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In this article:\nWhat is order fulfillment?\nWhat you need to know about the order fulfillment process\nCreating a profitable shipping and handling strategy\nHow to accurately calculate shipping costs\nShipping pricing options for eCommerce stores\nShipping carriers\nWhether you plan to run a brick-and-mortar shop with a supplemental online shopping cart, or whether you’re considering going fully eCommerce, your efficacy with shipping and handling will have a huge impact on your customers’ overall experience. \nIf their online purchase experience doesn’t go as expected or there’s a mishap with their order, you’re not likely to keep them as a customer unless you go over and above to make amends. \nHelp your business keep more opportunities by following our guide to fulfilling online orders. \nWhat is online order fulfillment?\nOrder fulfillment is everything involved in the process of ordering a product. Storing your inventory, taking and organizing orders, packaging, and properly shipping the product to your customers are all a part of the process. \nEnsure that your customers have a good experience with your business by strategizing your order fulfillment process. Whether you are business-to-business or business-to-consumer, your order fulfillment process will factor greatly into how they view your company. \nWhat you need to know about the order fulfillment process\nOrder fulfillment is more than simply shipping items to a customer. A lot of strategizing is involved to ensure a satisfactory buying experience. From tracking orders, to making sure you have the inventory you need to fulfill orders quickly, to having a profit-positive, yet customer-pleasing shipping and returns system in place, you have a lot to think about. \nInventory receiving and storage\nBefore you can ever provide a product to a customer, you need to have the inventory from which to pull that product. How are you getting the product yourself? Are you renting warehouse space or are you drop-shipping? \nGo deeper: \nHow to set up an online store\nIf you manufacturer the product or order it to yourself first and keep your inventory on hand, you obviously need a place for storing and organizing your inventory (also known as warehousing) while waiting for shipment. \nThis will help you keep your products secure and organized, and help you to know what is available for your customers’ immediate purchase. \necommerce store warehousing inventory with shelves\n\nOn the other hand, maybe you’re choosing the dropshipping method. Dropshipping is when you use a third-party manufacturer or warehouser to store products and ship them directly to your customers.   \nNo matter which of these methods you use for your inventory storage it will be important to have plans for these next parts of the order fulfillment process.\nOrder processing\nOrder processing involves physically retrieving the product and packaging it (whether you are doing this or you’re using a dropshipper). Basically, this step involves preparing the item to be shipped to your customer. \nA few things to include in your order processing procedures:\nExamining the product to ensure it’s not broken or defective\nSelecting the appropriate packaging material that will be used (boxes, bubble wrap, paper, packing peanuts, etc.)\nPackaging the product securely\nAdding a shipping label with the correct address\nDetermining how much shipping will cost (if this hasn’t been done already)\nIf you are dropshipping your products, make sure you have an approved process and clear instructions in place with the company that will be processing and shipping your products for you. \nShipping\nWhen your product is ready to send to the customer, it’s time to get it into the possession of the carrier that will be delivering the product. How will you make this happen?\nFor smaller shops, you might be running the products to the post office yourself. \nFor larger and more regular orders, you might schedule a daily carrier pickup at your location, or wherever your orders will be prepared for shipping.\nWe’ll talk in more detail about shipping in the sections below.\nReturns\nYou need to be prepared to process returns. Not every person will be satisfied with their product. \nMaybe they ordered the wrong size or purchased a gift for someone and found they already had a similar item. Whatever their reason for the return, you should be ready. \nCome up with simple, clear, and profitable return policy. Good things to consider when developing your return policy include:\nDuration of time during which you will provide a full or partial refund\nTerms that qualify a refund\nWill you accept returns on merchandise that has been removed from its original packaging (not the shipping package)?\nDo you charge a “restocking” fee?\nWhich party is responsible for return shipping fees (you or your customer)?