How to accept credit card payments

Many small business owners who didn’t accept credit cards before the pandemic find that it’s absolutely mandatory now. With more shopping and transactions taking place through online commerce and mobile apps ­– and many consumers preferring to avoid handling cash – accepting credit cards is one of the most valuable steps you take to grow your business, if you’re not doing so already.

Even with the COVID-19 vaccine rolling out, 74% of small business owners expect consumers to prefer contactless payments once a vaccine is widely available, according to recent research by Visa.

Check out all the answers from our credit card experts.

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Benefits of accepting credit card payments

There are many advantages to accepting credit card payments that go beyond changing consumer preferences. Consumers will often buy more with credit cards than they would with cash. If you run a service business, accepting credit cards can improve cash flow. A consumer who can’t pay you with cash immediately may be able to pay you with a credit card more quickly. And accepting credit cards can also help make it easier to keep track of revenue. All of your records of credit card transactions will be in one place.

How to accept credit cards as a small business

If you are going to accept credit cards on an ongoing basis in a small business, you’ll probably want to find a merchant account provider to set you up with a commercial bank account allowing you to accept and process electronic payment card transactions. You will need to sign an agreement with the merchant account provider that outlines per-transaction costs you will pay, as well as any associated fees. It is important to shop around as these costs may vary considerably.

If you’re having trouble finding a merchant provider, asking other businesses in your industry is a good place to start. That’s because many merchant account providers tailor their offerings to particular industries. A plan that’s best for a small medical office might not be ideal for an e-commerce merchant – and vice versa. Some trade organizations can also recommend preferred providers.

What credit card payment processing options are available?

If you don’t need to accept credit cards on a constant basis but still want to be able to offer this payment option to customers, there are a number of ways to do so, through payment services providers. Here are some options:

  • Square provides you with a free device you can attach to your phone or iPad and allows you to process transactions anywhere with good Wi-Fi. It costs 2.6% plus 10 cents per tapped, dipped or swiped transaction to use.
  • Clover offers a similar card reader you can plug into your digital devices to accept credit cards. The Clover “Go” reader costs $69.The least expensive plan, “Register Lite,” costs $9.95 a month and 2.7% plus 10 cents for in-person transactions and 3.5% plus 10 cents for keyed-in transactions.
  • PayPal Here offers a free mobile card reader when you sign up. You can also opt for a chip-and-swipe reader or a chip-and-tap reader that comes with a charging stand for $79.99. PayPal Here charges 2.7% per swipe for card-present transactions. Keyed transactions are 3.5% plus a fixed fee.

See related: Square vs. PayPal Here: What’s best for your business?

There is another quick and easy way to accept credit cards through your invoicing software. If you use QuickBooks, FreshBooks or Xero accounting, you can offer customers the option of paying by credit card by selecting that option on your invoices. If you normally invoice your coaching clients this way, it may be the simplest way to accept credit cards.

For customers who simply want to pay electronically and not specifically by credit card, you might also check out Zelle, a bank-to-bank transfer system that allows a customer to pay you in cash electronically. There are no fees. However, the customer has to have the cash available to do this, as Zelle doesn’t accept credit cards.

In-store vs. online payments

If you want to accept in-store payments, you will need a point-of-sale system or a mobile system such as Clover, Square or PayPal. Your merchant processing provider will typically be able to provide you with the equipment you need to swipe, dip and key in transactions.

When deciding how you will process transactions, it’s important to consider what the flow of activity is like in your place of business. If you operate a store, it may be most efficient to have a countertop point of sale system. However, in a restaurant where customers pay at the table, you might do better with a system that allows customers to pay on a tablet.

Bottom line

Some business owners are reluctant to accept credit cards because they don’t want to pay the fees. It’s not possible to avoid credit card processing fees, but it’s important to consider the cost of not accepting credit cards.

Will a potential customer opt out of working altogether if you don’t make it easy to pay – and miss out on your services as a result? If that’s the case, it may be worthwhile to accept credit cards.

Every customer has different habits when it comes to making payments. The more varied the payment options you offer, the easier it will be for customers to choose to do business with you.