How to Setup Small Business Credit Card Processing

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Accepting credit cards at your small business is imperative to beat the competition. Today more than ever, consumers want payment options that include not only paying with a credit card but contactless payments, too. The less contact they can have, the more likely they are to be loyal to your business.

If you’re ready to set up small business credit card processing, use these steps.

Determine How You’ll Accept Payments

Are you an in-person and online business or one or the other? Knowing your business model is important as it determines what type of credit card processing you need. If you only operate online, you need a virtual terminal. If you have a brick-and-mortar store, you need a way to collect payments in person.

Even if you collect payments in person, you can use a virtual terminal, but it will cost more in processing fees. Looking at all your options and the bottom line is important.

Which Credit Cards Do You Want to Accept?

Know the credit cards you’ll accept. Most businesses accept Visa and Mastercard by default, but will you accept Amex or Discover too? This will determine which credit card processors you can use and/or can afford.

Choose Your Payment Gateway

All businesses need a payment gateway. It’s what talks to all parties involved in the transaction. By parties, we mean the merchant, the merchant’s bank, the cardholder, and the cardholder’s bank. The payment gateway sends the transaction through one way and then the approval or denial back through the same channels.

Before you choose a payment gateway, understand their PCI compliance fees, reporting options, and all other fees.

Find a Merchant Account

Next, you’ll find a merchant account. This is how you accept credit card payments. Some merchant accounts include a payment gateway, but you can find services separately, too. Do what’s right for your business and don’t assume your options are limited.

Look for a merchant services provider that provides PCI compliance (with no extra fees), straightforward pricing, can handle your business’s sales level, and offers affordable prices. Each provider has different fees and even different payment structures. Make sure the pricing is straightforward and not too complicated for you to understand. Look for hidden fees like PCI compliance fees, termination fees, annual fees, or cancellation fees.

If you don’t understand something, make sure you ask so that you know your payment processing fees.

Understand Pricing Structures

Merchant services providers have different pricing structures. While every business pays interchange fees (these are non-negotiable from Visa, MasterCard, etc.), markup fees are negotiable and vary by business.

Some providers charge “Interchange+,” which is interchange plus a markup. Others charge a flat fee, which means you pay the same fee on every transaction no matter the size. Interchange plus is more transparent, even though flat rate pricing seems easier to understand.

Calculate the different pricing options with your average sales price and see what you come up with. You may find that flat-rate pricing works for your business, while others may find that interchange plus is better.

Either way, understand how it works and ask questions about any fine print. Are there extra fees you don’t know about? Finding out up front is important rather than after the fact when you have a large bill in front of you that you weren’t expecting.

Choose Your Equipment

If you’ll accept payments in person, you need equipment to do so. At a minimum, you’ll need a card reader that accepts magnetic stripe and EMV (chip) cards.

Think about where you’ll accept payments. Will you only see customers in-store? If so, will a fixed countertop machine work or do you want the flexibility to walk around the store?

If you’ll see customers outside of your store, such as at fairs or merchant markets, you’ll need mobile processing, too. Think about which equipment will suit your needs now and as you grow. Think ahead a year or two and find equipment that will grow with you.

If you’ll accept payments online only, you need a payment gateway, storefront, and shopping cart. Make sure all pieces work together for seamless processing.

Choosing the Right Solution for Your Business

Before you choose a solution, ask yourself these questions:

  • How many credit cards will you process a month? Think about now and in the future. If you are just starting, will your sales increase? Choose a system and provider that can handle the increase and with prices you can afford.
  • What are the fees? The fees are the driving force. If they’re too high, you won’t see any profits. If they’re too low, the services offered may be lacking for what you need. Find the middle-of-the-road that works for you.
  • What is the customer service like? Know your options and how often they are available. If you run an online store, you need 24/7 customer service if your customers have a problem at any time of day or night.

Setting up Credit Card Processing for Small Businesses Isn’t Hard

It seems overwhelming at first, but when you break down your options, you’ll see that setting up credit card processing for small businesses isn’t hard.

Know what you need and what you expect from a service before signing up, and always read the fine print on the contract. Know what a company offers and if they can grow with you as you scale up. Always know if you’re able to cancel at any time and if it will cost you anything to do so. Choose your provider carefully for the best results.

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