With the trends of cashless transactions and online shopping becoming increasingly popular, especially with the younger demographic of buyers, the need for all types of businesses to accept credit or debit card-based payments is becoming increasingly important. There are still some businesses that manage to run on cash only payments, but they are quickly running out of popularity. And if you are talking about online transactions, then credit or debit card payments may be your only options. Small businesses cannot usually process credit card payments on their own. Therefore, they need third party credit card processing services. However, choosing the right method for credit card processing depends on the nature and frequency of your transactions. There are multiple options for small business credit card processing, some offering extensive customer care while the others leave to you to figure stuff out. You need to know what suits you best. Here are a few steps that shall allow you to make a practical choice in credit card processing;
Selecting a Payment Gateway
All the transactions of a business are due to pass through their payment gateway. The role of the gateway is to get approval or denial for the transaction that is being undergone. The payment gateway functions straightforwardly; it is initiated by the consumer paying for goods or services using their credit card. The payment gateway relays the transaction details to the merchant’s bank account processor, who then passes the cardholder’s bank data. Here the transaction is verified, the transaction will be either approved or declined based on specific reasons by the cardholder’s bank. The information is then relayed back to the customer and store owner through the merchant’s credit card processor. The goods or services are provided based on the acceptance or declining of the transaction. Finally, the sent funds go to the payment processor of the merchant through the bank of the customer. The payment processor then deposits them in the merchant’s bank.
Multiple gateways can perform these functions for you. But to know which one will suit your business the most, you will have to see your business’s volume every month. Furthermore, once you have chosen a gateway, you need to consider the following further to strengthen the foundation of your credit card processing;
- The processor you choose should be PCI DSS compliant.
- They should feature a Secure Socket Layer (SSL).
- eCommerce integration should be readily available.
- Report Generation should be a regular and accurate procedure.
- The customer support should be engaging.
Setting up a Merchant Account or Payment Service Provider
For businesses with an enormous volume of credit card transactions, more than $10k a month, it is justified to have a merchant account. This is because in the long run, even though a merchant account has its own added fees and is expensive to set up, the merchant will save more on credit card processing over time. Some gateways service providers also provide merchant accounts, but it’s always better to do a little research and look for the best options available. A reasonable payment processor should have all the possibilities that your business needs in terms of payment processing. For example, if you need a specialized POS system or online transaction system, your payment processor should be up to the task to handle that.
It may be a better option for smaller businesses to connect with a Payment Service Provider (PSP). These service providers are available, most of the times with no setup fees and no monthly fees but charge a little more for credit card transactions. If you are a small business with not many transactions happening in the credit card area, this might be the more economical choice. The features that any processor should have to cater to your business are;
- Quick setup time and digital application
- Low fees on transactions
- No ancillary fees what so ever.
- Fraud protection
- Open options of software and hardware integrations that suit your business.
What is the Required Equipment?
Finally, before you can move onto processing card-based transactions, you will need equipment and software specifically for your business. For an online business, you will need;
- Storefront: All your products and services should be visible to any customers that are visiting your website.
- Shopping Cart: As customers browse through the website, they might like to buy multiple items. They should have the option to select various articles and see their cumulative prices before they can checkout and pay for all they need.
- Payment Gateway: This not only provides for the merchant to be able to get a transaction approved or declined, but it also acts as a secure terminal for the customer to perform their trade.
For in-store card payments, you need to have somewhat of a separate equipment bundle. That would be;
- Card reader/terminal: there are many card reading terminals or tools available, some you can even attach with your smartphone or tablet. You will need this to read the customers card.
- Virtual terminal: This is an alternate to a card reading terminal. By this way, you can enter the card numbers into a computer or a smartphone and can perform the transaction by that means as well.
- POS software: this should be present at the sales terminal of the store. It should charge the exact amount for the goods or services and give the customer an option to manage different things such as to provide tips, track purchases, collect emails and organize receipts.
Statement Monitoring and Error Removal
Once you’re all set, all you need to do is launch your setup and start accepting credit card transactions. But it doesn’t end here. You will have to keep regular checks on your sales and monitor your monthly statements by revisiting your credit card sales data.
This is because sometimes processors have hidden fees, or charge merchants incorrectly on per-incident items. This can be because of many reasons, one of which can be a simple mistake of data entry. If your statements remain unmonitored and no one is notified, then the errors will be very likely to continue. If the errors go on too late, the credit card processor may even refuse to cater for your losses as nobody notified them about the overpayment.
