Credit card processing basics that every business owner should know.
Accepting credit cards as a mode of payment is something of a necessity to improve your business nowadays. Before we talk about credit card processing, here are some terms you should familiarize yourself with:
- Merchant Account – this the account that allows you to accept and process credit card payments. You can get an account from your bank or payment processors and services.
- Processing Fees – these are the fees you pay to your Merchant Account Provider.
- Point of Sale System (POS) – these systems handle in-store payments and are also called Credit Card Processing Terminals. They usually include a payment screen, a credit card reader, a cash drawer and a receipt printer.
- Payment Gateway – this connects your online store’s checkout page to your payment processing system.
- PCI Compliant – the Data Security Standard of the Payment Card Industry is applicable to all companies of all sizes that accept payments via credit cards. You need to make sure that your hosting provider is PCI compliant.
- Cash Discount Programs – When a merchant reduces the price for customers who pay in cash for their purchases, which offers merchants an alternative to credit card processing.
The reason why many small business merchants don’t want to allow credit cards as a payment option is because of the many processing fees that they feel they need to pay to their credit card processors. That can be fixed with a little careful research into your processors fee structures.
Here are few things to be careful about:
- Hidden Fees: Complete transparency from your credit card processor is a must. You should know exactly how much you are paying in fees for every transaction.
- Fraud Protection: You provider should protect you and your customers from fraud
- Quick Transfer of Funds: You should be able to see the funds from credit card transactions within 24 to 48 hours.
For small business owners, transactions are also small and so getting a credit card processing system may actually be too expensive. However, once you start scaling up, you will need to look at this option as this is the prime payment method in the world today, beating cash payments.
At this point, you can actually consider the Cash Discount Programs such as the one offered by Merchant Driven called MerchantWIN®. This program’s proprietary technology ensures that even if you offer this benefit to your customers, you will still be within the guidelines laid out by Processor regulations.