Before you can start taking orders from customers, you’ll need to set up a payment option that’s simple and allows them to pay without any hassles.
It’s likely you’re considering opting for credit card payments as a convenient and secure way for your customers to pay for your goods and/or services.. So, how do you start the process of accepting credit card payments?
How to accept credit card payments for businesses
Accepting credit card payments for your small business, while beneficial, could initially be a challenging task. The process differs depending on the type of business and payment model.
Here are two potential ways to get your small business set up to accept credit card payments:
A merchant account with a bank
Getting a merchant account with a bank is generally the most challenging route you can take. But, once the account is set-up, it’s the most efficient solution as well.
A merchant account with a bank allows you to create your own payment gateway instead of relying on services like PayPal. With this payment gateway, you’ll be able to accept credit card payments from your customers in a safe and secure manner. By opting to create your own payment gateway through a merchant account, you’ll get access to physical card-reading devices found in brick-and-mortar stores, as well as the payment processing portals used for online sales.
Moreover, by securing a merchant account with a bank, you will most likely have fewer merchant fees per transaction, depending on the industry you’re in.
The process of getting a merchant account can be difficult, especially for smaller businesses, as banks are usually concerned about the risks of credit card fraud and customer complaints.
To increase your chances of getting a merchant account, you could consider contacting a smaller bank or a bank you have an existing history with.
Moreover, a bank would be more willing to give you a merchant account if you have a physical store, as the goods are delivered as soon as the payment is made, which reduces the chances of fraud. If you have an online store that sends the products days or weeks after the payment is made, the bank will likely refuse your application to open a merchant account. In such cases, you could consider using online options that enable you to accept credit cards.
Online merchant gateways like PayPal or Stripe
If you own a credit or debit card, you’ve probably used an online merchant gateway to make a payment at least once. This is one of the most popular ways for small businesses to accept credit card payments online. Also known as a credit card payment gateway, an online merchant gateway is similar to a credit card machine that is online. Your customers can submit their credit card details on a secure webpage to make payments for your services or products.
Setting up an online merchant gateway for your business is relatively easy as you just need to provide a company like PayPal all your business details and identification. Your PayPal account will then be directly linked to your bank account.
Online payment gateways are extremely user-friendly as you can create buttons like ‘buy now’ on shopping carts. You can even allow the customer to choose from various plans or buy-now-pay-later options. You can then add these buttons and customisations on your website for your customers to access.
What fees will apply when you accept credit card payments?
There are three types of fees you will typically be charged to accept credit card payments for your business. The amount usually varies depending on the payment platform. To know the exact amount, you could consider requesting a quote before signing up for a merchant account or payment gateway service.
1. Set-up fees
Some payment solutions may require you to pay a one-time set-up fee or a service fee to create the payment gateway or account. The amount usually varies depending on the size of your business, type of payment solutions you choose and other factors.
2. Account fees
You’ll generally have to pay an account fee on a monthly or yearly basis. This fee is based on several factors like the size of the business, the estimated number of transactions and the features of the package you choose. As account fees are usually a fixed price and are charged at regular intervals, it’s relatively easy to budget for it. However, you need to ensure that you choose the right type of plan and fee structure for your business.
3. Payment processing fees
Usually, you will be charged a payment processing fee, either a percentage of each transaction or a fixed dollar amount. For example, PayPal charges between 1.1 per cent to 2.6 per cent plus a fixed fee of $0.30 per transaction in Australia and up to 3.6 per cent for every transaction in a foreign currency. The fees could also vary depending on the package and features you choose.
While it’s essential to choose the right credit card for your business that provides a host of features, it’s also crucial to select the best way to accept credit card payments for your small business. So, it’s worth comparing various payment options that can help you find a suitable solution for your business and your customers.