With cash taking more of a back seat each passing day, even micro-companies are coming to terms with the fact that they need to accept credit and debit card payments. This is necessary in order to survive and appeal to the preferences of their customer base.
But what are the most effective methods to securely accept credit cards?
There is no cookie-cutter solution that works for every company, and there are several options that meet the varying needs of today’s websites and physical stores.
This article explains how to accept credit card payments, and some of the most popular methods available for getting paid in person, online, and remotely.
How to accept credit card payments.
To accept credit cards, you will need a payment processor, the appropriate hardware or software, and a merchant account. These components are often bundled together as part of a single service.
Below are some of the most popular ways to accept credit card payments, and what you will need for each method.
In person.
If you are looking to accept credit card payments directly from customers at your brick-and-mortar store, you will need a point of sale (POS) system and a payment processing provider.
Your POS consists of software that assists with many behind-the-scenes business processes, and interfaces with the other players in the payments arena. It also contains hardware such as a terminal or tablet, card reader, barcode scanner, receipt printer, and cash drawer.
The elements of your POS combine to allow you to accept credit card payments of almost any type, including recurring billing, mobile transactions, and even ACH transfers.
Your merchant account provider then operates quietly out of sight to ensure that credit card transactions are secure and go through without a hitch.
Online.
In order to accept credit cards online, you will need a separate payment gateway that enables customers to securely enter their payment details onto your website.
This gateway acts as an intermediary between merchant and customer, helping to facilitate a safe and speedy payment at all touchpoints.
Retailers with both in-person and online stores should use the same POS and payment service provider for both channels, in order to centralize data and maximize efficiency.
Phone or mail.
To accept credit cards over the phone or by mail, you can manually type a customer’s payment details, i.e., card number, expiration date, and CVV, into your POS terminal.
Alternatively, you can enter the data into your mobile phone app, or do so on a virtual terminal. This is a web-based secure application that mimics your physical POS terminal.
Accepting credit card payments by mail or over the phone provides businesses with additional ways to provide choice and flexibility for their customers. Offering these options can also resolve invoices quickly and help to reduce delayed payments.
What are the most common ways to accept credit card payments?
Traditional point of sale systems.
Most customers are familiar with the point of sale or POS device that reads their credit card and communicates with the processor to complete the purchase transaction. This can either be run on a “dumb” system that does nothing more than securely accept payments, or on a smart credit card terminal that interfaces with a more powerful software network that streamlines many other business functions such as inventory and employee management, customer relationships, and report generation.
Most of these systems can also be configured to accept other types of payments, including via digital wallets, mobile phones, and ACH.
Mobile point of sale systems.
When a company conducts many of its purchases away from its physical location, or when it makes sense for sales associates to be able to process purchases throughout the sales floor, mobile payments via mobile POS systems are ideal.
Today’s Tap to Pay on iPhone feature allows your staff to complete the transaction using an iPhone. With no additional hardware needed, the customer simply puts their mobile device or credit card near the salesperson’s phone. Thanks to near-frequency communication technology, the transaction will be securely processed within a matter of seconds.
Online payment gateways.
When people purchase goods and services over the internet, the need for security is stronger than ever. That’s because there is no way for the business owner or cashier to be able to see the person’s physical credit card.
In order to promote optimal security throughout the online purchase process, ecommerce companies usually opt to work with a payment gateway. This web application acts as an intermediary between the customer and merchant, helping to screen and facilitate a fast and efficient purchase.
To interact with the gateway, a customer will be asked to enter their 16-digit credit card number, expiration date, and security code into the system. The application then connects with the cardholder’s bank to ensure that there are sufficient funds, and it also screens for any red flags that might signify a security breach.
If all goes well, the payment is accepted, and the funds are moved from the customer’s account into the seller’s.
Peer-to-peer payment platforms.
Until January 2022, many small businesses used peer-to-peer apps like Venmo and PayPal when taking customer payments. These apps connect directly to a buyer’s bank account or credit card, withdrawing the specified amount and transferring it to the merchant quickly and efficiently.
