Recent studies have shown that more than half of America’s 27 million small businesses still don’t accept credit cards, which is very surprising when you consider how much they’re worth to the economy.
Cards account for well over 60% of offline transactions and their market share is increasing all the time, so they cannot be ignored for much longer. This article includes tips and advice that will help you choose the right credit card processing solution for your business.
There are so many different options available, so you need to do a lot of research before choosing a provider.
Learn more about the different fees and rates. Look out for annual, monthly and individual transaction fees and do some sums to work out which is the best deal overall
These fees are complicated and often take a lot of analyzing but if you’re looking for quick numbers the typical cost to an offline store is 2%. This average rises to 2.5% for transactions where the card is not present (e.g. online transactions).
Remember that these fees are negotiable too. If your business takes a high number of card payments then you’re in a particularly strong position to negotiate. Getting quotes from multiple companies can help too.
Avoid Long-Term Contracts
Nobody likes to be locked into a long contract with a high cancellation fee, but they’re particularly dangerous for small businesses. If a provider tries to sell you a long contract with a reduced rate it’s best to say no, or say that you’ll only sign the contract if they remove the cancellation fee.
Remember that there a lots of different processors competing for your business, so they’ll be prepared to make a few compromises to secure it.
Know the Purchase Minimum Rules
A quick internet search will show you that there’s a lot of confusion surrounding credit card purchase minimums. Before 2010 most card networks included restrictions to stop store owners setting up purchase minimums.
A new law was introduced in 2010 and merchants are now allowed to set a minimum purchase limit up to $10 for credit cards, providing they treat all types of card in the same way.
The two biggest debit card providers, MasterCard and Visa, don’t allow businesses to impose purchase minimums on debit card purchases though, so it’s easy to see why there’s confusion.
To be on the safe side you may want to suggest, rather than enforce, a minimum purchase amount for both credit and debit cards,
Don’t Drive Away Customers
Purchase minimums can be a source of tension between businesses and their customers. Card fees can make small transactions unprofitable when profit margins are slim, but customers generally dislike purchase minimums and the restrictions they bring.
You should do everything you can to avoid setting purchase minimums, even if it means raising your prices slightly. There are many creative ways to encourage cash payments. For example you could enter anyone who pays by cash or check into a monthly prize draw.
Integration and Security
You should make sure your payment data is integrated into the businesses accounting system. Entering data manually takes time and there’s a high risk of inaccuracy. An integrated payment solution eliminates this risk.
It goes without saying that the merchant accounts provider you choose needs to be reputable and offer a system that’s totally secure. Be sure to research a company thoroughly before you select them as your provider.
Embrace Credit Cards
Even though accepting credit card payments will usually cost your business more in fees than cash transactions you should still embrace them with open arms.
You need to allow customers to purchase from your store in the way that they want to. Statistics published in Forbes last year show that 66% of all POS (point of sales) transactions are now made with either credit, debit or gift cards.
In comparison cash payments account for only 27% of all POS purchases and it is predicted this figure will be as low as 23% by 2017.
It can be hard to adjust to the fees as first, but once you’ve fully integrated credit card processing into your business you’ll see that the benefits cards bring significantly outweigh any added costs.