\nDo you provide refunds as store credit or do you refund the original fund-transfer method (credit/debit cards, PayPal, electronic check, etc.)?\nThen, depending on the quality of the product when it is returned, you need to decide if you will restock it or dispose of it. \nafrican american woman working fulfilling small business ecommerce order\n\nCreating a shipping and handling strategy\nWe’ve talked about some of the main factors that go into the order fulfillment process, and now it’s time to get strategic and create your shipping and handling plan. \nResources\nThe resources you have available will largely determine how you will handle the shipping and handling of your products. \nWhat is your order volume like?\nIf you have a low amount of orders coming in, you may choose to fulfill the orders yourself. Then you need to determine if your home will work for this or if you’ll need to rent a storage space to handle your inventory. \nLarger order volumes may require you investing in your own storage space or outsourcing the work to a third party. \nDetermine what your order volume will be and how you plan to scale to help you in deciding how to ship your products. \nLocation\nYour location will definitely factor into the cost of shipping your products and may even factor into where you are willing to ship your products. \nLonger distances and overseas or over country borders impact shipping rates, so you’ll want to keep these things in mind when putting your order fulfillment strategy together. \nWill only ship locally? Will you only ship to the continental U.S.? Will you ship wherever people are willing to buy from you?\nThink about the type of shipping rates that you want to offer your customers. If you want to offer free shipping or a flat rate, shipping products out of the country isn’t going to be a viable option for you. (We’ll go over shipping options later in this article so you can decide which works best for your business.)\nProducts\nThe traits of your products will have a large impact on your shipping strategy. Are your products heavy, fragile, hazardous materials, temperature-sensitive, over-sized? All of these attributes will contribute to how your products need to be shipped and what the cost of that will be. \nTechnology\nWhat kind of technological resources do you have at your disposal? Integrating your online store with your shipping and handling processes will help you run a more efficient order fulfillment operation. \nSome functions that can help:\nAlerts for your shipping and handling team when an order is placed\nProviding tracking information to your customers\nDigitizing your inventory levels and keeping them available to all shipping locations\nHaving a reorder point formula when stock levels get low\nHow to calculate shipping costs\nSeveral factors contribute to your overall shipping costs. Along with everything that we’ve discussed already, you need to identify a few additional pieces of information to calculate your shipping costs. \nDelivery time\nHow quickly can you get your products to your customers?\nYou may need to experiment with this one a little bit. Determine the time it will take for a product to get to your customer after they place an order. \ncommon carrier driver delivering package to a woman for ecommerce\n\nMany US customers today have been spoiled by Amazon’s 2-day shipping (or even same-day shipping!) and expect the same from other companies. Is that something that you could try? \nShipping items quicker also results in higher costs and more complicated infrastructure, which should be reflected on the customers’ costs. \nBottom line is there’s no way you can compete with Amazon on shipping costs for common goods, so you need to determine how you will differentiate your store from the monster eCommerce players.\nTake all of these things into consideration and determine a reasonable time frame to ship your products to your customers. Set clear expectations for your customers as well so they aren’t surprised by the time that it takes their order to arrive. \nGet estimated costs \nGet estimated costs of shipping your products from different carriers. Most major carriers—USPS, FedEx, and UPS—will calculate costs accurately based on the size and weight of the item and the shipping origin and destination. \nDo some comparisons with different carriers to see what your costs might look like and use that to help you find the best rates. You may also ask about bulk shipping rates or special discounts if you meet certain terms.\nShipping costs factored into the product price?\nWill you factor any shipping costs into the cost of the product? If you choose to offer free shipping, you will have to make up the cost in other ways.