What small business owners need to know about credit card processing
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Running a small business is hard work, and it can be tough to keep up with all the financial responsibilities that come with it. One of the most important – but often overlooked – aspects of running a small business is credit card processing.
Credit card processing is the term used to describe the act of exchanging payment for goods or services with a credit card. When you run a small business, it’s crucial to have a good credit card processing solution to accept payments from your customers.
You need to know a few things about credit card processing before getting started. Here are some of the most important things to keep in mind.
You’ll need a merchant account to process payments
A merchant account is a bank account expressly set up for businesses to accept credit and debit card payments. When a customer purchases with a credit or debit card, the payment is processed through the merchant account.
There are several different types of merchant accounts, and each one has its own set of fees. The most common type of merchant account is a swiped account, which allows businesses to process payments by swiping customers’ cards through a magnetic stripe reader. Other types of merchant accounts include:
- A keyed account allows businesses to process payments by manually keying in customers’ card information.
- An online account allows businesses to accept payments over the Internet.
- An e-commerce account is specifically for businesses that sell products or services online. It includes features that allow businesses to process transactions securely, such as fraud protection and encryption.
A merchant account is provided by a bank or other financial institution specializing in these accounts. These banks are called “acquiring banks” because they approve you for a merchant account and “acquire” the funds from card issuers on your behalf before depositing them into your business’s bank account.
There are several different types of credit card processors
Merchant account providers, independent sales organizations (ISO), and banks are most common. Each one has its benefits and drawbacks, so it’s essential to do your research before signing up with one.
Merchant account providers are companies that offer merchant accounts. It’s the most common type of credit card processor. They usually have low processing fees and offer a wide range of products and services. However, their customer service can be lacking at times.
Independent sales organizations (ISO) are companies that partner with banks to provide credit card processing services. They usually have lower processing fees than merchant account providers, but their product offerings are limited. They also have poor customer service ratings.
Banks are financial institutions that provide credit card processing services. They usually have higher processing fees than merchant account providers or ISOs, but their product offerings are wide-ranging, and they typically offer better customer service. Banks often require high minimum monthly purchases to qualify for lower rates, so it’s important to know what your business will need before signing up with one of these processors.
Credit card processing can be expensive
There are a few reasons why credit card processing can be expensive. One reason is that credit card companies charge merchants a fee for each transaction. This fee is often referred to as a “processing fee” or “swipe fee.”
Another reason credit card processing can be expensive is because it is often used to process large transactions. The credit card companies have to ensure that they profit on these large transactions, so they charge merchants a higher processing fee.
But there are ways to keep credit card processing costs down. Instead of paying per transaction, you can sign up for a flat-rate merchant account. Doing so will save you money in the long run because it eliminates all those pesky per-swipe fees!
Or, you can offer reward programs like cashback rewards cards or travel points cards where every time someone makes a purchase using their card from your store, they get a small percentage back of what they spent at your store.
Look for credit card processors like Helcim that offer affordable fees and no hidden fees. They also have a customer service team that promptly answers any of your questions. Check out this Helcim Review to learn more.
Website or software compatibility
Not all credit card processors are created equal. Some only work with certain types of shopping cart software, and others are not compatible with ecommerce at all! It is essential to check the compatibility before you choose a processor.
Some processors will advertise that they accept “all shopping carts,” but this may not be entirely true, especially if your website was built on custom software.
Final words
Credit card processing can be a daunting task for small business owners, but it’s essential to understand the process to ensure that your business runs smoothly. By taking the time to learn about credit card processing, you’ll be able to make informed decisions about which processor is best for your business. Also, if you ever have any questions or concerns, don’t hesitate to reach out to your processor for assistance.