Allowing customers to pay via credit card can make cope cash flow less nerve-racking and eliminate the delays associated with waiting for assay payments. If your occupation international relations and security network ’ metric ton yet accepting credit card payments, changing that may be easier than you think .
Reading: How to Accept Credit Card Payments
Key Takeaways
- Accepting credit card payments for your business can make managing cash flow easier and potentially boost sales.
- More Americans are relying on credit and debit cards as a payment method instead of cash or checks.
- You can accept credit card payments whether you run a large business or a small one.
- Setting up your business to accept credit card payments doesn’t have to be complicated.
Benefits of Accepting Credit Card Payments
Allowing your customers to pay with credit cards can yield a number of advantages for your business that could lead to greater growth. According to the National Federation of Independent Business, there are many benefits to accepting credit rating cards .
major reasons to accept credit cards include :
- Improving cash flow, since it can speed up payment times and reduce delays
- Legitimizing your business in the eyes of customers
- Potentially boosting sales volume, since your customers will have more ways to pay
If you ’ re still not sold on the idea of accepting cards, consider the growth of credit tease payments compared to other requital methods. research from Deloitte shows that credit rating cards made up about $ 4 trillion in requital volume in the United States in 2018. From 2016 to 2018, credit wag transactions increased while the percentage of Americans using cash to pay declined .
That tendency may continue if demand for contactless and/or digital payments besides rises. As a result of the 2020 economic crisis, for example, 64 % of small businesses said they were trying to steer clients away from using cash and checks in party favor of digital payments, such as credit cards. Credit cards could become an even more common payment method acting as Americans move a greater part of their transactions online—even when buying from brick-and-mortar businesses, such as local restaurants offering delivery services or stores with curbside cartridge .
What Types of Businesses Can Accept Credit Card Payments ?
The short answer is that about any kind of commercial enterprise can accept credit cards. For exercise, you could choose to accept citation cards if :
- You run a brick-and-mortar business
- Your business operates completely online
- You have a traditional small business with employees
- You’re a sole proprietor with zero employees
- You’re an independent contractor or freelancer
- You have a mobile business (such as a food truck or dog grooming service)
In any of those scenarios, accepting credit card payments could work in your favor if it makes it easier for customers to pay. Deciding not to accept credit cards in your business normally comes devour to personal choice, preferably than the type of occupation that you run .
Note
If you decide to accept credit card payments, federal law requires that you verify that those payments are authorized by the customer before processing them. That is typically done behind the scenes, and about instantaneously, by a payment march overhaul.
How to Accept Credit Card Payments
If you ’ re ready to accept recognition tease payments for your small business, then you ’ ll need to follow a few steps. But once you get a system set up, it ’ s relatively easy to oversee and manage .
1. Decide How You ’ ll Accept Credit Card Payments
The first gear step is determining when and how to accept credit card payments. For example, you can take credit card payments :
- Online
- In person
- Using a mobile card reader
- Over the phone
The option that you choose may depend on the character of business that you run. For model, if you have a brick-and-mortar retail memory, you may accept credit cards in person at check or online if you ’ ve set up an ecommerce memory. But if you run a mobile business, using a mobile batting order reviewer may be the best choice .
Tip
You ’ ll besides need to decide which of the major credit card networks ( Visa, Mastercard, Discover, or American Express ) you want to accept .
2. Choose a Payment Processing System
When a customer gives you their credit poster to pay, there ’ s more to it than just swiping or inserting the card. The customer ’ s menu and explanation details have to be reviewed and processed electronically so that the payment to you can be authorized. All of this happens digitally behind the scenes in a matter of seconds, but you need to hire a requital central processing unit to make it all function .
If you want to accept credit card payments, you can do it one of two ways : merchant accounts or payment service providers. A merchant bill is an history that you open with a bank to accept credit card payments. Payment service providers are companies that allow you to accept accredit tease payments without setting up a merchant history .
Of the two, a requital serve supplier may charge lower process and transaction fees. So it may work good for you if you have a newer clientele or relatively small credit card requital volumes. But if you do a large volume of sales from citation cards, then a merchant report could be an easier means to manage your credit card payments .
Important
When comparing merchant accounts and requital service providers, consider whether you have to sign a long-run contract and what fees you ’ ll pay for credit batting order march.
3. Get Your Credit Card Payment Software and Hardware in Place
once you have a method of processing recognition batting order payments in place, you may need to update your point of sale software and hardware to actually accept them .