\nWill you need to raise the price of your product a little bit? Can you save money elsewhere in your business to help you absorb the cost of shipping? \nAfter all, the most customer-satisfying shipping experience in the world won’t help you much if you’re not profitable at the end of the day. \nAlso, “free shipping” is a lot more appealing to customers than even $5 shipping. So if you have a product that sells for $30 and shipping costs you $5, it will likely be more attractive to your customers if they purchase the product for $35 and get free shipping than if you price it at $30 and charge them $5 shipping—even if their actual out-of-pocket cost is the same.  \nman shrugging for online ecommerce fulfillment shipping\n\nHandling costs\nHandling costs are important to consider if you are using a fulfillment center or have extra employees you are paying to assist you with order processing, packing, and shipping. \nIt may be difficult to determine the handling costs for each individual item, so let’s take a broader look at this.  \nLet’s say you are spending an average of $1,000 each month on your shipping and handling operations and you send out around 200 orders. Your handling cost per order would then average $5.\nOf course, there’s a little more that goes into it than that, but this is a good start to determining your costs. Be sure to take these into account.\nShipping price options for eCommerce stores\nCustomers expect options when it comes to selecting how to ship their orders. What’s more, you don’t want them to be surprised and disappointed when they get to the checkout process and see how much their shipping is going to cost.\nWe’ve laid out several common shipping options for you so you can determine which one/s will be the best option for your business. \nFree shipping\nFree shipping is self-explanatory. We’re all familiar with Amazon Prime’s free 2-day shipping. But there is a lot to consider if you are going to offer free shipping to your customers. \nIt is not free for you to ship your products, so how are you going to balance out your cost of shipping and handling customer orders? \nA common solution is to raise the cost of the product to cover the cost of shipping. This way, your customer is satisfied that they “don’t have to pay for shipping” (even though they technically are in a way) and you don’t have to absorb that cost. \nHowever, on less expensive items, it doesn’t always make sense to raise the cost to cover shipping expenses. It will make more sense from a customer perspective to pay a flat rate for shipping several low-cost items rather than getting free shipping on items that cost a few dollars more than they “should.” \nFlat rate shipping\nFlat rate shipping is when you have a specific, stated shipping cost no matter how many items a customer orders. Let’s say you have a flat rate of $4.99 for shipping orders of any amount. Your customer might order 1 product or 10, but their shipping rate would remain that same $4.99. \nReal-time quotes\nReal-time quotes take the size, shape, and weight of your products and, in real-time, calculate the costs necessary to ship them.\nReal-time quotes are a great shipping option if you sell an assortment of products of varying sizes and weights. This helps to ensure that the customer is getting a fair rate and that your costs are covered. \nonline store on tablet for ecommerce fulfillment\n\nTwo-day or same-day shipping \nIf you’ve determined through market research that your customer base is intent on getting rapid shipping, then it might be a good idea to offer two-day or same-day shipping. \nYou don’t have to offer free shipping on these options either, and if you do, be aware that the costs will be \nsignificant\n. \nDetermine your costs to ship your products in this time frame and add a shipping option with a higher rate for quicker delivery times. You might be surprised how many customers are willing to pay significantly more to see their orders a few days sooner. \nRate-by-order\nRate-by-order allows you to offer your customers deals for paying more at your store. For example, you could charge for typical orders but offer free shipping on orders over $100 (or whatever threshold you determine will be profitable for your store). \nShipping carriers to consider for your online fulfillment\nIf you are managing the shipping and handling for your business, it’s a good idea to become familiar with the different carriers that are available to you. \nResearch local, national, and international carriers (depending on where you will ship your products to) and find the best rates for your product offerings. \nSome of the common carriers include:\nUSPS\nUPS\nFedEx\nDHL (international)\nwhite usps truck for ecommerce shipping fulfillment\nAfter you’ve successfully delivered a product to your customer, be sure to follow up by asking them how you did. \nLet them know that you appreciate online feedback and reviews on your website, Facebook page, or Google listing to help convert even more customers. 

