Accepting Credit Cards: Which Method is Right for You?

Accepting credit cards in a cashless society is a must. The many methods of accepting credit cards make merchants wonder which method is best for their business. As a merchant, you can accept credit and debit cards in many different ways including website shopping carts or traditional counter terminals that might offer contactless payments. There are Point-of-Sale (POS) systems, specialized industry software, and, of course, cell phone payments. The biggest challenge is understanding how payments work, the types of hardware available, and how to obtain them.

Behind The Scenes

Credit card processing likely seems like a foreign subject to most merchants. Let us take some of the mystery out of it and simplify it for you. Basically, each transaction contains three steps. First, when a customer taps, swipes, or scans their card, the card is determined to be valid or invalid. Once that happens, the transaction information is sent to the card brand (Visa, Mastercard, etc.), which then transmits it to the customer’s bank. If there is sufficient credit available on the account, the payment is approved. The final step includes the customer’s bank approving the transaction. Money is then funded to the merchant, and the transaction is posted to the customer’s billing statement. All of this happens in seconds.

Credit Card Terminals

None of this can happen without a method for accepting credit card payments. Credit card processing machines, also known as terminals, have changed over the years. The most common type of terminal is the one found on the counter of most retail establishments. The terminal is connected to a telephone line or to wi-fi through an internet connection. This is known as wireless processing. A wireless terminal looks the same as a telephone-line model in most cases, but the main difference is how they send data. Instead of relying on a phone line, mobile credit card terminals use wireless technology. As a result, they can be portable and used anywhere there is access to wi-fi. Some models contain the same functionality as a cell phone and can use cellular networks for transmitting and receiving transaction data.

Another variation is a mobile card reader. This small piece of hardware can be connected via Bluetooth to a smartphone. Customers can swipe their credit card or even place their own smartphone near the reader for a secure but contactless payment.

Another method for accepting payments is the “card-not-present” type of payment, such as when you accept a payment over the phone verbally or allow customers to manually enter their credit card information into your website or cloud-based software system. In this case, you must have secure virtual terminal software that turns your computer into a Point-of-Sale terminal. Using a “virtual terminal” allows your customers to securely enter credit card data and personal information, knowing that the payment is processed safely.

Do You Need a Point-of-Sale Device?

Stationary terminals and mobile card readers are both effective methods for accepting payment, but if you operate a retail store or restaurant, you may benefit from having a Point-of-Sale system. There are many on the market, from the robust Clover Station Point-of-Sale system to the smaller Clover Mini and even iPad-based POS systems. Using a POS system enables you to do much more than just accept credit cards. POS can help with payroll, employee scheduling, report generating, financial reports, customer relations, marketing, and inventory management. Data is generally stored in the cloud, offering an additional layer of security.

POS systems can be priced from $150 to $2,500, depending on the bells and whistles and the hardware such as a cash register drawer and a signature capturing device. Chosen Payments recommends that you buy this type of equipment outright to save money. Leasing is an option that will cost you much more in the long run but does offer some benefits. When you lease, you’re not locked into a particular device. At lease renewal time you can trade in your system for a newer, state-of-the-art model. You will always have a payment for your equipment but in most cases, that payment is tax deductible.

Which Method is Right?

Whether you own a pop-up shop, a farmer’s market stall, a retail store, or a restaurant, there is no doubt that accepting credit cards, debit cards and contactless payments from a cell phone wallet is a must to survive in today’s marketplace. Now that you understand how payments work and the options available when it comes to equipment, you can make a decision about which technology will work best for your type of business and more importantly, your type of customers. Take time to do your research. Talk to your dedicated Chosen Payments Account Executive who knows your business, your industry, and your type of customer by calling 855-4-CHOSEN.

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