The best ways to Accept Credit Cards Online, In-Store or Anywhere
The best ways to Accept Credit Cards Online, In-Store or Anywhere
Trying to figure out how to accept credit cards doesn’t have to be as complicated as it seems. It’s truly as simple as finding the most hassle-free and the very least pricey route between your customer’s credit card and your bank account.
It’s really simply a two-step process.
1. How Do you do business with your cutsomer?
First, figure out exactly how you want to do business with your client: In person– via a POS system, a traditional credit card swiper or a mobile device– or remotely, via the Internet or phone. Simple, right? Once you decide that, you can determine whether you will need a merchant account– basically a financial middleman that authorizes transactions and deposits the money in your bank account– or whether your method of accepting credit cards can connect directly with your bank account without the need for a merchant account.
If you already know what you need and just want to see our recommendations for the best credit card processing services, visit our best picks page here.
If you’re still not quite sure what method of accepting credit cards is best for you, first you need to understand how each method works. Here are the four basic ways to accept credit cards We’ll fill you in more thoroughly on the details of each down below, but let’s start simple.
4 ways to accept credit cards
Point-of-sale (POS) systems
A complete checkout terminal that can include a credit card swiper, NFC reader (e.g., for Apple Pay, Android Pay or Square), touch screen, barcode scanner, cash register, printer and other equipment.
Usually requires a merchant account.
Best for: businesses with a physical location that want to connect multiple locations or cash registers to each other and/or to other business systems such as accounting or inventory.
Mobile credit card processors
A dongle and/or app that lets you accept credit cards anywhere using a smartphone or tablet.
Normally requires a credit card reader that attaches to your phone. Does not usually require a merchant account.
Best for: a business that sells in a variety of places, wants to process transactions anywhere in the store or does only a few transactions a day at its physical locations.
Credit card terminal
A piece of hardware used to swipe credit cards in person or, in some cases, to manually enter credit card numbers from phone or Internet orders.
Requires a merchant account and is usually provided by merchant account providers as part of their service.
Best for: a business that doesn’t need its credit card processing system to do anything but accept payments
An e-commerce solution, shopping cart software or third-party marketplace– such as eBay, Amazon or Etsy– that lets Web-based businesses accept payments at their website, blog or online store. Most e-commerce sites hosted by a third party do not require a merchant account. Stand-alone e-commerce sites that use shopping cart software may need a merchant account.
Best for: businesses that conduct a variety of business transactions online.
Now that you’ve got the basics, you might be ready to make some decisions. If so, check out our best picks for credit card processors here or our best picks for POS systems here.
Still not sure? No problem. Here’s everything you need to know about different types of credit card processors and how they all fit together.
Merchant Account Services
What is it? Merchant account services act as middlemen between the business and the customer’s credit card company or bank. Merchant account services process payments and make sure the money is appropriately withdrawn from a credit card account and placed into the business’s merchant account. Once the money clears all of the processing protocols, it can be transferred from a merchant account to the business’s regular bank account.
Who should use it: Merchant services providers are an option for nearly all types of businesses, including brick-and-mortar, mobile and online businesses, but some methods of accepting credit cards don’t require the use of a merchant service.
There are a few different types of merchant accounts:
Merchant accounts: The merchant services provider usually, but not always, offers merchant bank accounts that allow debit and credit card payments. These accounts act as holding locations for the debit and credit card payments a business receives. Once the funds have been approved, the merchant services provider transfers the money, minus its commission, to the business owner’s bank account. When opening a merchant account, it is important to ensure the merchant services provider offers the type of merchant account you need, based on the type of business you run. Types of merchant accounts include the following:
Retail merchant account: This alternative is generally chosen by businesses that operate in a storefront area, where the customers’ debit and credit cards are physically swiped through the payment terminal.
Internet merchant account: This type of account is for businesses being run online. It allows businesses to collect and process credit and debit card information from their e-commerce website.
MOTO (mail or telephone order) merchant account: These accounts are for businesses that operate by taking payments via the telephone and/or direct mail.
In addition to the payment-processing services and merchant accounts, merchant services providers offer many other tools for businesses– including the physical equipment needed to accept debit and credit cards, such as in-store point-of-sale swipe terminals, and a number of fraud and security prevention tools.
Equipment: Merchant services providers offer businesses a variety of equipment needed to accept debit and credit cards, including point-of-sale terminals, simple swipers, PIN-pad terminals and wireless terminals. Most merchant services providers give businesses the option to rent or buy the equipment. Business owners can also purchase the equipment from a source other than the merchant services provider.
Cost: Merchant accounts are more costly than most other kinds of credit card processing methods. Business owners should expect to pay numerous fees each month and per transaction costs. Typically, average fees include the following
Monthly statement fee (on average, $10 per month).
Monthly minimum fee (on average, $25 per month).
Gateway monthly payment (usually $5 to $15 per month).
Transaction fees (anywhere between 0.5 percent and 5 percent per processed transaction, plus 20 to 30 cents for each transaction made).
Because the rates can vary widely among providers, it is important that business owners accepting credit and debit cards for the first time shop around to ensure the best deal.
What makes a credit card processor affordable? Scott Blum, Vice President at Total Merchant Services, said there are three areas small businesses should consider: upfront costs, processing rates, and contracts.
All three should be evaluated before settling on a credit card processor,” Blum said. “Small businesses need a clear understanding of the upfront cost to get the equipment they need, such as a terminal, then ongoing processing rates should be affordable. These are typically expressed as a percentage of sales. Small businesses should not be locked into a long-term contract.”.
Pros and cons: The benefit of using a merchant services provider is that it can fulfill a business’s credit card acceptance needs on its own. Merchant services providers also offer necessary tools, such as merchant account management and fraud protection. As an all-in-one solution, nonetheless, the main downside is its costs, which is one of the reasons some businesses don’t accept credit cards. Businesses need to do their study and make sure they get the most cost-effective merchant account services provider that is best suited for their needs.
What to seek: Whenever we spoke to small business owners about credit card processing and merchant accounts, the best advice they gave is to look for a vendor with simple, up-front pricing and to always read the fine print. This means swipe fees, transaction rates, monthly fees, minimums, maximums and other numbers should be crystal clear, so you’re not faced with any unpleasant surprises. Knowing your agreement terms is also vital– make sure the vendor makes the terms clear, so you don’t end up in a multiyear contract with a steep early-termination fee. Other aspects to consider include the difficult merchant account approval process, the start-up and month-to-month costs, the equipment offered, and the customer-service options provided. For businesses that want to offer products or services via their website, it is important to make sure the merchant services provider has all of the Internet-based features that will certainly be needed, such as virtual terminals and payment gateways.