Business owners must have multiple reliable methods of accepting payments, whether customers come in person or online. Today, 70% of Americans hold at least one credit card, and approximately 40% are likely to use it on purchases. So, it could be detrimental for businesses that don’t accept them. In this article, find out the best ways to accept credit card payments in person or online and what are its processing fees.

How does credit card payment processing work?
The process of automating transactions between customers and retailers is called payment processing. Third-party services frequently handle processing, verification, and accepting transactions on behalf of the merchant. The two main parties involved in the transaction are a customer or cardholder and the merchant or business providing goods or services. Apart from that, it also consists of a bank that holds the business account, the credit card network and issuer, and the payment processor.

The credit card networks like American Express, MasterCard, Visa, etc. facilitate these transactions. The payment processors send the payment information to the customer’s issuing bank and deliver payment approvals to the consumer, acquiring bank, and retailers.

How to accept credit cards as a business?
Step 1: Determine payment processing needs
One must take into account one’s payment processing needs to determine whether one needs a merchant account or a payment service provider (PSP). These are some of the questions one can ask to determine them:

What is the volume of business transactions per month?
What type of credit cards will the business accept?
Will the transactions be in person, online, or over the phone?
Does the business cater to international customers?
Do customers need financing?

For online businesses, it’s important to use a payment processor with an interface that integrates seamlessly with one’s website. Credit card processors with mobile apps and tools are best for taking payments on the go. For brick-and-mortar stores, find out the hardware requirement, such as payment terminals, one needs and whether it will work with one’s current point of sale (POS) system. A POS system is the software and hardware that manages purchases, returns, and exchanges. Usually, the point of sale is at the register or checkout counter, but it may also include customer relationship management (CRM) and inventory management.

Step 2: Select a payment processor
One should select a payment processor compatible with the company’s current software, such as a point-of-sale (POS) system, an e-commerce platform, or an appointment booking system. By streamlining one’s payments with management tools, one can minimize manual entry errors and troubleshoot problems easily.

There are two ways to accept and process credit card payments:
Merchant account : One can choose to open a merchant account for processing payments. For this, one has to go through a bank generally. It entails submitting information about one’s business and connecting the bank account where money will be deposited. It involves processing fees that vary depending on the provider and the type of business. It is suitable for established and high-risk businesses.

Payment Service Provider : Payment Service Provider (PSPs) is another option to streamline payments. Ideal for small businesses, these third-party enterprises connect small businesses with consumers making digital payments. Their processing fees can range from 2.5% to 3% per transaction. One can open an account at the provider’s website and connect a business bank account there.

Considering the volume of one’s business transactions and location, some trusted PSPs assist small businesses. One famous name with competitive transaction fees below 3% is PayPal. Square Payments are ideal for mobile businesses. Stripe is good for an online business that wants to scale up, while Venmo is an option for businesses that are strictly online.

Set up payment terminals
Installing payment terminals across one’s business is the last step in accepting credit card payments. If one operates a physical store, this phase involves acquiring hardware such as a card reader and a POS that accept payments through swipe, inserted chip, or contactless tap. One can use website plugins that accept payments online for an online business. After installation, the plugin will walk one through the steps needed to enter the relevant information. One can also seek technical support from one’s website developer or card processing provider for the same.

Accept credit cards over mobile, online or in-person
Businesses can accept credit card payments online, in person, or on the phone.  Each comes with various costs and technological requirements.

In-person : Brick-and-mortar stores, on-site service providers like electricians or gardeners, and mobile business merchants like food trucks can all benefit from in-person credit card processing. Here, the consumer presents their credit card. These transactions often have lower costs since there is less chance of fraud.

Online : Enterprises that depend on online credit card processing include e-commerce stores, restaurants that take online orders, and businesses that offer digital services. Processing costs for online transactions are often greater than those for purchases made in person. For this, a business must have a payment gateway and a digital storefront.

Phone : Over-the-phone transactions are generally used for food takeaways. The customer provides the business with their credit card number, and the merchant manually enters that data into their card reader. It involves significant risk of fraud. Hence their processing costs are often the highest. One will require a credit card reader, a POS, or an online payment gateway in order to accept credit card payments over the phone.

How much does it cost to accept credit cards as a business?
In most cases, providers impose fees per transaction instead of monthly charges. The fees are determined by many factors, including the payment network (such as Visa, Mastercard, Discover, or American Express), the kind of credit card, and the type of business.

The four payment networks are listed below, along with their typical credit card processing costs: