Still operating a small business that only accepts cash or check payments? Expanding your payment options could significantly benefit your bottom line.
According to the site Fortunly, cash represents just 30 percent of all American consumer transactions, while credit and debit cards account for 21 and 27 percent respectively. This means businesses unable to process card payments potentially create barriers for nearly half their customer base.
To make customer payments more convenient, you’ll need a reliable partner for processing electronic transactions. Here are the most effective ways to accept credit cards for your small business.
What Factors Influence Credit Card Processing?
Understanding credit card payment acceptance starts with recognizing the associated fees. Processing centers deliver valuable services by conducting security screenings and fraud checks with every card swipe, while ensuring accurate fund transfers from customer accounts (typically processed at day’s end). Currently, no legitimate payment platforms offer these essential services completely free.
Most payment processing providers structure their fees around these key charges:
- Transaction fees – A fixed charge per transaction. Example: $0.10 per purchase.
- Percentage fees – A rate calculated from the transaction total. For instance, a 3.0% fee on a $100 sale would cost your business $3 to process.
- Monthly fees – Some platforms charge upfront monthly subscriptions for service access. These usually come with reduced transaction and percentage rates.
- Minimum processing requirements – Certain providers require minimum sales volumes. Example: Your business might need at least $5,000 in monthly transactions. Conversely, high sales volumes can help negotiate better transaction and percentage rates.
Transferring Fees to Customers
Given the typically thin profit margins small businesses face, passing these costs to customers becomes an option. Many businesses add approximately 3 percent to transaction totals as a processing surcharge.
This practice became legally permissible following a 2013 court ruling allowing merchant surcharges. While increasingly common and socially accepted, the impact on overall customer satisfaction remains debatable.
Top Small Business Credit Card Processors
The growing number of small businesses and online stores has attracted numerous companies to credit card processing. Here are several leading POS systems and service providers currently dominating the market.
1- Square
If you’ve visited local coffee shops, dog groomers, or farmers’ markets, you’ve likely encountered Square payments. Square pioneered alternative payment systems over a decade ago, immediately resonating with small business owners desperately needing card acceptance capabilities.
Square’s approach remains refreshingly straightforward. They provide free POS software downloadable to phones or tablets for payment processing, complemented by sleek, Apple-inspired hardware including registers and card readers available through affordable lump-sum purchases or monthly plans.
Square extends into e-commerce with seamless integration solutions for major providers, plus website creation services for businesses starting from scratch.
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.
2- PayPal
eBay users know PayPal well. This payment processing giant has dominated the industry for years, but since spinning off as an independent company, has dramatically expanded services beyond eBay to merchants worldwide.
PayPal accommodates virtually any payment method customers prefer—credit cards, debit cards, PayPal balances, and more. The platform integrates effortlessly into any shopping system for both one-time and recurring payments.
For in-person transactions, PayPal provides various chip, tap, and swipe readers compatible with smartphones or tablets, plus complete point-of-sale systems.
Fees: PayPal charges a transaction fee of 2.7% per each US card swipe and 3.5% + $0.15 per each keyed payment.
3- Payline
Payline offers versatile payment solutions for both in-person and online transactions.
Physical retailers can choose from tabletop devices or comprehensive POS systems accepting all electronic payment forms, including EMV chip & PIN, magstripe, and NFC/contactless options.
E-commerce businesses benefit from APIs enabling seamless payment gateway integration with existing shopping cart systems.
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.
4- Stripe
Online-only businesses should strongly consider Stripe. This platform manages credit card payments from single website purchases to recurring subscription billing. Their flexible coding approach has attracted thousands of platform partnerships with companies like Shopify, Xero, and DocuSign for customer payment facilitation.
Fees: Stripe’s standard processing fee is 2.9% + 30¢ per transaction.
5- Shopify
While many associate Shopify with trendy apparel and custom gifts, this platform offers substantial value to e-commerce through secure payment processing.
Online businesses can seamlessly integrate Shopify’s payment platform into existing websites for smooth transaction processing.
Shopify additionally provides multiple POS systems and smartphone accessories for in-person payment acceptance.
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: Optimal Credit Card Acceptance for Small Businesses
Small businesses require numerous operational components, from payroll services and invoice software to reliable POS systems and credit card processors. Credit card acceptance capability can dramatically enhance your small business success. Armed with knowledge of the best credit card acceptance methods, select the solution that aligns with your business needs and start maximizing revenue!
