Essential Insights
Countless payment processors tout similar offerings, yet selecting the perfect match boils down to your anticipated transaction volume and preferred payment channels—be it face-to-face, digital, or telephonic.
Processing fees tend to be gentler for transactions made in person, whereas phone orders often carry heftier charges, a repercussion of the heightened fraud risks tied to card-not-present scenarios.
When sizing up your options, don’t just chase the bargain basement rates. Instead, focus on your company’s unique demands and whether the provider’s toolkit can expand alongside your growth trajectory.
Why Every Payment Counts in Small Business
Missing out on credit card payments means potentially alienating customers who’d rather swipe plastic than fumble cash. Whether you’re laying the foundation or fueling an already thriving storefront, integrating credit card acceptance via a cost-effective processor can be a game-changer.
Kickstarting Your Credit Card Acceptance Journey
Before you unleash your customers to swipe freely, a bit of homework is essential. Once you zero in on a cost-efficient processor and the right terminal tech, the process becomes notably straightforward. Here’s a four-step roadmap to get your small business up and running with card payments:
1. Scout the Ideal Credit Card Processor
The marketplace is saturated with processors offering near-identical services, but the key is matching them to your existing payment patterns. Reflect on these:
- What’s your primary transaction mode? Will sales be conducted face-to-face, through your site, or by phone?
- Which card brands are on your radar? Visa, Mastercard, Discover, American Express, or others?
- What’s your acceptable processing fee threshold? Fees fluctuate based on transaction types and card networks. Aim for providers with competitive rates tailored to your transaction profile.
- How many sales do you typically handle? Some processors reward bulk volume with better pricing.
Online-only ventures should prioritize processors that mesh seamlessly with their websites. Brick-and-mortar setups might need to invest in compatible hardware and software—think card terminals syncing smoothly with your POS system.
2. Break Down the Pricing
With a shortlist in hand, gather quotes or estimates to contrast them side by side. Look beyond sticker price: factor in transaction limits, equipment purchase or rental needs, and how swiftly payments settle.
3. Set Up a Merchant Account
A merchant account is indispensable for face-to-face transactions if you don’t have one already. Many banks bundle these services within business accounts, helping track sales, accept diverse payments, and even roll out loyalty perks. Meanwhile, platforms like Intuit, Clover, and Square offer standalone merchant services that link to your business bank account.
Online-only businesses typically dodge bulky hardware, relying on established payment gateways like PayPal, Stripe, or Square to funnel payments straight to their accounts. Remember, a business bank account remains essential to enable credit card acceptance.
4. Deploy Payment Terminals
For physical shops, the final piece is equipping your space with terminals—card readers and POS systems—unless you’re purely virtual, in which case secure online gateways will handle payments.
Card readers abound, catering to swipes, chip taps, or contactless payments via smartphone NFC. E-commerce clients may tap into platforms such as Shopify for integrated payment portals, or enlist help from providers or web developers to implement payment acceptance on custom-built sites.
Credit Card Acceptance: Modes and Methods
Small businesses commonly embrace three avenues to take credit cards: in-person, online, and phone orders. Each route demands distinct tech and carries different fee structures.
Face-to-Face Transactions
Ideal for physical retail outlets, service pros on site—think plumbers, HVAC techs—and mobile merchants like food trucks or market vendors. These rely on mobile card readers.
Since the card or digital wallet is presented physically, fraud risk diminishes, bringing processing fees down compared to other modes.
You’ll require a POS system paired with a card reader to keep the wheels turning.
Fixed Location Systems
Generally bundled hardware and software suites fit snugly into permanent storefronts. While initial investments can be steep, the payoff includes syncing with ordering systems, managing cash flow, printing receipts, inventory monitoring, and loyalty program support.
Traditional countertop POS setups are a favorite among established merchants. If you want to keep it simple, a standalone card reader accepting swipes, chip, or NFC might suffice.
Mobile Device Payments
Perfect for businesses on the move—farmers markets, trade shows, contractors. With digital wallets on the rise, mobile payment acceptance has become indispensable. Portable readers connect to smartphones or apps, typically via Bluetooth or headphone jack, handling swipe, chip, and NFC transactions.
