How to Accept Credit Card Payments in Business
The growth rate of any business is facilitated by its ability to accept credit card payments. Nowadays, businesses are digitally supported. The credit card payment system provides support for both online and in-store transactions and opens more doors for customer traffic.
So if you want your business to compete favorably in today’s global market, you have no option but to allow and start accepting credit card payments. Due to the size of your business, you may be concerned about the cost of accepting credit card payments.But accepting credit card payments for your business will increase your customers’ confidence, loyalty, and patronage.
This page provides guidance on how to accept credit card payments, credit card payment benefits, and major credit card payment risks.
How to Accept Credit Card Payments
As we proceed with the process of accepting credit card payments, it’s very important we discuss the process and different credit card payment options side by side.
There are four major credit card payment options we’ll be considering on this page. The payment option you adopt depends on the nature and needs of your business.
Mobile Payment Processor/ Card Reader
This is suitable for businesses that process only a few credit card payments and run an in-store business. A mobile payment processor allows you to use your mobile phone for a payment transaction. This is possible thanks to card readers that can be plugged into or connected to your mobile phone.
There are numerous mobile payment processors on the market, but the most recent is the New PIN on Glass technology.To accept mobile payments at your business, you need to buy a point-of-sale device fitted with NFC technology.
A merchant account allows business owners to accept credit card payments both in-store and online, anywhere and anytime. For businesses that have a higher sales volume, need different shopping methods for customers, and want maximum flexibility, a merchant account is recommended.
It implies you will need to create a real merchant account with a bank. This gives you the opportunity to own an online merchant gateway instead of using online payment companies like PayPal, Square, and lots of others.
Having a merchant account means you will require a credit card machine to enable you to process the customer’s normal ATM card if the customer doesn’t have a debit or credit card.
A merchant account seems to be the best solution for any online payment professional. But this process can be very difficult to achieve most of the time. This is due to the high risk of credit card fraud, especially if you’re setting up a new business.
Furthermore, if you choose to use a merchant account payment gateway, It’s important you create a merchant account and understand all the transaction fees they charge. Merchant account payment gateways are not as straightforward as all-in-one payment service providers.
Online Payment Gateway
This method is strictly recommended for online businesses that have no need for in-store or in-person credit card payments. An online merchant gateway allows customers to make payments into your business account. The customer only needs to submit their credit card details to your payment platform on the Internet, and the payment is processed.
To set up your business on this payment platform, first select any online payment gateway company like PayPal or Square. Provide your business details to the company along with a link to your personal bank account. Then set up a Buy Now button, Shopping Cart buttons, and also enable accepting payment plans on your e-commerce website to be able to accept payments.
Just like any other payment platform, you will be charged a merchant fee. But this varies depending on your country.
POS Payment System
For businesses that have no strong need to accept online payments, a POS payment system is a good option. This method requires a merchant account with software and equipment that permit in-person transactions.
There are criteria to consider in your choice for the POS payment system. This criterion has to do with the scale (size) of your business. You can select an all-in-one POS system that has built-in payment processing or third-party POS payment processing. It all depends on the scale of your business operation.
- Small Size/New Business: If you run a small business, we recommend an all-in-one POS system with built-in merchant services and a payment processing unit.
- Large-Sized Business: If you run a business on a large scale with a high sales volume, we recommend using a third-party POS system. This POS system runs on a separate merchant account.
How Do I Accept Credit Card Payments
We will be considering both in-person and online credit card payments. since we have discussed different credit card payment options. So, how do we accept credit card payments for our company?
In-Store Credit Card Payments
Before you can accept credit card payments in-store, you need the following:
- You will need a point-of-sale (POS) system to enable credit card processing.
- To accept credit card payments, you need a merchant account.
- You also need a credit card reader to be able to accept credit cards.
Note that the credit card reader works with the POS device and is able to track and record all payment transaction details. Once these devices are in place, the customer will insert their credit, debit, or ATM card into the card reader. You will approve the transaction, and once it is completed, your merchant account service will receive their fees and deposit the funds into your account within a few days.
Online credit card payments
Here we will discuss how to accept credit card payments online. This payment process is very simple and straightforward. First, you have to set up an online payment gateway system. Secondly, create a “Buy Now” or “Shopping Cart” button on your e-commerce website. What your customers have to do is provide their credit card details via the payment channel and approve the payment.
The online payment gateways are POS credit card processors; they receive the customers’ card details and process the transaction. Note that as an online merchant, you need a merchant account, especially if you also run a physical store.
Credit Card Payments Benefits
Accepting credit card payments both online and in-store is a critical stimulus for business growth. We acknowledge the difficulty in the setup and management processes. But the benefits are overwhelming, highly efficient, and flexible.
Boost sales volume
Permitting credit card payments apart from the normal cash payments in your business attracts more sales. Some customers find it more convenient than carrying cash around. and tends to use credit cards for the payment of goods and services due to the huge benefits credit card companies offer from using their card.
Many businesses today are already accepting credit card payments, putting them ahead of you. If you are not accepting, you will be left behind and lose some customers. Therefore, accepting credit card payments will enhance your competitiveness and thereby increase your business turnover rate.
Improve customers experience and royalty
Just like we said previously, not all customers like to carry cash on them. Most of them find it more convenient to shop with a credit card as a payment option,
For example, suppose a customer walks into your store and begins shopping; after selecting the items he or she requires, the customer wishes to make a payment but discovers that the cash on hand is insufficient to cover the purchase. The customer may decide to complete payments using a credit card. If you accept a credit card payment option, the customer will feel relieved and will like to patronize your business next time.
Reduces security risk
Notwithstanding that credit cards come with some security concerns, they’re a safer alternative than keeping or moving large amounts of cash with you. Any fraudulent or unnecessary credit card charges may be recovered, but recovering cash may be impossible.
Major Credit Card Payment Risk
Credit card Fraud Risk
The tendency for fraud incidents in the use of credit cards cannot be ignored or underrated. This fraud is normally initiated by fraudsters by duplicating their victims’ credit cards. They can get the victims’ card details from different sources, like POS terminals, ATMs, emails, or their phones.
To curtail this card fraud issue, you have to be very careful with the way you handle your credit. Avoid sharing your card information with anyone. Ensure that your card details are wiped after a transaction, and report any suspicious transaction or any case of a lost card to the authorities managing your cards.
Credit card companies charge interest rates or processing fees on every single transaction carried out. Most credit card processing companies charge a percentage on every transaction.
These are charges incurred due to unconcluded transactions conducted by customers as a result of dissatisfaction with the transaction process. Chargebacks are very difficult and costly to override.
Reduction of credit score
No doubt there is a reduction in credit card scores. This usually occurs due to late payments or defaults in your credit agreement terms. Another factor that may lead to a reduction in your credit score is the overutilization ratio.
The utilization ratio is the proportion of your total outstanding credit card balances against the available balance. A credit utilization ratio is considered acceptable by credit lenders at an average of 30–40%.
To avoid a credit score reduction, make sure to pay your total bill amount by the due date. You can enable automatic deduction by setting up standing instructions in your bank account. Avoid frequent breaches of the 30-40% credit card utilization level.