Credit card processing for small business

Great news: 2020 is coming to an end. Soon enough, the winter holidays are upon us. As you get your business ready for the new year, it’s time to ensure you have the right payment platforms ready. Let’s go through the virtues of small business credit card processing, why you’d need it for your business, and the factors to ensure you’re getting the best deal in town. 

The case for credit card processing 

It’s rare nowadays for people to carry a pile of cash, which is especially true for eCommerce merchants. If you own an online store, making small business credit card processing available is pretty much not negotiable. No matter if your business primarily serves customers with credit cards, setting up this platform as an available option is always the right move. You can not only open up to the majority of customer demographics but also have quicker access to cash since credit card processing is typically very efficient.

Also, accepting credit cards, such as Visa, MasterCard, and American Express means your business has grown to a reputable size. Supporting a small business credit card processing takes scrutiny from compliance and processors, so offering credit cards as a payment option adds credibility to your business. Even more, having small business credit card processing capabilities ready will get you prepared for the future as eWallets are getting more and more popular in the US and abroad. Don’t miss the trend: getting a small business credit card processing capability that is compatible with eWallets will up your retail game in the long run. 

The downside of accepting credit cards lies in the cost. No matter which processor you choose, the majority of the cost goes back to the card brands, which are known as interchange. As a rule of thumb, you should expect to pay between 2%-3.5% total in order to accept credit cards. For small businesses that are just starting up, it could make sense to stick with cash and checks until you are comfortable taking on that cost.

Pricing options

When comparing credit card processing, there are three main pricing structures to consider:

Interchange plus pricing 

As mentioned previously in this article, interchange is an important term to become familiar with when accepting credit cards, especially on this pricing method. On their structure, the processor passes through the true cost of the card (interchange) and adds a markup above that number. Speaking in generalities, the average interchange is 1.8%, and markups range from .2%-.75%, depending on your volume and the company. On Payline’s site, we lay out the current interchange rates based on the card brands. On top of the markup, there will be a per-transaction cost as well and a monthly fee for some as well.

This is the most cost-effective solution on the market because you are paying the true cost of the credit card brands, and a small fee above. It does vary based on the card itself, but the reason the majority of the largest company use this structure is that it is the cheapest.

Flat rate

A flat-rate structure is exactly that, a flat rate. No matter which card it is, you pay the same rate. Most companies using this structure have a flat fee for a swipe and a flat fee for a keyed transaction. A lot of the larger companies, like Square, use this structure.

While it is easy to keep track of the cost, you are leaving savings on the table when using this pricing method. Consider a use case of accepting a Visa card that has an interchange of 1.8%, and then paying 3.5%. In this instance, the difference of 1.7% goes to the processor, versus the smaller markup on the interchange-plus pricing method.

The positive of this model is, generally, there are no other fees, such as a monthly fee. For a company only accepting credit cards occasionally, or with minimal volume, this method may make the most sense.

Subscription Model

On this pricing method, the processor passes through the interchange cost, but instead of a per-transaction markup, you pay a flat monthly fee to the processor. Typically, that monthly fee is between $50-$500, depending on your volume.

Miscellaneous fees

Make sure you are clear on the other fees, outside of per-transaction costs, that come with your account. Some of the most common fees are monthly fees, monthly statement fees, PCI non-compliance fees, cancelation fee, annual fees, and chargeback fees. Almost all processors charge for these, so make sure you ask how much those are.

How much are you paying?

When it comes to finding the best credit card processing for small businesses, there are many kinds of fees involved. There will be a per-transaction interchange fee for any processing service. Typically, this fee will not exceed 3%, but depending on the processor, card type, and the amount, this number can vary. Besides interchange fees, there can also be a monthly fee to cover expenses, or even other additional charges like setup fees, gateway access fees, and termination fees. Remember to understand the pricing model and read the fine print, so you won’t be paying more than you should. 

Set up and ease of use

Setting up a new processing technology shouldn’t be rocket science. Holiday seasons are approaching, so you should choose a platform that has the most efficient setup process. Compare over processors and assess how much time and work the installation needs — the shorter the setup time, the better. On top of that, it’s crucial that the platform is transparent with their communications, that they will notify you if there is an issue. 

When setting up an account, it is also important to recognize the risk involved when accepting credit cards. When applying to a back-end bank through your processor, there will be an underwriting process. Make sure you ask about what is needed to get your particular account approved. You can get an account approved in the same day, and be up and running to accept cards right away. Some processors also provide an account manager or a training session.

Integration capabilities and other tools at your disposal

Each business has its own needs when it comes to the specifics of payment processing. Some businesses might swipe cards at their location, some may have customers check out online, some may send out monthly invoices, and more. When researching credit card processing, it is important to identify your specific needs, and then make sure your processor has those capabilities. Some of the most common things are:

  • QuickBooks integration
  • Invoicing
  • Hosted payments page/Shopping cart integration
  • Recurring Billing
  • ACH or eChecks

What payment types does it support?

Make sure the payment processor accepts all the cards your customers use. Depending on your business, types of cards and payment types may vary. Still, it’s best to have all major card types ready, such as Visa, MasterCard, and American Express. The key is to accommodate as many customers as you can, so you can build your customer base to the best of your ability. Also, try to pick a platform that supports different card types, such as digital wallets like Apple Pay, or others like gift cards. You may not need that now, but as you expand your business, it’s always good to have these handy and bring them to use. 

Does it have robust customer support?

If you run into trouble when setting up the platform, or if you have any questions about your payment, do the processors have a customer support system that you can reach? After you choose a processor, can it provide an account executive to solve your technical issues quickly as they arise? As a customer, you should have access to help and support from a company representative at all stages, including the trial stage, so only consider a processor that can offer that. 

There are many options of banks or processing platforms out there that can offer small business credit card processing. But do take your time to compare, so you can pick one that works best for you while saving time and money. At Payline, we offer an array of pricing models, from interchange rate to flat rate and tiered subscriptions. Our processing service also supports different industries and businesses, making it the best credit card processing for small businesses. Speak with our representatives today and see how we can brighten up your holiday sales season. 

Final Thoughts

Credit card processing is essential for businesses nowadays. When setting up an account, make sure you are covering your bases on a few things: pricing, support, and capabilities. Once you have all of these in place, you will be all set and you can focus on scaling your business.

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