How to accept payments for your business is always of great concern to businesses. Of course, you need to accept credit card payments so that you can offer your products or services to a broader range of customers. But there are many different options for accepting credit card payments. It’s important that you understand how the options compare with each other so you can ensure that you’re using the best choice for you and your customers.
Why Credit Card Payment Options Matter
The credit card payment option you choose for your business payments matters very much to you, your customers and to your business. Consider that if your credit care payment processor goes down, you could lose out on a sale or an entire succession of sales. That’s damaging to your bottom line but it’s also damaging to your business reputation. It’s unlikely that customer will return to your store if they think you don’t have a reliable payment processor. Now consider if your payment processor doesn’t record sales accurately. That would lead to a very lengthy and costly process to figure out. And what if your payment processor’s data was compromised. That would mean that your business data was compromised as well as your customers’ data. Now, you can blame the payment processor all day long, but in the end the customer is going to hold your business responsible. The legalities of such a situation are too grim to even contemplate. Hopefully now you see why it matters so much that you choose your payment processor very carefully.
Fee Structure Differences
Your credit card processor should offer certain features that help you do business. One of the major differentiators among credit card processors are their fees. Some credit card processors charge fees based on a business’ credit score. If you’re a sole proprietor, they’ll use your credit score to determine your fees. Other credit card processors just charge a straight fee across the board – everyone pays the same fee. Even those types of credit card processors can vary greatly as far as their fee structure. Some charge a percentage of the sales and a small transaction fee. Others charge a slightly higher percentage of the total but no transaction fee. The one you choose should be based on the average amount of your credit card transactions and the number of credit card transactions you do each month. Then you can compare and decide which fee structure works best for your business.
Merchant Accounts
A merchant account establishes a fairly direct relationship between you and the provider’s network. You’ve seen this system in operation countless times when you shop at grocery stores, bookstores and most retail outlets. The business runs a customer’s card, it gets processed electronically, the total is charged against the customer’s account, your account is credited and you are charged a fee for the privilege of having the merchant account.
Getting a merchant account isn’t as complicated as you might think. If you and/or your business have decent credit, run an upstanding business and are deemed trustworthy, you’ll likely be approved for a merchant account. You’ll then be able to accept Mastercard, Visa and maybe Diner’s Club and American Express if you also apply for those merchant accounts. Once you’re approved, you’ll need to invest in the equipment to run the cards and send the data. Some companies offer leased equipment, so you might be able to expense it over time.
Mobile Payment Accounts
If you’re not yet ready for the sophistication of a merchant account or you don’t qualify, you can still accept credit card payments. If your business has a Paypal account, you can run credit cards through their website. If you want to be able to swipe customer cards on the spot, you can get a free credit card reader that attaches to your phone. In fact, several companies now offer a mobile credit card reader for merchants that sell at trade shows, flea markets, fairs, or anyplace where it’s impractical to set up standard electronic card equipment.
Online Credit Card Processors
There are also other alternatives, such as online credit card processors. These are less convenient, since they may require you to run every transaction through their website. They’re certainly less conventional. You can easily find a list of online credit card processors. In most cases, all you need to qualify is a tax ID number and a business bank account.
Whichever credit card processor you use, make sure you read all their reviews thoroughly. Since you’re going to be placing your customers’ data in their hands, you want a credit card processor with a near perfect track record, a recognizable name and one that is based in the U.S. Here’s why.
The Dangers of Some Credit Card Processors
The government is very strict about preventing money laundering. If you’re working with a credit card processor that’s based in a foreign country such as the Cayman Islands that has a reputation for money laundering operations, your business could be put on a watch list. Even if you have no knowledge of the issue and do not willingly engage in such activities, your business could suffer by affiliation.
The second danger of some credit card processors is a lack of security. If you use a company that fails to protect your company data, you could fall victim to hacking and be liable for any customer data that you failed to protect. Even though you personally didn’t cause the breach, it could spell trouble for your business and your reputation.
The final conclusion is that you should choose your credit card processor very carefully. Look at their fee structure, consider your needs and think about doing business only with companies based in the U.S. Ask any company you’re thinking of working with how they protect data. Once you find a company that you think will work for your business needs, you’ll feel safe in the knowledge that you chose your credit card processor with discretion.