Accepting Credit Card Payments for Your Small Business
Having access to credit can enhance your small business, providing a way for your customers to do business with you whether they have cash on hand or not. Accepting credit card payments can expand your business and there are options you can take to make dealing in credit possible for you and your customers.
Small business operators can put in place one or more of these options, accepting credit as soon as today.
1. Establish a merchant account — Your bank would be happy to help you establish a merchant account, one where you can accept credit cards directly from your customers. You will need to fill out an application for approval by MasterCard, Visa or both, with your bank processing your application. If you choose to deal with Discover or American Express, you may need to make a separate application for one or both services.
2. Get equipped — To process credit cards, you’ll need to receive equipment from your financial institution. Typically, this is a card reader that is attached to a modem, permitting instant access to the credit service. By having instant access to the service, point of sale purchases can be immediately accepted or declined. You may need to ask the customer for identification to verify the cardholder and the validity of an account. Check the signature on the back of the card against the signature on the receipt before giving final approval for a sale.
3. Process transactions online — Some business operators prefer not to deal with equipment and outsource credit processing to a third-party completely. For example, Paypal is the largest service provider of online transactions and charges fees that are competitive with banks and other account providers. With Paypal, you make application, giving your business information including a bank account to transfer funds. Make yourself aware of Paypal’s rules to ensure that your account does not become frozen, an event that can take days to clear up. Show the Paypal symbol on storefront or website to give customers assurance of the security this service provides.
4. Review fees and rules — Every payment processor will charge fees for transactions and you need to know what these are and how they are charged. Some merchant accounts charge a flat fee by the month, quarter and year while others charge a flat fee for every transaction. Some do both. Expect to pay fees on products that are refunded, another cost your business must incur.
Your business may find it beneficial to offer your customers a number of choices for using credit. MasterCard and Visa go far, but American Express, Discover and Diner’s Club may be preferred options for your customers. Accepting credit can increase your business, but be aware that the Federal Trade Commission builds in layers of protection for consumers, including a detailed process for handling disputes.