Credit cards are a central part of the modern shopping experience — and if your business can’t accept credit card payments, you’re probably missing out on some serious revenue. Luckily, you won’t have to jump through too many hoops to process credit card payments. Consider these three simple payment-processing methods that your company can implement, along with the pros and cons of each:
Go digital with an E-commerce platform
Do you sell your products online through sites like Etsy and eBay? If so, your e-commerce platform offers an in-house credit card payment processor. On top of the ability to accept payments from every major credit card company, these platforms let your shop accept gift cards. To get this handy tool set up, all you’ll need is your employee identification number and your account information from your financial institution. When you build a store on one of these platforms, you’ll have the option of integrating the payment processor into your existing website, or building an online storefront from scratch on the platform. Best of all, most e-commerce platforms offer a free trial period, so there’s no risk or commitment when it comes to starting a shop. However, if you decide to go this route in the long term, you’ll pay a bit of a premium for the convenience. According to Jamie Johnson, a contributor to the U.S. Chamber of Commerce website, e-commerce platforms tend to charge higher fees than other credit card processing methods.
Pick up a payment service provider
Although not quite as convenient as an e-commerce platform, payment service providers are also a quick and easy way to accept credit card payments. Popular payment service providers, including PayPal, Stripe and Square, offer flat rates and no contracts, so you can cancel at any time. Johnson warns you should expect to pay fees up to 2.9 percent if your shop processes less than $1 million in annual sales.
Move up to a merchant account
If your company is committed to processing credit cards and electronic payments, consider opening a merchant account at your financial institution. This allows your financial institution to serve as a liaison for you, so you don’t have to worry about complex details like payment authentication. However, setting up a merchant account is a longer process than the other methods. You’ll need a lot of paperwork on hand to open your account, including your desired payment model, your company’s tax returns, a list of its business activities and information on your other accounts. Plus, you’ll have to choose which countries your store will serve and which credit cards you’ll accept. Although it’s more expensive to accept more credit cards, U.S. Chamber of Commerce contributor Sean Peek explains this often translates into turning away fewer customers and receiving greater sales. And despite the relatively complicated setup process, a merchant account is often more affordable than the previously listed options. However, Johnson advises you to consider that merchant accounts typically involve a multi-year contract. Therefore, if you’re just getting started with a new business, it might be best to start off with a less-committed payment processing method.
Bear in mind that every form of credit card processor will include fees. According to Peek, these can include setup fees, statement fees, early cancellation fees and transaction fees that skim 2-3 percent off of every sale you make. In addition to these, most processors require you to pay a monthly minimum fee of $10-$25.
Despite these costs, accepting credit cards can give your sales a massive boost. If you’d like more information on setting up credit card payments, contact an advisor or specialist at your financial institution.