Complete guide to fulfilling and shipping orders for your online store

Knowing how to show proof of income if you’re self-employed can feel daunting, especially since you’re likely not earning a set amount each pay period. Showing proof of income for self-employed workers requires additional preparation and organization than it usually does for the traditional employee. \nWith this guide, showing proof of income if you’re \nself-employed\n is easier than ever. Read on to learn about why you need to show proof, the specific documents you need, and other tips.  \nWhat is proof of income?\nProof of income is paperwork that provides insight into your earnings during a certain period of time, usually a full year. The documents are proof that what you say you make is what you actually make. Those that require proof of income usually include: \nInsurers\nBanks \nLandlords\nCredit companies \nUtility providers\nThese entities will use proof of income paperwork to determine if you are qualified and able to make payments on time for an extended period. \nWhy proof of income matters\n\nThere are certain instances in life where you’ll need to show proof of income, typically whenever lending money is involved. This documentation is required for activities such as: \nFiling taxes\nApplying for a credit card \nObtaining health insurance \nApplying for a rental \nApplying for personal loans \nLeasing a car \nApplying for a mortgage \nAside from filing taxes, these events involve issuers letting you borrow money—this requires a certain level of trust that you’ll be able to pay back what’s owed. Proof of income matters because it’s the proof that you have funds and cash flow to make payments. \nHow to show proof of income when you’re self-employed\n\nFor full-time employees at traditional workplaces, showing proof of income is easy—all you need is a W2, a pay stub, or tax returns. Self-employed individuals can typically provide the same information, but there are a few caveats with each: \n1. Tax returns  \nOne of the easiest ways to show proof of income is through your annual tax returns. A tax return is a legal form from the Internal Revenue Service (IRS) that states your total earnings and expenses for the year. \nIf you’re purchasing a large item, such as a home, the more detail you can provide in your tax returns the better. If you don’t have this form on hand when you need to show proof, you can alternatively provide your 1099 forms. \nCaveat: \nSelf-employed individuals don’t always have to report income that is below a certain threshold, so tax returns may be an underestimation of your total income for that period. \n2. 1099-MISC form \nA 1099-MISC form is used to report miscellaneous as well as non-employee business compensation for freelancers, contractors, sole proprietors, independent contractors, and self-employed individuals. It’s a record stating that a person or entity paid or gave you money for services. This form is one of the more commonly used forms in the 1099 series. You are able to file this form through the IRS online. \nCaveat: \nYou must have made at least $600 in the past year as a self-employed worker to receive this form. \n3. Bank statements \nBank statements can be used to show your income if you’re self-employed or have a side hustle. These statements can come from a savings or checking account, credit card records, or an investment account. These details are usually included in a bank statement: \nInformation about your bank and its contact information\nAccount details, like your bank account number and name \nA summary of transactions, including withdrawals and deposit\nA period of time summarized within the bank statement\nCaveat: \nIf the bank statements you show are from a personal account, be sure to go through and clearly separate your personal expenses and business expenses before presenting this info as proof of income.\n4. Profit and loss statement\nProfit and loss statements are forms that \ntrack your revenue\n, costs, and expenses from your business over the course of a year. Normally, profit and loss statements cover the following: \nYour revenue\nYour expenses \nBusiness-related deposits\nNet profits \nCosts of goods sold \nThese statements can be created on your own or with the help of credit companies.\nCaveat: \nProfit and loss statements are more easily accessed by those who operate their own businesses, but an accountant or software can help you obtain these forms if you’re a freelancer. \n5. Online payment records \nIf you’re a freelancer or sell your services or products online, chances are you use an online payment method through a service provider. These providers usually offer monthly or yearly breakdowns of payments received and issued from your account. \nCaveat: \nNot all of your income may be tracked on these platforms, but it at least provides proof that you do have a steady cash flow.  \nProof of income considerations\n\nHere are a few considerations and tips to keep in mind to make showing proof of income as simple and successful as possible:  \nStay organized:\n To make showing proof of income easier, stay as organized as possible and keep track of all business expenses and payments. \nAsk ahead of time:\n Knowing which documents lenders require will also make the process smoother. Get in touch with lenders ahead of time to see what they need. \nKeep copies of your deposit slips: \nKeeping a paper trail of deposit slips can provide proof of income since they’re a record of money going into your account. \nProof of income made simple \nShowing proof of income for the self-employed is still important even if you’re working for yourself, but it doesn’t have to be complicated. After being self-employed for a while, you’ll have a larger paper trail of proof and documentation and it will become easier to provide each time. \nIf you’re starting your own small business, be sure to invest in a \ncard processing system\n or \ncharge cards\n to make accepting payments from new customers easier. \nSolo makes it easy to pay, get paid, and track spending\nSolo is not a bank, but is a financial super-app for small businesses, freelancers, sole proprietors, contractors, and more. Solo is the easy way to pay, get paid, and keep track of your spending. Your customers don't have to sign up to pay you, and can use several payment methods, including Apple Pay, Google Pay, and cards. QR codes make it easy to get paid, and you can easily cash out your Solo account balance for free, or spend it using your Solo Cash Card anywhere Visa is accepted. Learn more at \nSolo.co\n.

