How to accept credit card payments from your customers | finder.com

How to accept credit card payments from your customers

This can be one of the simplest parts of your business to manage.

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Once you know how to accept credit card payments on the Internet, it can become one of the easiest elements of your business because it requires so little of your time for processing and management.

This allows you to be able to receive payment from customers for a variety of transactions, such as ordering goods and services, creating service subscriptions, purchasing tickets, making reservations and more.

Get your business in order to start receiving payments

You technically don’t need to do anything specific to start receiving customer payments. However, there are a few steps you can take to make sure your payments go smoothly.

  • Apply for a tax ID number.
    If you plan on opening a business bank account, you’ll need a tax ID number from the IRS and the state in which you’re operating your business. You can print out IRS Form SS-4 from the IRS website to start this process.
  • Set up a business bank account.
    This helps keep your finances separate and might be necessary for depositing checks if you’ve incorporated your business.
  • Register your business name if necessary.
    If you’re not doing business under your own name, you’ll need to register your fictitious business name in your area of business. Some banks will require you to register your business name prior to opening a business bank account and this often requires you to pay a small fee.

Choose a payment processing method for your business

You generally have two options: merchant accounts and third-party processors.

Merchant account providers.

You might think of merchant accounts as the go-between in moving funds from a customer’s credit card or debit card to your business bank account. There’s a host of dedicated merchant account providers that can help set up your business with a merchant account and relevant credit card processing services.

Merchant account providers tend to be ideal for larger businesses, as they can provide more dedicated resources than third-party processors. They can also provide services to help you manage your business cash flow. Merchant account providers can help supply you with physical hardware you might need for in-person credit card payments.

Merchant account providers typically feature top-notch security and dedicated resources for your business but are more expensive than third-party website processing. Many merchant account providers also require your business to reach a certain threshold of income or transactions before they’ll take your business on.

In addition to the setup fees, there are merchant fees each month, as well as transaction fees on each purchase charged by the bank.

Third-party processors.

Third-party processors help your business process credit card payments similar to a merchant account provider. The difference is third-party processors have their own merchant account, which serves as the hub for distributing credit card payments for multiple businesses, not just your own. PayPal and Square are two of the more popular third-party processors on the market right now.

Setting up credit card processing through a third-party processor is much simpler than creating your own merchant account and helps you avoid some of the fees associated with merchant accounts.

The downside of third-party processors is a lack of the dedicated support you’d find in a merchant account provider. You’re also ultimately at the mercy of your third-party processor and you might find your account frozen or terminated for reasons outside your control.

Policies

Clarify your policy on the return of purchased goods, the steps for customers to take if they wish to return a purchase and any specific costs that are related to returns.

Describe in detail your policies regarding shipping for customers. Do not forget that some customers may be located overseas with additional shipping, importation and other costs.

Merchant account providers vs. third-party processors

Whether you go with a merchant account provider or third-party processor depends on the size and needs of your business.

ProsCons
Merchant account processor
  • Personalized support and customer service
  • Highly secure
  • Support for a wide variety of credit cards and currencies
  • More fees than third-party processors
  • You might not be eligible depending on the size of your business
Third-party processors
  • Very easy to setup
  • Fewer fees associated with processing payments
  • No monthly minimums
  • Higher transaction fees compared to merchant account providers
  • Less secure than merchant account providers
  • Limited customer service

Compare business credit cards

Updated September 21st, 2019
Name Product 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 14.99% to 20.99% variable)
$0
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)
$0
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 14.99% to 20.99% variable)
$0
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

Bottom line

Getting started with a business website can be complicated, but its easier than ever to open your business to payments. Review your business needs to determine which method of processing credit card payments works best for you. You might also compare business credit cards to help finance your online business.

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