Credit card payment processing for small businesses |

Credit card processing for small businesses

Want to start accepting credit cards at your small business? Learn about your processing options.

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In this day and age, if your business isn’t capable of accepting credit cards, you’re certainly going to be missing out on sales. In fact, a 2018 study showed that only 25% of consumers would be deterred from shopping at a store if it were cashless. Customers want convenience, and credit cards are the ultimate form of convenience when it comes to spending.

If you can give the customer an option besides a cash payment, allowing them to swipe a credit card for a purchase is certainly the way to go — and it can be easier than you think to integrate into your business.

What is credit card processing?

When a customer presents their credit card, their payment info needs to be verified. That’s when your credit card processor goes to work to clear the transaction. This happens behind the scenes with your processor, your customer’s bank and the card networks.

Different types of credit card processing

These are probably the most familiar options. Credit card readers are secure and simple to use, allowing customers to swipe, insert or tap their cards against a reader for payments. A credit card machine accepts most cards, and there are different types of machines for different kinds of businesses.

  • Countertop machines. These machines are attached to your Point of Sale (POS) computer system and allow you to process card payments from a fixed location in your store.
  • Mobile readers. These allow you to process payments wherever you go, and offer a lot of flexibility. They’re ideal for cafés and restaurants because you can process card payments where your customers are seated. They can also be convenient for delivery services or outdoor markets.
  • Integrated machines. This option is integrated with your POS system to help simplify sales reporting and the balancing of accounts. They are best suited for businesses with higher transaction volumes, such as supermarkets.

What are the costs of getting a credit card reader for my small business?

Depending on the vendor, you could be potentially charged the following fees:

  • Setup fee.
    Some vendors may charge this to cover initial support in getting your processing system off the ground.
  • Rental fee.
    What you pay to rent a credit card terminal.
  • Service fee.
    Your processor may charge a fee for ongoing support.
  • Printer cost.
    Most machines have internal printers, and this will let you print physical receipts.
  • Interchange fee.
    Fees that issuing banks charge to merchants for credit card processing.
  • Monthly minimum fee.
    The minimum amount of processing fees you must pay to the vendor. If you don’t reach this amount, you’ll need to pay the difference.
  • Early termination fee.
    A penalty fee you pay if you end your Merchant Processing Contract (MPC) before it expires.

Fees and prices can always vary significantly between companies. For example, one vendor may charge a fixed monthly contract with no setup fees, while another may charge a setup fee plus monthly usage-based charges. It’s important to factor these costs when making the decision to get a credit card reader for your business.

How long does it take to set up?

Setting up your credit card processing account can take anywhere from a day to two weeks. It may take less or more time depending on your business type, the volume of purchases you intend to process, your financial records and more.

happy credit card user

Smartphone and tablet credit card payment processing options

It’s becoming more simple to take a payment from mobile devices thanks to card readers that can plug directly into any phone or tablet and mobile apps that allow payments between users. Some popular smartphone and tablet payment processing choices include:

  • Square.
  • PayPal Here.
  • Intuit QuickBooks Go Payment.
  • PayAnywhere.
  • Shopify.

These products are compatible with iOS and Android devices and are convenient options that can suit sole traders and smaller businesses on the go, such as market vendors, food trucks, plumbers and electricians.

What are the costs for smart device credit card processing services?

Potential costs include the following:

  • Card reader cost
  • Swiped transaction fee — usually a percentage of the transaction, e.g., 2.75%
  • Keyed transaction fee — usually a percentage of the transaction, e.g., 3.5% and 15 cents for manual input of card

Generally, you pay the fee for the card reader and then the processing service charges per transaction. However, some providers offer the card-reading device for free when you sign up for a monthly plan.

When considering this option for your business, it’s important to decide if a smart device payment system can meet all of your needs.

Online credit card processing for small businesses

E-commerce is incredibly convenient, as everything is online and available for purchase with just a few clicks. Online credit card processing works safely and efficiently via a secured Internet connection and allows shoppers to browse and buy from virtually wherever they are. It’s ideal for any business operating on the Internet.

What are the costs of setting up online credit card processing for a small business?

A big advantage of online payment processing is that you can do away with monthly and annual fees, set-up fees and contracts. Each online transaction usually attracts a fixed-percentage of the transaction amount.

  • Some providers charge an extra fixed fee on top of the percentage fee, for example 2.6% plus 25 cents per transaction.
  • Some companies may charge a higher rate for processing international payments that need to be converted into another currency. For example, PayPal charges 2.9% plus 30 cents per transaction.

Depending on the type of business as well as the number of transactions, you may find that online credit processing is an affordable and flexible choice.

