The credit card is the most convenient and popular mode of payment today. Millions of consumers rely on credit cards for buying goods, paying bills and so on. If you don’t want to lose out on these customers, it is high time you start accepting credit card payments. with a little information you can avoid the big mistakes made by others.

‘Third-party Merchant Services’ are credit card processing companies that process credit card payments on your behalf and deposit the money in your account. This option is best suited for:

• Those who do not want to handle credit card transactions on their own
• Those who do not own a secure server to store customer credit card data
• Businesses with less than $1000 worth of transactions per month
• Those who may have difficulty in obtaining their own merchant account (bad credit history, unauthorized business dealings, ownership issues, etc.)
• Those who first want to test if accepting credit cards will boost their sales, and only then obtain their own dedicated merchant account.

Though third-party processors are also referred to as ‘free’ merchant accounts, they are not really free. While the set-up costs for these accounts are very low, they earn their revenue by charging a small percentage from each of your completed transactions.

These are some of the most popular third-party merchant service providers:

• PayPal – Paypal allows to you sell electronic goods, services and other products by processing all your credit card transactions on its server.  Though setting up an account is free, it charges a small percentage on all your transactions.

• ProPay – ProPay supports all kinds of businesses that accept credit cards and require instant credit card processing services. You need to pay a one-time activations charge, plus 3.5% of total sales and $0.35 per transaction.

• 2Checkout.com – This is another third-party merchant service that supports all types of businesses that accept credit cards. An account can be set up in as little as 3 minutes.

• CC Now – It provides complete solutions for online auctions and other kinds of businesses.

• Kagi – This is best suited for ecommerce sites and other online businesses. It handles everything, from the creation of websites to processing online payments.

• Clickbank – It caters to businesses that deliver unique products or services only over the internet.
• Credit Card Billing – CCB is for companies that sell website content or services, and charges a small percentage of the transactions that are processed through their server.

While opting for a third-party processor is the best option for some who accept credit cards for business, it has its disadvantages too. Let’s have a look at the pros and cons of using third party merchant accounts:

Pros:

• Low upfront costs
• No customer service charges or gateway fees
• Minimal (sometimes zero) Setup Fee
• Capable of handling international sales
• No credit checks required
• Starts accepting online payments within minutes

Cons:

• Charges a percentage from all completed transactions
• Charges a small fee per sale
• Retains 5-10% of your total earnings as a safeguard against charge-backs
• More expensive than dedicated merchant accounts
• Support is based on the kind of products you sell or services you offer

Do your homework properly before selecting a third-party merchant service. While it has its cons, using a third-party processor is still the easiest, quickest and most inexpensive solution for accepting credit card payments without owning a merchant account.

• Secure Server Certification: When your customers key in their credit card information on your website, it gets stored on the server. To prevent any unauthorized interception of such sensitive data, you need SSL encryption.
• Order Form: This is an online form required for financial transactions and provided to your customers to fill in their banking details. The form must be hosted on a secure server to prevent fraudulent activities.
• Gateway: Online Gateway allows the transfer, authorization and processing of customer’s personal and financial information to the main processor.
• Shopping Cart: This allows visitors to shop around for various products and get them billed.

Register for a Merchant Account

The second step toward accepting online credit card payments is registering for a merchant account either at a bank or a credit card processing company. Having a Merchant Service Account allows you to securely process, manage and verify credit card transactions.

If you are a large business and have been around from a long time, you can approach banks to provide you with a merchant account, otherwise you can choose one of the credit card processing companies.

Here’s a list of indicators that can help you stay away from fraudulent merchant account providers:

• Non-Disclosure of Fees
• Inexperienced Sales People
• Small companies with no Track record
• BAD or NO BBB rating
• No Helpline Facility
• Partial Application forms
• Poorly Designed Websites
• Companies that don’t list Prices on their Website
• Companies that don’t have their own in-house customer support

If you accept both credit and debit cards, look for companies that provide the ‘Split Debit & Credit Pricing option’. This will help you take advantage of the pricing available for the specific card types that you typically accept.

Once you have set up a fully functional and secure ecommerce website and registered for a merchant account, the last and the final step is to choose the best processing equipment for your business.

As a merchant you might not know what processing system is right for your kind of business. In most cases, your merchant account provider will also provide the virtual processing equipments for your site and give you more options, making accepting customer credit cards far easier and more convenient.

Choosing the Right Processing Equipments

The basic function of all terminals and printers is to read the credit card information, process it and provide the receipt of the charged amount to the customer. Here’s a look at the most popular processing equipments used by different kinds of merchants:

Retail Merchants: Retail merchants will require instruments that are easy to use, simple and come with a printer. Some examples are Nurit 2085, Hypercom T7-Plus and Verifone Vx510LE.

Keyed Face-to Face Merchants: They can choose either a combination of card readers and printers, or can go in for a terminal-only option. Some examples are Tranz 330 or Linkpoint 3000.

Internet/Online merchants: If you have a high speed internet connection, you can choose Gateway and Virtual Terminals such as Authorize.net, PC Charge etc. These are fully integrated with most shopping carts for real time online transactions.

While the entire process of getting started with accepting credit cards might seem long and tedious, it usually gets completed within 48 hours. Ensure that you follow through all the steps for a successful and trouble-free online business.

1.) Double or Triple your Current Sales

If you look at the latest market trends, you will notice that businesses that accept credit cards earn three times more profit than those who don’t.  This is because most  buyers today prefer using credit cards for all their purchases. If you don’t accept them, you lose out on a potential number of buyers.