The best systems often support shopping cart integration, user-friendly payment pages, or sending payment links for hassle-free customer payments.
Highlighting Leading Providers
| Paypal | In-person retail | Trusted brand, competitive fees, versatile payment options (online checkouts, POS, invoicing) | Overwhelming options can confuse; some services incur extra charges |
| Square Payments | Mobile businesses | Free mobile card reader, works offline, contactless payments | Relatively high in-person fees |
| Shopify | E-commerce | Seamless integration with Shopify platform, uniform fees for card-not-present transactions | Requires Shopify-hosted website; monthly plus transaction fees |
| Stripe | Scaling online businesses | Customizable API, competitive online rates, growth-focused financial tools | Costlier for in-person & card-not-present fees |
| Venmo | Online-only and quick-service businesses | Familiar, no setup fees, free standard bank transfers | No in-person acceptance yet, pricier transaction fees |
Online Credit Card Payments
To accept payments on the web, you’ll need a digital storefront plus a payment gateway. Online retailers, eateries with digital ordering, and service providers tapping into the net all fall into this realm. Bear in mind, these transactions often cost more in fees, given a higher fraud probability.
Direct Payment Links
Spreading direct payment links helps sidestep handling physical cash—a growing trend as commerce turns increasingly digital. These shareable URLs, sent via email, text, or invoices, guide customers swiftly through payment.
Shopping Carts & Payment Pages
Online carts let customers browse, add products, and checkout by entering billing, shipping, and credit card details. Returning buyers can speed through future purchases by saving their info.
Alternatively, centralized payment pages facilitate straightforward payments without product selection. Commonly employed by charities, medical billers, or contractors with prearranged pricing.
Paying Over the Phone
Credit card acceptance via phone falls under card-not-present transactions, common for takeout orders and mail orders. Customers share card details, which merchants manually enter into their processing system.
Given the elevated fraud risk, these transactions typically bear the steepest fees. To process these payments, you’ll need a credit card reader plus a POS or online payment gateway. Most processors don’t focus on phone transactions as their core, though some accommodate them as alternatives.
Why Go the Credit Card Route?
Offering customers more payment options can tip your sales upward. Research spanning eight years shows a steady rise—from 18% to 32%—in consumers favoring credit cards over other payment methods. Catering to that preference can pay dividends.
Additional perks include:
- Reduced risks tied to carrying large cash sums
- Seamless deposits into your business bank account
- Competitive advantage over cash and debit-only peers
- Swift settlement and cash flow
- Enhanced fraud safeguards
- Faster, smoother checkout experiences for customers
Even after factoring in processing fees, the overall gains often eclipse the costs.
The Nitty-Gritty of Processing Fees
Credit card processors levy charges for their services—fraud detection, fund verification, and security checks execute swiftly as customers swipe, tap, or dip their cards.
Luckily, monthly fees are rare; fees usually apply per transaction and vary by card brand and processing mode. Amex generally demands higher fees, prompting some merchants to forgo accepting it.
Fees also hinge on your chosen provider (PayPal, Stripe, Square, etc.) and your payment acceptance method, typically ranging between 1.5% and 3.5% plus a flat charge.
Typical Network Fee Ranges
| American Express | 1.43% + $0.10 up to 3.30% + $0.10 |
| Discover | 1.40% + $0.05 up to 2.4% + $0.10 |
| Mastercard | 1.15% + $0.05 up to 2.5% + $0.10 |
| Visa | 1.15% + $0.05 up to 2.4% + $0.10 |
Note: Fees are based on USD transactions and can differ across currencies. Rates accurate at time of publication.
Final Thoughts for the Astute Merchant
If you operate a small business today, embracing credit card payments is essential for thriving and surviving. The segment of customers who lean on credit cards for convenience and security continues its upward climb. Neglecting this channel means slipping potential clientele and lost revenue through your fingers.
Pinpoint your business’s specific processor needs and scrutinize providers accordingly. Though fees might feel like a burden, the uplift in sales, fraud defense, ease of payment, and competitive positioning often tip the scales in favor of acceptance.