How to Accept Credit Card Payments As a Business

Quick Hits 

  • With over 80 percent of U.S. adults having at least one credit card in 2020, businesses that offer this popular and convenient payment method can help boost their revenue opportunities and sales volume. 
  • Businesses that accept credit cards need to determine their payment needs, which will help them choose the best payment processor, software, and hardware to process transactions successfully. 
  • It’s essential to understand the differences between accepting credit card payments in-person and online, such as the payment terminals needed and transaction fees. 

Choose a Payment Processor 

One of the first steps to accepting credit card payments is to choose a payment processor. The type of payment processor you need depends on various factors. For example, how many transactions will likely be processed in person, online, or over the phone? Another factor to consider is what type of credit cards you will accept, such as the major card brands – Visa, Mastercard, Discover, American Express, and JCB. Additionally, you will need to research how much payment processors charge for processing card transactions. It’s a good idea to choose a processor with the best rates for the specific type of transactions and card brands you will be processing the most, such as online transactions with Visa and Mastercard.  

Furthermore, knowing the average transaction volume your business will process can help you find the best payment processor for your specific needs. This is important because some providers give better rates to those with higher transaction volumes. If your business is multichannel, it’s a good idea to look for a processor that handles both card-present and card-not-present transactions.  

For ecommerce businesses, your payment processor must easily integrate with your website so customers can enjoy a seamless checkout experience. If you own a brick-and-mortar business, research what type of hardware is necessary to use your point of sale (POS) terminal. 

Open a Merchant Services Account 

Once you choose a payment processor, the next step is to open a merchant services account. This step is necessary for your business to accept credit card payments. Setting up a merchant account usually involves providing information about your business and linking the merchant account to your business bank account, where funds will be deposited.  

Keep in mind that this step will vary based on the payment processor you select. A payment service provider (PSP) like Square offers a group merchant account for all users, making it easy to set up and a popular, cost-effective option for small businesses with lower sale volumes (e.g., less than $10,000 per month). The downside is that there is a higher risk of withheld payouts or being removed from the group account if your business is considered high-risk for credit card fraud and chargebacks or sells items whose sales are regulated at the state or federal level like firearms.  

If you’re using a PSP, you will sign up with your business contact information. Though, high-volume businesses that need interchange-plus pricing or high-risk businesses that need a more complex processor will have to complete additional steps to start accepting credit card payments.  

On the other hand, a merchant account provider like Chase offers individual merchant accounts, which have a more extended approval and setup process but more stability for businesses with large sale volumes and a greater risk for card fraud. Other benefits of using a merchant account provider are usually not tied to a single POS brand. They offer better access to customer support representatives to assist you regarding your business and payment questions. One downside is that the fee structure can be hard to understand, especially for interchange-plus pricing fees. 

 

To set up a merchant account with your business bank, you must prove that you are a legitimate company. The verification process will vary for each bank, but most will require the following information: 

  • Articles of incorporation 
  • Business address 
  • Business bank account details 
  • Business license 
  • Employer identification number 
  • Financial statements  
  • PCI compliance 
  • Other documents like business plans or marketing resources 

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Set Up Your Software/Hardware 

Now that you have a payment processor and merchant account, it’s time to set up your payment terminals. If you have a brick-and-mortar store, this involves purchasing and setting up hardware, such as a card reader and a POS system. While there are numerous card readers available, the most important feature is the ability to accept card payments via a swipe, dip, or contactless tap. Card readers can range from free (from your payment processor) to thousands of dollars for complex POS systems. Some payment service providers offer the equipment necessary to accept credit card payments in-store or on a mobile card reader.  

There is a wide variety of hardware to use in a POS system. Keep in mind that some hardware will require professional installation, while other equipment will be easy to set up by simply turning them on, connecting them to your Wi-Fi or Bluetooth, and linking it to your payment terminal. 

  • Point of sale (POS) terminals – these systems are the current standard for brick-and-mortar shops and include a cash drawer for processing cash sales. 
  • Handheld terminals – these are small POS systems to process payments anywhere, making them a popular choice for big stores, repair and sales shops, restaurants, and trade shows. 
  • Mobile apps – these are phone apps that use a card reader to process payments, which are better for hobbyists and solopreneurs rather than larger businesses. 
  • Peripherals – this usually refers to a POS system but can also include cash drawers, gas station card readers, kitchen display systems, and self-service ordering kiosks.  
  • Self-checkouts – these complex systems usually require a professional setup and are popular among grocery stores and home department stores. 
  • Tablet-based terminals – this involves a mobile app that can be used on any tablet device in place of a larger POS system. Many payment processors will provide this type of hardware, which can be used on the counter or on the go for small shops and businesses that travel, such as food trucks and mobile grooming companies. 

If you accept online purchases, you will also need to set up ecommerce software. Ecommerce platforms like Shopify come pre-built with payment portals so you can start accepting online payments. If you have a custom website, you can work with your payment processor or site developer to integrate the card processing tools for your business, such as from PayPal or Stripe.  

To use your PSP’s payment software, you will typically need to set up: 

  • An account to receive funds 
  • Employees/permissions 
  • Inventory 
  • Locations 
  • Taxes 

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Accepting Credit Card Payments 

Businesses can accept credit card payments in person, online, and over the phone. No matter which methods you take, it’s crucial to understand how each differs regarding technology requirements and associated fees.  

How to Accept In-Person Payments 

In general, in-person credit card processing is geared towards brick-and-mortar stores, on-site service providers (e.g., electricians and plumbers), and mobile businesses (e.g., food trucks and farmer’s market vendors). These transactions require the customer to be present to complete a purchase. Since the cardholder and card are physically present for these transactions, this reduces the risk of card fraud. Thus, in-person transactions come with lower fees compared to other transactions. To accept this payment method, you will need a card reader and POS terminal. 

How to Accept Credit Card Payments Online 

As for online card payments, this applies to everything from ecommerce shops and restaurants offering online orders to software companies providing digital services and travel sites. For online-only businesses, they would not be able to operate without accepting credit cards. Unlike in-person payments, online transactions usually come with higher processing fees due to the increased risk of card fraud and chargebacks. To accept online card payments, you will need a digital store, such as a payment page, website, or payment gateway.  

Final Points 

In today’s digital market, it’s common for most businesses to accept credit cards. Credit cards are a quick and convenient way for customers to purchase products and services, while companies can benefit from increased cash flow and sales volume. While there are some risks and costs involved in using this payment method, the benefits mentioned throughout this article outweigh those cons. Contact our cloud-based tokenization platform today if you are interested in learning how we can help you protect your customers’ sensitive payment data, maintain PCI compliance, and scale your business. 

 

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Topic(s): payments