Questions About How To Accept Credit Card Payments?
According to studies, credit card purchase volume has shown a consistent increase since 2010. The growth is significant. From $1,860 billion in 2010 to $3,684 billion in 2018, the spending level through credit card processing has doubled in under a decade.
This proves that if your business shies away from accepting credit cards as a mode of payment, then the decision can have detrimental effects on your growth.
That is why more and more businesses are now turning towards merchant services to accept credit cards as a payment method.
Some of these businesses choose a traditional payment solution to accept credit card payments, while others go with an integrated payment platform. For example, businesses as coffee shops may choose to use a point-of-sale system or card-present terminal to accept credit card payments, while other businesses may consider a more feature-rich platform.
They may choose a feature-rich platform to account for the integration of a variety of online and in-store payments into a single payment platform.
Business owners require various solutions ranging from mobile device payment processor options to having the ability to accept credit card payments online.
But the common factor remains their pursuit to accept credit card payments, which lets them serve more customers and increase their revenues.
The truth is that you must streamline your business operations to accept credit cards. As you may know, credit card transactions continue to grow due to digitization and other factors.
More businesses seek to work with merchant service provider options to process debit card payments and accept credit cards to be more accommodating to their customers.
If you want to scale your business, you must pay attention to how credit card payment processing works within your business operation. But given that the payment type isn’t as simple as cash payments, you might have a few questions in mind before you can trust your business with it.
Learn more about credit card payment processing with this accepting credit card payments ultimate guide that tells you all you need to know about this branch of merchant services.
What is Credit Card Payment Processing?
Before you learn more about detailed aspects of credit card payments for your business, such as the difference between traditional and integrated payment platforms, it is important to learn the basics of processing credit card payments.
This fundamental knowledge will help you learn more about the process to accept credit cards. It will also contribute to further realizations on how it works for your small business.
You can understand the relationship between credit card processing fees, the nuances of debit card and credit card transactions, and how it ties back to your business bank account.
These essentials will also enable you to work with payment service providers and credit card processors more seamlessly.
Ready to learn about the payment processor and the nuances of credit card transactions? Let’s start with the mechanics of accepting credit card payments.
Credit Card Payments Are Not Limited to One Channel
Credit card processing refers to the processing of card-present and card-not-present payments, from the moment the customer makes a card payment to the moment the transaction is authorized and settled. This can be done through a variety of channels, which include but are not limited to:
- Point of Sale (POS) Terminals
- Mobile POS Terminals
- Mobile Card Readers
- Mobile Apps
- Online Payment Gateways
POS terminals are present in brick and mortar stores. Further, more business owners are shifting to POS payment method types that are consistent with other payment solutions to keep their overall payment process simple.
Mobile solutions are becoming increasingly popular with popups, service professionals, and doorstep delivery services. They can use the typical method of swiping the card or also go the route of modern tap to pay payments.
Mobile apps can be used by service professionals to accept credit card payments directly into their app account. They are also used by businesses that accept credit card payments via modern methods such as QR codes, which are unique to each merchant account.
As the name suggests, online payment gateways are in use by e-commerce stores and apps. These solutions require customers to process their credit card payment by manually entering its 16-digit number, expiration date, and its CVV code.
Next, let us talk about accepting credit card payments and credit card association when it comes to your business.
Credit Card Association Plays a Crucial Role
All of these different methods connect to various credit card associations.
These include Visa, MasterCard, American Express, and Discover.
All major credit cards are connected to these associations in some way.
It is important to understand the associations you will be accepting when you are ready to accept credit card payments.
Each association has its own interchange fee, so knowing what these fees are and how they are handled by your Merchant Service provider will help ease any potential confusion. This component is a core part of your overall transaction fees and you will see this as a part of your processing fees.
Some providers will even allow you to “turn off” acceptance for American Express or Discover, allowing you to simply accept Visa and Mastercard as they are the most widely owned.
This is beneficial if you discover over time that your customers are not really using either of those associations for payment and you want to save on those fees.
Keep in mind that while these are the most widely used payment card networks, they are not the only networks that you can encounter or use as a small business to accept payments on behalf of your customers.
You Need an Acquiring Bank or Merchant Service Provider
Apart from credit card associations, the other key party involved in processing these card payment types is your merchant services provider and your acquiring bank.
