How to Set Up Online Credit Card Payments for a Small Business

Congratulations on your decision to start taking credit card payments and other forms of electronic payment. Once you’ve got service set up, you’ll be able to inexpensively accept practically any of the contemporary payment structures credit companies use, as long as you have the hardware to process it. Whether you’re setting things up before you open your doors or adding service to what was previously a cash-only business, this is a positive move because credit card transactions are the most common form of payment for most retail businesses. They’re also the dominant payment method used by clients for many service-sector companies. So, what’s it going to take? Starting up with credit cards typically involves three or four parts:

  • Hardware to read the cards and process in-hand transactions
  • Payment gateways for online payments and keyed-in transactions
  • Merchant accounts to act as intermediary between your business bank account and the customer’s credit account
  • A processing agreement with a credit card processor

Some customers who only accept in-hand transactions forgo setting up a payment gateway, but for any business that wants to accept cards as part of an automated online transaction, they’re absolutely necessary. That means in today’s business environment, most new companies do opt for them.

How To Set Up Processing Services

The payment processor is the key part of this service, because many of them offer to help you get set up with a merchant account and some even bundle in the equipment you need. Nine times out of ten, the processor can handle everything you need to get started, even if they’re referring some of the services out to trusted partners and not managing things themselves. That means high risk processors have networks of high risk merchant account providers, offshore processors have a similar network of account providers that work well with them, and so on.

There are a couple options for service, too. The lowest cost structures tend to be for contracts with a set term of service. Most often, if there’s a hardware deal to be made for free equipment or a deep discount, it’s on a plan like this. Contract free plans are also fairly common, but they tend to be structured in ways that make them more expensive, and that includes extra costs if you need terminals or other equipment. You can also go the other way, shopping for the right merchant account and then finding a processor that works well with them or a merchant account provider you like who also offers processing as part of the package.

Can You Get Payment Processing Without a Merchant Account?

Electronic payments have become so common that services are now offering processing without a traditional merchant account. These services are simpler, but they are often simply third-party merchant account services paired with processing. Payment service providers offering these deals tend to charge more than traditional payment processors, for a variety of reasons. Any business that does regular, daily transactions has a great chance of being able to do so at lower cost with a traditional merchant account and processor setup. Nonetheless, those do require approval, so PSPs are a good option if your business does not qualify for merchant account service at the moment. They can help you get up and running, but they’re probably not going to be your best bet for long-term service.

Choosing the Right Processor and Merchant Account

Once you have found a few options for your processor and merchant account, it’s time to do some head to head comparison to figure out which one is right for you. You’ll want to look at the cost structures involved. Typically, processing and merchant fees are bundled into one package, no matter how the rate is calculated. You might also have additional fees on top of that charge. There are a few basic structures most agreements for service take, although the costs within each vary enough that you might be surprised to find out which one is actually your best deal when you compare them.

  • Flat fee service charges the same amount for every transaction, and it’s usually the most expensive because of that
  • Interchange-plus rates are most common for smaller companies, and they apply a surcharge to the actual interchange rate for that transaction, making some cards more expensive to accept than others
  • Tiered rates charge less for “qualified” transactions that are judged to be low risk, and can come with many rate tiers or just a few

In most cases, this list is ordered from least expensive to most, but a lot of tiered programs are only open to companies that have a certain volume of transactions. That’s why interchange-plus is so popular for small business. It’s also worth noting you might find other options like high risk services have fewer choices for rate structure due to the nature of the account. Once you’ve chosen your service, you can set up your gateway and start taking electronic payments.

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