Credit card processor Per-swipe transaction fee for mobile (US) Manual transaction fee for mobile (US)
Square 2.75% 3.5% + 15 cents
PayPal Here 2.7% 3.5% + 15 cents
Intuit QuickBooks Go Payment 2.4% + 25 cents — pay-as-you-go plan 3.4% + 25 cents — pay-as-you-go plan
PayAnywhere 2.69% 3.49% + 19 cents
Shopify 2.7% — basic Shopify plan 2.7% — basic Shopify plan

What credit card machine features should I look for?

  • Works without an app. Some machines can process transactions alone. Others need to be paired with an app — for example, the Square reader needs to be used with the Square app.
  • Magstripe swipe reader. This reads the magnetic stripe on the back of a card.
  • EMV reader. This allows a customer to use a chip card by dipping the card into the machine.
  • NFC payments. NFC (near field communication) lets customers pay with services like Apple Pay, Android Pay and Samsung Pay.
  • Built-in receipt printer. You can print receipts straight from the machine. If the machine doesn’t have the capability, you’ll print a receipt from another terminal.
  • PIN pad. This allows customers to enter PINs — for example, if they use debit cards.
  • Mobile. Usable with a mobile device. For example, you can plug the Square reader into your smartphone.
  • Works with most POS systems. Some readers work with many point-of-sale systems. Others work with just one POS system — such as the Square reader, which must be used with the Square POS.
  • Price. Some machines have monthly fees, others have upfront fees.
  • Free 24-hour replacement. If there’s a problem with your machine, some providers will replace it quickly and at no cost.

What to consider when selecting a credit card processing option

Start by considering the needs of your business, then do the math to weigh up the extra costs to decide if it’s worth the investment. Also, check with the processing company that you’ll be able to accept major credit cards.

The type of business

  • Businesses involving face-to-face customer service or high volumes may find conventional credit card readers are still best suited to their environment.
  • Mobile or seasonal businesses may prefer smartphone and tablet processing to give them the mobility and freedom they need.
  • Online businesses are most likely to appreciate the convenience of online credit card processing.

Software integration

  • Find out whether the processing service will integrate with your current software.
  • Look for devices that offer the most comprehensive solutions, such as accounting or sales reporting features.

Revenue and surcharges

  • Revenue should offset the cost of setting up a card payment service and any ongoing processing fees.
  • Consider whether you can realistically expect an increase in sales by offering credit cards as a form of payment.
  • Have clear signage to inform customers of any surcharges if they pay with a card.

How to save on credit card processing fees

  • Shop around.
    You don’t have to settle on the first processor you find. Compare rates between different vendors — the extra research can pay off in significant fees saved.
  • Negotiate with your processor.
    It never hurts to ask your processor to lower your rates. Your request is more likely to succeed if you have a lot of volume.
  • Switch your bank.
    You may be able to cut down on processing fees by using a bank that takes care of processing in-house. This means big banks such as Chase, Bank of America, US Bank and Wells Fargo.
  • Avoid manual transactions.
    Processors tend to charge higher fees for keyed-in transactions, because these come with a higher risk of fraud. Instead, swipe cards and pay the lower transaction fees.
  • Set a minimum on credit card sales.
    You could require customers to rack up a certain amount of purchases to use a credit card. This will incentivize them to use cash or check out with higher purchase sizes.
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Compare business credit cards

Great business tools can streamline operations and open new opportunities. Like credit card processors, business credit cards can help you grow your business.

Name Product Filter values Rewards Purchase APR Annual fee
2% cash back on all purchases on up to $50,000 per calendar year, then 1%
0% intro for the first 12 months (then 15.24% to 21.24% variable)
Earn 2% cash back on all purchases on up to $50,000 per calendar year, then 1%. Rates & fees
2% cash back on all purchases
19.24% variable
$0 intro annual fee for the first year ($95 thereafter)
Earn $500 after spending $4,500 in the first 3 months.
1.5% cash back on all purchases
0% intro for the first 9 months (then 15.24%, 19.24% or 23.24% variable)
Unlimited 1.5% cash back on every purchase, every day.
2x points on everyday business purchases on up to $50,000 annually, then 1x points
0% intro for the first 12 months (then 15.24% to 21.24% variable)
Earn 2x Membership Rewards® points on everyday business purchases on up to $50,000 with no category restrictions. Rates & fees
2x miles on all purchases
19.24% variable
$0 intro annual fee for the first year ($95 thereafter)
Earn unlimited 2x miles on every purchase for your business, with no blackouts or seat restrictions, and no minimum to redeem.

Compare up to 4 providers

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Bottom line

Non-cash payments are only increasing, and your business’s revenue will likely grow once you start collecting credit card payments. Compare card processors and examine them based on cost and convenience. In no time at all, you’ll have a smooth-running card terminal that streamlines your payments.

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