For example, if you run a brick-and-mortar business, you may need to purchase checkout software to accept menu payments or install a poster subscriber that ’ second EMV chip -enabled at checkout. Some payment service providers will besides supply the equipment that you need to get set up for accepting accredit card payments in-store or via a mobile card subscriber .
How to Accept Credit Card Payments Online
many belittled businesses are now online-first, or flush online-only. Whatever type of commercial enterprise you own, giving your customers the ability to pay with their credit rating card on-line provides them with more appliance and can boost sales. Ecommerce shops, restaurants that accept orders online, and digital services companies wouldn ’ thymine be able to function without this capability .
Providing this overhaul to your customers is not unmanageable. If you plan to accept credit cards online, then you ’ ll besides need to set up a payment gateway for that. Again, this may be included with your merchant report or requital serve provider plan .
You will need a digital shopfront, and the most common direction of obtaining one is to sign up for an report with an ecommerce platform provider. Credit calling card payments are such an important part of contemporary ecommerce that all of the major ecommerce chopine providers will allow you to take credit cards as a shape of payment .
just be aware that there is broadly a cost associated with this. Online credit wag transactions typically have higher work fees than in-person transactions.
Using Credit Cards safely : Tips for Small Businesses
Despite the advantages of accepting credit cards for your small business, some risks are involved in giving customers this option. The most big are :
- Fraud. Some credit card systems are safer than others, and there have been instances in which businesses have been affected by credit card fraud.
- Processing fees. If your margins are very small, the processing fees associated with accepting credit cards can easily add up to a major business expense. Small businesses with thin margins will need to assess whether accepting credit cards makes business sense.
- Chargebacks. A chargeback is a disputed transaction that customers initiate when they aren’t satisfied with a purchase. Even if you’re in the right and the customer is not, it’s difficult and costly to dispute chargebacks.
little businesses that want to accept credit rating cards but besides want to avoid these risks should be wary, and should follow best practices for credit rating card payment systems :
- Only use approved, well-known software and equipment. There are lots of different payment processors on the market today, but make sure to check the credentials of the company that you choose to work with.
- Don’t store customer credit card data. Although you are allowed to do so, it makes you very vulnerable. It’s better to have a use-and-delete process.
- Train your employees to handle credit card data and spot potentially fraudulent transactions. This can save you a lot of time in the long run.
- Verify shipping and billing addresses. This can dramatically reduce the potential for fraud.
- Be extra vigilant when accepting credit card payments online. With this kind of payment, if your company accepts a bad or stolen credit or debit card, then the total liability of the loss is yours.
Pay Attention to Credit Card Payment Processing Fees
Accepting credit cards through a merchant report or a requital serve provider international relations and security network ’ t free ; each charges servicing fees to facilitate those payments. As you get cook to accept credit card payments, consider how those fees factor into your engage and overhead costs .
If the fees are going to take a serious bite out of profits, you might compensate by increasing prices for your products or services. Or you could add on a surcharge or public toilet tip for processing credit poster transactions below a certain dollar amount. But be certain that you ’ ra mindful of submit and federal regulations on credit calling card surcharges to avoid any illegal practices .
Can Companies Refuse to Accept Credit Cards?
Yes. however, it ’ s not a great mind for the business. Any occupation is within its rights to refuse a method of payment. The interrogate is whether this will affect their customer base by doing then, particularly as the consumption of non-cash payments is growing fast .
Can You Accept Credit Card Payments Without a Merchant Account?
Yes. You can accept citation tease payments without a merchant score by using a third-party processor. Third-party processors work through a unlike business model, which allows you to accept these payments into a standard commercial enterprise report. This can provide an easy way for very humble businesses to accept credit rating wag payments .
How Much Do Small Businesses Pay in Credit Card Fees?
Credit card march fees will typically cost a commercial enterprise 1.5 % to 3.5 % of each transaction ’ mho sum. For a sale of $ 100, that means you could pay anywhere from $ 1.50 to $ 3.50 in citation poster action fees. For a small commercial enterprise, these fees can be a significant expense. however, most businesses find that this is more than made up for by the increase in sales associated with taking credit cards.
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The Bottom Line
nowadays, it ’ south unusual to find a little business that doesn ’ metric ton accept recognition cards. This is because giving customers as many options as potential when it comes to payment can drive sales and boost customer gratification. And while there are some risks and costs associated with accepting credit card payments, these by and large are more than made up for by an increase in appliance and sales .
