With so many different payment options, it’s not always easy for small businesses to become intimately familiar with how each works. But when it comes to credit card processing, you can’t afford to be uneducated or misinformed.
4 Tips for Processing Plastic
From a business perspective, it’s beneficial to accept as many different forms of payment as possible. With each additional payment form, you both increase your reach and appeal to more customers. Whether you run a physical storefront or online business, convenience is king. The easier you make it for customers to pay you, the less likely it is that transactional friction will hold them back from making a purchase.
These days, there are more than a dozen different ways you can get paid – including cash, check, bank wire, Bitcoin, Apple Pay, PayPal, Venmo, etc. – but plastic is the preferred method. And while debit cards certainly get their fair share of usage, it’s the credit card that reigns supreme.
Research shows that accepting credit card payments increases in-store sales by an average of 40 percent (compared to accepting cash payment in isolation). And if you’re selling online, it’s an even greater necessity.
But accepting credit cards does come with some challenges and logistical details to work through. As you integrate plastic into your business, here are some things you’ll have to think about:
How Will You Accept Cards?
The first element to consider is how you’ll accept payments. If you’re running a physical storefront or business where you process transactions in person, you’ll need a card reader and merchant account. If you run an online business where you process transactions over the internet, you’ll need an ecommerce website and payment gateway.
Your business can either choose an all-in-one provider that bundles products and handles every step of the credit card payment process, or you can go with individual providers for separate merchant accounts and POS systems.
Think About Fees and Rates
Every processor has different rules, fee structures, and rates. Depending on the size of your company and how much business you expect to do on a monthly basis, you’ll want to adjust your approach.
If you process small amounts –less than $3,000 per month or an average ticket size of $10 or less – a flat-rate processor is your best bet. You’ll pay a flat rate per transaction without having to worry about monthly or annual fees. But if you process more than $3,000 monthly – or have relatively high transaction sizes – you may choose to go with a processor that requires a monthly fee with smaller rates.
“At Payment Depot, for example, we give you access to interchange rates straight from card issuers,” the company explains. “Unlike traditional payment processors, we don’t markup that amount. Instead, we only charge a membership fee (starting at $49 per month) plus $0.10 per transaction.”
Every company offers different terms, rates, and fees. Make sure you compare at least two or three different processors before settling on one.
Be Careful With CNP Transactions
If you’re processing credit card payments over the internet, make sure you’re smart with how you handle these card-not-present (CNP) transactions. This will minimize the risk of fraud and payment disputes.
In addition to asking for standard card information – like card number, name, billing address, expiration date, and CVV code – it’s also wise to get delivery confirmation on orders and to match billing and shipping zip codes.
Be Smart With Equipment
Because the credit card processing equipment can be expensive, processors will use a variety of techniques to lure in customers. Free equipment is one of the more popular strategies at the moment. And while it may look good on paper, you’ll likely have to sign a lengthy contract in exchange. If you cancel, you may be required to return the equipment and pay a fee.
Meet Customers Where They Are
It’s nearly impossible to run a profitable and competitive business in 2019 without accepting credit cards. By offering plastic, you increase the convenience of purchase and reach your customers at a point of convenience. But as you make the transition, be sure to consider some of the details outlined in this article carefully. Smooth implementation will lead to successful results.