or online and selects the items to purchase but leaves during the checkout because you don’t have an option for a credit card. What will he do? He’ll go to your competitors who accept cards. Awful, right?
To be on a level playing field, you must take credit card payments and stay up-to-date with market needs.
Boost Sales When you have a cash-only medium, you limit your customers. When you open the doors for multiple payment methods, you can cater to all kinds of customers. This change will give a surge in your company sales profile.
Legitimize Your Business Customers trust a business that has a credit card payment mode, as it shows the business has a legal name and a bank account. It will also create a sense of familiarity and will keep customers coming back.
So these are the few reasons why should small business accept credit cards.
What Type of Business Should Accept Credit Card Payments? Well, there’s no particular type of business that can and cannot use credit cards as their payment method. To clear your doubts, we have listed the types of businesses that can take advantage of this.
Any brick-and-mortar store. Any kind of online business running on social media. Small businesses with small teams. Companies selling digital products. Any independent contractor or freelancer. Any cart business like food trucks or pop-up shops. So these are the types of businesses that can incorporate this mode of payment for the convenience of customers.
What is the Credit Card Processing Fee for Small Businesses? If you were unaware of the fact that businesses pay the providers for accepting payments via credit cards, please take note of this. They charge a fee for their services, like conducting fraud checks, verifying customer’s details, and taking and depositing money between accounts.
Most providers charge per transaction, and fees will vary depending on the company you choose to partner with. So, you need to determine e-commerce payment processing charges to run a successful venture.
Let’s look at the average charges of the biggest providers:
Credit Network Charges American Express 2.5 percent — 3.5 percent Discover 1.56 percent — 2.3 percent MasterCard 1.55 percent — 2.6 percent Visa 1.43 percent—2.4 percent
When you are just starting, these networks might be expensive for you. If you have the budget, you can surely go with them. If not, read the next section to know the alternatives.
Network Providers to Accept Credit Card Payments Looking out and selecting the best credit card network provider can be difficult, and you can’t copy others, as every business has different needs.
We have listed the efficient and budget-friendly network providers with all their positives and negatives below. Read through, and it will help you find the best one.
PayPal is a platform that allows you to manage your finances. You can send and receive money and cancel transactions on PayPal easily. Not just that, you can also buy bitcoins with PayPal as an investment . This is widely used by almost all types of businesses. It offers many tools and great merchant solutions for credit card processing, whether online or in person.
Pros Cons Instant payment for goods and services. High chargeback fees. Accepts Multiple currencies. It may take 2 business days to get your money. No account is needed. PayPal’s seller protection doesn’t cover digital goods. Easy to set up recurring payments.
Processing Fees :
In-person transactions: 2.99 percent + $0.49 Online transactions: 2.9 percent + $0.49 Venmo is a safe money transfer platform that offers credit card processing solutions for businesses. Customers can use credit cards on your Venmo checkout page and transfer the amount.
Pros Cons User-friendly interface. Only available to Venmo users. Instant transfer. Supports limited payment types. Social integration. Data privacy concerns. Transaction security.
Processing Fees : Online transactions: 3.49 percent + $0.49
Shopify is an e-commerce platform that helps businesses set up an online store and sell through it. It has an inbuilt credit card network system that allows any business to accept credit cards right away. Moreover, it gives multiple tools to optimize Shopify stores and drive more sales.
Pros Cons Set up automatically with Shopify stores. Fees (0.5%- 2%) for transactions with a third-party payment gateway. Track your orders and payments through the Shopify platform. High monthly and annual fees for advanced plans. Sell in different currencies. Retail Business POS costs an additional $79 per month. Competitive transaction rates.
Processing Fees
In-person transactions: up to 2.7 percent Online transactions: up to 2.9 percent + $0.30 Card-not-present transactions: up to 2.9 percent + $0.30 Stripe was built by keeping small businesses in mind. They provide tools that are customizable for online and in-person payments. It also supports EDI payments , which makes billing and invoicing simple.
Pros Cons Transparent pricing. Difficult to customize without software development expertise. No setup, cancellation, or monthly fees. Limited functionality. Supports a wide variety of payment methods. 24/7 customer support.
Processing Fee :
In-person transactions: 2.7 percent + $0.05 Online transactions: 2.9 percent + $0.30 Another popular network provider for credit card payments, Square, has a big reputation in the market. The best part is that it does not have any lengthy contracts and does not charge any setup or transaction fees. It has free and paid programs for POS systems, and you can choose whatever suits you.
Pros Cons Free to start. Not cost-effective for high-volume transactions. No monthly fees in the Basic Plan. No phone support Wide range of hardware to choose from. Accounts can freeze due to irregular activity.
Processing Fees :
In-person transactions: 2.6 percent + $0.10 Online transactions: 2.9 percent + $0.30 Card-not-present transactions: 3.5 percent + $0.15 So these are the credit card network providers you can select from. All of them are trustworthy, reliable, and best in the market, so you can pick whichever sits well with your budget.
Also Read: Explore the Best Business Credit Cards With an EIN Only in 2024
Tips for Accepting Credit Card Payment for Small Businesses There are certain things that you need to keep in mind while taking credit cards, given the fact there are tons of credit card frauds. It is better to be on the safer side by taking the precautionary measures.
Make sure to read the terms and conditions carefully before filling out the application form. Each provider has a different fee structure , so pick the one that suits your budget. If you do not have a budget while starting, incorporate the credit card payment into your system when it’s possible. Get quality hardware, like a card reader and set up the software for seamless processing. By putting all these things into practice, you can make your business environment safer.
This was all about how to accept credit card payments for small businesses, the processing fee, and the list of network providers. We hope this article will help you bring positive changes in your business. If you liked it, don’t forget to share it with your friends as well to make them aware!
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Frequently Asked Questions Ans: Open an account with a payment service provider like PayPal, or Square and start receiving funds via credit card from your customers.
Ans: You can partner up with a third-party payment network by filling out an application form.
Ans: Yes, the card issuers allow you to transfer funds from your credit card to your account by visiting the branch.
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