Knowing that you want to accept credit, debit card, and even contactless payments is just the first step towards offering your customers as many convenient payment options as possible. Your bigger challenge is coming to an understanding of how payments work, the types of hardware available, and the best way to obtain it.
Card payments in a nutshell.
The credit card payment process may seem somewhat mysterious and magical, but it basically contains three steps. First, the card is authorized. After it is tapped, swiped, or scanned, the processing information is sent to the card company (Visa, Mastercard, etc.), which then transmits it to the customer’s bank. If there is sufficient cash in the account, the payment is approved.
Next, if the customer’s bank approves the transaction, the merchant receives a credit for the sale. This charge is reflected on the customer’s billing statement.
Finally, a deposit is made into the merchant’s business account by the payment processing company. This money can usually be accessed within a few days.
Credit card terminals.
Of course, you cannot accept credit card payments without hardware on which to process them. Credit card processing machines have changed a great deal over the years. The most common type remains the stationary credit card terminal. In order to work, this equipment requires either a connection to a telephone line or the internet.
In recent years, wireless processing has become very popular. In many respects, wireless machines look very similar to stationary models. The difference is in the way they send their data. Instead of relying on physical phone lines or cables connected to a modem, mobile credit card terminals utilize wireless technology. As a result, they are portable and lend themselves to businesses that take their products on the road.
Another somewhat recent innovation on the wireless processing equipment landscape is the mobile card reader. This small piece of hardware can be connected via Bluetooth to a tablet or smartphone. Customers are then able to swipe their physical card or even place their own smartphone near the reader for a secure but contactless payment experience. With each passing day, more consumers are choosing to leave their cash and plastic at home in favor of the digital wallet software built into their hand-held devices, particularly younger buyers.
Another card-not-present type of payment is when merchants accept payments over the phone or online. In these cases, it makes sense that businesses have access to secure virtual terminal software that can turn a desktop or laptop computer into a facsimile of a POS terminal. These virtual terminals allow the merchant to securely enter credit card data and personal information knowing that the payment is processed as safely as it would have been had the physical card been available.
Should you consider a point-of-sale system?
Stationary terminals and mobile card readers are both effective ways to take customer payments. However, you may also want to look into a point-of-sale system. You can pretty much run your entire business using a modern POS solution. Often cloud-based, these set-ups can help with payroll, employee scheduling, report generating, financial reports, customer relations, and inventory management, to name just a few of their features. They even allow you to store your data off-property for an additional layer of security.
As with anything you bring into your business, cost must always be considered. High-quality POS solutions can be expensive since they involve both software and hardware and provide customer service, troubleshooting, and regular upgrades. You should spend some time determining whether buying or leasing is your best option. In some cases, you can even obtain a free payment processing system.
Buying your equipment outright gives you full ownership and removes the drain of monthly fees that often also contain interest. On the other hand, you are responsible for upgrades and repairs once the warranty expires.
Leasing a POS system is another terrific option for entrepreneurs on a budget or for people who don’t mind those monthly payments. When you lease, you’re not locked into that particular device. That means that when your lease is up for renewal, you can trade in your older system for a newer, state-of-the-art model. Even if you end up having to pay higher fees, the cost will be significantly less than you would pay to buy a new device outright.
Whether you own a pop-up shop, a farmer’s market stall, a retail store, or a restaurant, there is no doubt that accepting plastic and even contactless payments is a must in today’s marketplace. Once you understand how payments work and your various options when it comes to equipment it’s not as overwhelming to decide on the specific technology that will work best for your type of business and customer base. Just be sure to take all the time you need to make a carefully considered decision. When you find equipment that is in sync with your products and customer preferences, you’ll see the positive difference in your business’ bottom line.