Different Types of Credit Card Processing



As a small business owner, you need a convenient way to accept credit card payments. Your customers expect to be able to pay with plastic, and not offering this option can severely limit your cash flow.

Why Accept Credit Cards?

Businesses without a method for accepting major credit cards can’t access a large chunk of the consumer market. Thirty-five percent of shoppers used credit cards to make purchases in 2014, and 43 percent of transactions involved debit cards. Those numbers are climbing even higher. Whether you operate out of a brick-and-mortar location or make the majority of your sales on the road at various events, it’s essential to have a reliable method for processing credit cards.

Accepting credit payments can also make your business more lucrative. Customers tend to spend 12 to 18 percent more when using plastic than with other payment methods, and this money goes straight to your bank account without the risk of being stolen by unscrupulous employees. Credit card payments don’t bounce the way checks can, and there’s no need to make separate trips to the bank to deposit your earnings.

Options for Credit Card Processing

To choose the best method for accepting credit cards, look for an option designed to meet the needs of your business while providing maximum convenience for customers. As you compare the most common choices, consider the type and number of transactions you commonly handle, where you make the largest number of sales, and whether or not your company engages in e-commerce.

Use a Standard Terminal

Cash registers with accompanying credit card terminals are still the most recognizable way to accept credit card payments. If you operate a well-established brick-and-mortar location and handle a large number of credit card transactions every day, this is likely your best option.

Modern terminals should be equipped to handle swipe cards, EMV chip cards and near-field communication (NFC). This provides the greatest number of payment options for customers and expands your potential customer base to include those who prefer mobile payment methods. Keypads for entering PIN numbers are also necessary to accept debit cards and to process the “chip and pin” method put in place to improve payment security.

For smaller operations, a swipe machine provided by a card processor and connected to a phone or Ethernet line functions much the same way but doesn’t always include NFC or EMV-compliant technology.

Try a Mobile POS Option

Not all small businesses have the budget for complex credit card processing equipment. Fortunately, you can get a low-rate card reader from your merchant provider, which can be used to turn your phone or tablet into a mobile point-of-sale (mPOS) device.

Accept Payments Online

Adding e-commerce to your operation extends the reach of your business beyond local customers, but it requires a way to process credit card payments from your website. Choose a processing provider with the ability to handle all types of payments so that you don’t wind up trying to juggle data from two different providers.

During 2014, 48 percent of online shoppers paid with credit cards and 30 percent used debit cards. This represents a significant audience of potential customers, including a large number of mobile shoppers. Online payment options should make shopping and payment as easy as possible for this audience.

Go Mobile

Some of the same providers offering POS devices and online services can be used for taking credit card payments on the go. Using an mPOS device is a good option for companies in need of flexibility. If you attend festivals, trade shows and other events where you offer products for sale, having a mobile solution can increase the number of transactions you’re able to process.

Using a mobile reader or mPOS requires a compatible mobile device and a reliable connection to wireless internet or your cellular data provider. These readers allow you to accept electronic signatures and email receipts to your customers. All transactions are handled through the provider, and some can recall customer information to assist with future purchases or recurring billing.

Choosing the Best Credit Card Processor

Once you’ve decided on a credit card payment option, it’s time to find a provider with the capabilities your business needs. Providers operate in one of two ways:

  • A gateway processes online or mobile payments and transfers the funds to your account minus fees if the credit card is accepted.
  • Merchant accounts are dedicated bank accounts through which banks process credit card transactions before sending the money to your business bank account.

Depending on the size of your business and the types of sales you make most often, one option might be more beneficial than the other.

Make sure your merchant services provider offers the type of terminal you need and offers reliable customer support with consistent availability. If you need a solution for both your physical location and an e-commerce website, choose a company with cross-compatible processing services. Access to a mobile app from which you can manage and track payment information can help simplify accounting tasks.

Research each credit card processing option to find the right fit for your business and customer base. Compare rates, fees and features, including which major cards you can process. By choosing a convenient, low-cost option with the ability to integrate with e-commerce solutions, you can offer the best service to every customer who wants to pay using credit or debit.