2.) Benefit from Impulse buyers

Credit card holders tend to be impulsive buyers. Not only is their buying capacity more, they also buy products on an impulse by paying through their credit card. If you do not accept credit cards and rely more on cash payments, you will lose out on all these customers.

3.) Improved Cash Flow

Accepting credit cards for business increases the cash flow in two ways – one, you are able to cater to many more customers than you presently do and secondly, the credit card payments are instantly credited to your bank account. You will no longer need to wait for pending invoices or cheques to clear.

4.) Increase your Credibility

Displaying logo of the credit cards you accept payments from, greatly increases your credibility. When people see those logos, they trust you more and are more willing to buy merchandise from you. This is especially true for online businesses where reliability and security are two major concerns.

5.) Lifeline for online customers

If you own an online business and do not accept payments through credit cards, there is nothing worse you can do. Almost 90% of online shopping is done through credit cards. People will always prefer a site that accepts credit cards and when you don’t, your business suffers.

6.) Flexibility

Safety, convenience and reward points are some of the reasons why customers prefer using credit cards, online or offline. When you say No to credit cards, you are actually saying NO to more than 80% of buyers. You should be more flexible and let customers pay through their preferred payment mode – be it cash, cheque or credit cards.

Whether you own a website or a garment store, accepting credit cards will improve your sales and profit margins significantly.

This is how you can start accepting credit cards for your business and get your profits rolling:

Step 1: Ensure that you have your Business License in place

If yours is a government approved company, you would already be having an operating license with you. However, if you do not, apply for one now- since such is needed to open a merchant account and accept credit card payments.

Step 2: Understand the Difference between Credit and Debit Cards

Credit cards provide customers a fixed line of credit which they can use to pay for goods and services, whereas debit cards are just a cashless method of paying directly from a person’s checking account. It is best to accept payments from both, as this provides your buyers with more payment options.

Step 3: Understand the State Laws and Regulations

Every state has its own rules and regulations to protect consumer rights and these apply to all businesses. Before you start accepting credit cards for business, get acquainted with these laws to prevent problems in the future:

• The Fair Credit Reporting Act – It is the federal law that regulates the collection and use of consumer credit information by businesses.
• The Fair and Accurate Credit Transaction Act (FACTA) – This law was passed in 2003 and is also known as the Consumer Credit Protection Act. This law deems that it is important to provide all your customers with a receipt of credit card transactions.

These and many other such laws are meant to safeguard all your transactions, so that neither you nor the consumer gets cheated.

Step 4: Set up a Merchant Account

A merchant account allows you to accept credit card payments and deposits that money into a designated ‘bank’ account where all financial transactions are verified and approved. This helps you accept payments directly from consumers, and the amount is instantly added to your bank account.

You can either contact your bank to set up a merchant account for you, or you can choose a financial institution or credit card processing company instead.

Step 5: Install Credit Card Reader/Processing Instruments

The last step is to install the credit card processing units or equipments in your store. These are machines that allow you to swipe the credit/debit cards and charge the consumer. The cost of these equipments differs on the basis of their features, ease of installation etc. Ensure that you choose a processing unit that provides maximum security.

Choosing to accept credit cards is a big, but often necessary step one has to take to run a successful business. Following the above 5 tips will make this process easier, and you will soon be on your way to earning more money.

To be able to cater to millions of credit card users, you need to accept credit cards for your business transactions too. And the first step in this direction is setting up a merchant account.

What is a Merchant Account?

A merchant account is an account set up with a financial institution that allows you to accept credit card payments directly from your clients. The money charged from the customers is directly credited to your bank account. A merchant account is essential for processing and verifying credit card payments from customers and getting the money deposited directly in your account.

You can approach your bank or other independent financial institutions such as credit card processing companies to get a merchant account for your business.

Different Types of Merchants

• Swiped or Face-to Face merchants: These include retail businesses, restaurants, lodges etc. Retail merchants can physically swipe their customer’s credit card through a processing terminal at the point-of-sale.

• Wireless merchants: They need to accept credit cards wherever they are, and not necessarily within their offices or stores. Thus, the merchant account provider equips them with a wireless terminal that allows immediate authorization for their credit card sale.

• Keyed or Card-Not-Present Merchants: These are merchants who collect credit card information without swiping the card through a point-of-sale. In such cases, the credit card information must be typed or keyed-in for the transaction to take place.

• Keyed Face-to-Face merchants: These are merchants that meet their customers face-to-face, but not at a sales point where a processing terminal is present. Some examples of keyed face-to-face merchants are pizza delivery people, landscapers etc. who meet their customers either to deliver a product or provide a service. The credit card information for such accounts needs to be manually keyed in.

• Internet or Ecommerce: As the name suggests, these are the merchant accounts for websites and e-stores, where credit card transactions are processed through internet gateways. These are automatically processed in real-time as the customers purchase products online.

Based on your business, you can decide which merchant category you’d fall into, and your merchant account provider would set up an account with all the features that your business requires.

Merchant Account Costs

Before you select a merchant account provider, you also need to compare the charges and fees. Ensure that these are optimal and do not outweigh your profits. Some of the common provider charges and fees include:

• Transaction fees
• Sales transaction fee per item
• Batch fee/ACH fee
• Amex and Discover Transaction fees
• Authorization charges
• Statement fee
• Monthly Service fee
• Set up fee
• Annual Fee
• Chargeback Fee
• Early Termination Fee
• Retrieval Fee
• And many more

Setting up a merchant account is essential if you want to accept credit cards for your business. With little research and planning, you can acquire a merchant account that is feature-rich and inexpensive.