Are you a small business that still only accepts payments in cash or check? If so, you’ll want to know that you could benefit from expanding your range of payment options.
According to the site Fortunly, cash only accounts for 30 percent of all American consumer transactions while credit cards and debits cards make up 21 and 27 percent respectively. That means if you’re a business that doesn’t have a way to accept credit or debit card payments, you might be creating a roadblock for half of your potential customers.
If you’d like a way to make it easier for your customers to pay you, then you’re going to need to work with a partner who can help you to process those plastic payments. Here are the best ways to accept credit cards for your small business.
What Factors Affect Credit Card Processing?
The first thing you’ll need to understand about begin able to accept credit card payments is that there will be fees involved. Processing centers provide a service by performing a variety of security and fraud checks every time a card is swiped. They also ensure the proper amounts will be deducted from the correct accounts (usually at the end of the day). At this time, there are no legitimate payment platforms that will perform these tasks for completely free.
Generally speaking, each payment processing provider has a fee structure consisting of the following charges:
- Transaction fees – A small fixed fee for each transaction. Example: $0.10 per charge.
- Percentage fees – A percentage that is charged based on the total amount fo the transaction. For example, a 3.0% fee on a $100 purchase would cost your business $3 to process.
- Monthly fees – Some platforms will require an up-front monthly fee or subscription for the use of their services. Typically the transaction and percentage fees are reduced when a monthly fee also applies.
- Minimum processing requirements – Some providers may not work with you unless you meet certain minimum sales volumes. Example: You might need to demonstrate that your business generates at least $5,000 in transactions per month. On the flip-side, if you have relatively high sales, you could also use this to leverage lower transaction and percentage fees.
Passing Fees On To Your Customers
Since profit margins are generally quite slim already for small businesses, one option you have is to pass on these fees to your customers. Many of them will do this by charging an additional 3 percent on top of the total transaction (for example).
This is due in part to a 2013 court ruling which made it legal for merchants to do this. Though this has become somewhat commonplace and socially acceptable, it’s debatable if it has any negative effects on the overall customer experience.
The Best Small Business Credit Card Processors
As more people are opening their own small businesses and online stores, more companies are getting into the credit card processing game. Here are a few of the top POS systems and service providers available on the market today for credit card processing.
Chances are that if you’ve been to a local coffee shop, dog groomer, or even the farmer’s market, you’ve been able to make a purchase using Square. Square was one of the first alternative payment systems to hit the market a little over a decade ago. And when they did, they struck a nerve with small business owners everywhere who were in desperate need of being able to accept plastic.
The Square system is very simple. They offer free POS (point of sale) software that you can download to your phone or tablet for accepting payments. They’ve also got sleek, Apple-style hardware such as registers and card readers at affordable prices (lump sum or monthly).
Square also works with e-commerce offering easy solutions for integration with most big-name providers. They will even help you with creating a website that’s ready to take orders (if you don’t have one already).
Fees: Square’s standard processing fee is 2.6% + $0.10 for contactless payments, swiped or inserted chip cards, and swiped magstripe cards. Payments that are manually keyed-in, processed using Card on File, or manually entered using Virtual Terminal have a 3.5% + $0.15 fee. Online payments are 2.9% + $0.30 per transaction.
If you’ve ever used eBay, then you know about PayPal. PayPal has been giant in the payment processing industry for years. But ever since it was spun off as a separate company, they’ve expanded their services far beyond just eBay to merchants all over the world.
PayPal allows your shoppers to pay online using nearly any form of payment method they wish (credit cards, debit cards, PayPal balance, etc.). PayPal can easily be integrated into any shopping system for one-time or reoccurring payments.
If you need to accept payments in person, PayPal offers a selection of chip, tap, and swipe readers that work with any smartphone or tablet for accepting credit cards and contactless payments. They also have point of sale systems too.
Fees: PayPal charges a transaction fee of 2.7% per each US card swipe and 3.5% + $0.15 per each keyed payment.
Payline a payment system that can be used in person or online.
If you have a physical store, you can get a tabletop device or full-scale POS system that accepts all forms of electronic payments, including EMV chip & PIN, magstripe and NFC/contactless.
If your business is e-commerce based, then they also have API’s that will allow you to integrate their payment gateway into your existing shopping cart system.
Fees: For transactions swiped in person, Payline charges 0.2% + $0.10 per transaction plus $10 per month. For transactions entered manually, the charge increases to 0.3% + $0.20 per transaction plus $20 per month.
If your business will be online only, then you might want to consider Stripe. Stripe handles credit card payments for everything from one-time website purchases to subscription-based payments. Thanks to their focus on flexible coding, thousands of platforms like Shopify, Xero and DocuSign have partnered with Stripe to help them facilitate payments for their customers.
Fees: Stripe’s standard processing fee is 2.9% + 30¢ per transaction.
Though you may just think of Shopify as a place to buy trendy tee shirts and custom gifts, as it turns out, they also have a lot to offer to the world of e-commerce too: Secure payments.
Online businesses can easily integrate Shopify’s payment platform into their own websites for seamless online payments.
Shopify also offers several POS systems and smartphone accessories for taking payments in person.
Fees: Depending on your business needs, Shopify offers several tiers of plans. The most basic is their Basic Shopify which costs $29 per month. Transactions are then 2.9% + 30¢ per online transaction and 2.7% + 0¢ per in-person purchase.
Final Thoughts: Best Way To Accept Credit Cards For Small Business
Small businesses take a lot of work and need a lot of things. From payroll services, to invoice software, to a good POS system or credit card service provider. Being able to accept credit cards can be greatly beneficial to your small business. Now you know the best ways to accept credit cards. Pick the one that’s right for your business and make money!