The acquiring bank is a financial institution that accepts the payment and deposits into the business account. Further, they can play the role of the payments processor, making them a critical part of the transaction.
In essence, these solution providers or acquirers are the entity that helps you accept credit card payments via different equipment and software solutions.
Remember What’s Required for Credit Card Payments
To summarize, there are three key parties involved in processing any credit card transaction.
1) The Merchant
This is you or your business. You are also given a merchant account where your processed payments go for your usage.
2) Credit Card Association
This is the association that powers the credit card for the cardholder. Examples such as Visa and MasterCard will help you remember what credit card networks do.
3) Acquiring Banks/Payment Solutions Providers
These are the service providers that provide you with the required equipment and infrastructure to process credit card payments and deposit funds into your account.
How Are Credit Card Payments Processed?
When used via different equipment, payment modes, and merchant services, you can accept credit card payments in multiple ways.
When a card is present, you can swipe the card against a POS terminal. You can also scan it via a card reader. For scenarios where the card isn’t present, you can use its details to perform contactless credit card payments via online or digital payment gateways.
Through your acquiring bank or your payment solutions provider, you can use these methods to send the payment information to the credit card network.
The credit card network receives the information, verifies it, and then sends you its approval. When the transaction goes through, you can know right away and deliver your customers the products or services they have purchased.
It’s as simple as that.
But that’s just a surface-level description of credit card payment processing. The major part of the process comes after these services have been delivered.
Traditional vs. Integrated Payment Systems
If you use a traditional POS method of credit card processing, then it goes like this:
- Create a new sale in POS & scan the item
- Choose the payment method your customer would like to use (debit, credit, gift card, etc.)
- Grab your terminal or card reader and manually input the sale amount into the terminal
- Start the process of authorizing and accepting payment from the merchant services provider/acquiring bank
- In case the transaction is approved, retrieve the terminal and print receipts
- Go back to the POS, manually mark the purchase as paid and close the sale
In an integrated payment, the transaction amount is automatically pushed to the terminal instead of being manually input. It is also automatically reconciled and marked as paid once payment has been processed.
By contrast, Integrated Payment solutions combine payment processing systems with feature-rich technology that helps automate the payments process. By using integrated payment services, you cut through the redundant work required by traditional payment systems.
That’s why most business owners now prefer using integrated payment solutions as opposed to traditional payment systems.
Apart from making the addition of credit card payment processing easier, integrated payment solutions also bring other benefits to the table.
If you use multi-channel payments, then integrated payment solutions also help you manage your transactions from different avenues. For instance, if you have multiple stores or if you sell your services at a storefront as well as online, then you can see all your transactions in one place.
What Are the Charges for Credit Card Processing?
Before you sign up with a merchant solutions provider, it is essential to remember that the charges for credit card payments are not set in stone.
While some merchant account providers charge you a separate fee to pay for credit card networks, others do not require you to do so. Some merchant service providers may ask you for a higher setup fee for your equipment, while others may offer their equipment at a lower price.
All in all, the charges for processing credit card payments depend upon the merchant services provider. It is best to shop around and compare fees as well as services before you sign up with a provider. This way, you can make sure that you are getting the best deal for your business.
Here are some of the most popular fees or costs that you will see during the process.
- Setup Fees
- Equipment Fees
- Monthly Fees/Subscription Fees
- Credit Card Transaction Fees
- Interchange Fees
It is also prudent to remember that while not all merchant account providers charge you the same amount, most of them charge you for each transaction they process. This is an industry-standard, but the actual fee varies on a case-to-case basis.
How to Start Accepting Credit Card Payments?
Thankfully, the advancements in the payment sector now allow business owners to obtain the required services for credit card payments easily.
It’s now simple for a business owner to choose between a traditional or integrated payment platform.
It is also straightforward to obtain online payment solutions or mobile payment solutions for your operations. You just need to find a provider that offers these services under one umbrella while also being known for their reliability.
At Stax, we offer an array of credit card payment processing services that help you take your business to the next level. Through Stax’ integrated payment solutions, we can help you manage your payments in a highly efficient way.
We understand the needs of our merchants as we have been in the industry for a while and have been able to serve many partners over our tenure.
Our overall business owner experience at Stax is superior due to our excellent customer success, flexibility, and advanced processes and systems.
Our seamless, reliable, and subscription-style solutions also keep affordability in mind and help business owners save.
Reach out to Stax for a consultation today.