Since then, however, a change in the tax code now requires that companies report any transactions over $600 received via those apps and pay the required taxes. As a result, this method has lost some of its luster with many small businesses.
Virtual terminals.
If a company accepts phone or mail order purchases, one of the best ways to enter card information is via what is known as a virtual terminal. This simply means that the customer would verbally tell you their payment data over the phone or provide it in writing on a catalog order.
You or your staff would manually input the information into your POS terminal or online virtual payments interface.
No matter which solution you decide to incorporate into your business, it is crucial that you work with a reputable payment processing company that provides updated security and is in compliance with the Payment Card Industry Data Security Standard (PCI DSS), a set of requirements set forth by the industry to protect cardholders.
Additionally, you should keep data security as your highest priority by instituting robust authentication and anti-fraud measures, both on your website and in your physical store.
Once these options and protocols are in place, you can look forward to a customized payment experience that protects each customer and takes their individual needs and preferences into consideration.
Benefits of accepting credit cards.
There are several benefits that businesses may quickly discover when they opt to accept credit card payments.
Increased sales.
When you opt to expand your offerings to accept customer payments via credit cards, you instantly open a broadened sales avenue. These days, few shoppers carry cash in large amounts, due to safety concerns as well as to the prevalence of other more secure digital options.
Once you upgrade your systems to accept credit and debit cards and other digital methods, customers will have more available funding avenues to spend on your products. Additionally, your store will be in step with your competitors, raising your credibility and inspiring trust that could lead to higher brand loyalty, more referrals, and increased sales.
Increased security.
As we discussed above, credit card transactions are safeguarded by PCI DSS, a set of measures put forth by the card industry to protect cardholder data.
Furthermore, the terminals and mobile devices furnished by your merchant accounts provider tokenize data throughout the transaction, ensuring that the information is converted into a random series of numbers that cannot be used by digital criminals.
Finally, as part of their own commitment to safety and security compliance, payment service providers keep their hardware and software updated and upgraded to the highest current standards, furnishing their merchant clients with several additional layers of cutting-edge data protection.
Improved customer experience.
Although sellers need to compensate merchant account providers by paying credit card processing fees, the expense is often well worth the financial sacrifice thanks to the enhanced shopping experience that customers will receive.
It starts with secure payments and robust protection against digital criminals, but that is just the beginning.
Shoppers can also gain a host of benefits that come along with the credit card POS: creative loyalty programs, regular, personalized communications thanks to customer relationships management software, and streamlined record-keeping for easy returns and purchase record retrieval.
Thanks to the POS solution’s inventory management capabilities, shoppers can also look forward to receiving the merchandise they want right away, without needing to wait for backorders to arrive.
Do I need a merchant account to take credit cards?
Most businesses that accept customer payments via credit cards and other digital options elect to obtain a merchant account. In simple terms, a merchant account is a specialized bank account where funds are kept during the period of time between when the transaction has been approved, and when settlement occurs.
Once the latter happens, a retailer’s funds can be transferred from this repository into their business account, at which time they have full access to their profits.
Merchant account providers offer a comprehensive suite of products and services to their customers, including payment gateways, point of sale systems, peripheral software, and more.
They are ideal for businesses who want to take advantage of the complete spectrum of services available on the market today. However, many retailers do not require that extensive degree of options. For them, payment aggregators such as PayPal and Stripe are more than sufficient.
These scaled-down companies focus solely on delivering only essential payment processing. Applying for their services is generally faster since these vendors have fewer application requirements.
Moreover, these aggregators are trusted and recognizable as well as easy to use. Finally, their flat-rate pricing structures make budgeting easy and predictable.
On the other hand, this flat-rate pricing structure can be quite expensive. Additionally, customer support is often spotty at best. Only businesses considered to be in the low- or average-risk category are accepted as clients.
It can take longer for businesses to receive their funds upon settlement, and there is an increased chance of account freezes that can often occur without notice or explanation.
When you accept credit card payments, a whole new world of sales and brand expansion opportunities will open for your business.
If you first take time to explore your store’s unique needs and requirements, you can arrive at digital and credit card payment solutions that will help to enhance your internal operations and security, while offering an enhanced level of service to your valued customers.