Proof of income for self-employed: What you need + tips

In this 6-minute read:\n4 advantages (for vendors) of accepting card payments\n5 advantages (for businesses) of paying vendors and suppliers with a credit card\nHow you can pay nearly anyone using a credit card\nThough consumer credit card use is growing by leaps and bounds, business-to-business credit card payments are still not as widely adopted. In fact most businesses still pay at least half of their bills using paper checks.\nThe reasons some vendors and suppliers don’t accept credit card payments are varied, but primarily the concern is the added fees associated with credit card processing.\n\nCredit card processors\n and \nthird-party payments facilitators\n generally charge between 2% and 5% to businesses that accept these payments, and for some vendors, these fees can eat up a significant portion of their profit—or all of it. \nHowever, there are several advantages to both payer and payee when you source your business bill payments using a credit card.\nLet’s go over a few perks (for the vendor) if they accept card payments, and then we’ll talk about why paying vendors and suppliers using a credit card can provide more than just convenience for you and your business.\nAdvantages (for vendors) of accepting digital payments\nSo why should vendors and suppliers consider accepting credit card payments? Here are just a few benefits: \n1. Credit card payments are much faster than mailing a check\nCredit card payments are reconciled nearly instantly, so vendors get their money much faster than when you mail them a check. This means they can balance their accounts faster and more accurately. \n(Image)\n\n2. Credit card payments are more secure\nThere are multiple levels of validation and identity confirmation happening behind the scenes whenever your vendors accept a credit card, particularly if they use EMV chip validation. The risks associated with accepting a check include insufficient funds, identity fraud, etc. \nCredit card processors help assume the risks (which is part of why they charge a fee), so vendors can be more confident of the funds arriving in full when they accept digital payments.\n3. It can help make a vendor’s business more “legitimate”\nCredit card processing companies generally have a robust underwriting process as a part of approval, so when a vendor accepts credit cards, it can give their business more legitimacy and credibility than if they only accept cash or checks. Some consumers will only do business with companies that accept credit cards, and this feeling can translate over when those consumers start businesses of their own.\nAlso, vendors and suppliers are in constant fear of being outbid and outperformed by their competition. If the competition is accepting credit cards and you aren’t, and prices are similar, the vendor that accepts digital payments may attract more business.\n4. Accepting cards can improve cash flow and save valuable time\nAs we discussed above, credit card payments arrive much quicker than by check—most processors can get your funds deposited into your account within a couple of days max, versus 4-6 business days for the mail to arrive, plus a few days or even a week for the check to clear a bank. And that’s AFTER whatever delay there is in getting the payer to write and mail the check in the first place, which can take weeks.\nSince your funding is available much sooner, this frees up cash flow and all the time spent preparing and sending out invoices, and processing paper checks.\nYou may also like: \nWhat’s the cheapest way to accept credit cards?\n \nAdvantages (to businesses) of paying vendors and suppliers via credit card rather than by check\nNow let’s talk about some of the benefits to businesses who pay vendors using a credit card, rather than sending paper checks.\n1. Credit card payments save time and improve cash flow for businesses\nAs noted in the section above, sending a check can take quite a few days or even weeks to complete the process and clear a bank. When you pay vendors using a credit card, you speed up the process and free up cash for other business expenses.\n2. Increased purchasing power and business credit\nSince you don’t have to pay off your card balance for at least 21 days (and often longer, if your account is in good standing), you can effectively borrow business funding at 0% (plus you get perks and rewards) to pay vendors and suppliers. \nIf you need to spend a little more than you currently have in your bank account to order supplies for a large order you’re working on fulfilling, a business credit card with an appropriate limit can make that easy. (Just be sure to pay it off once you sell the widgets you make using the supplies.)\nIn addition, as you regularly pay your credit card statement on time and use much of your available credit, you can increase the credit limit available to your business and improve your business credit rating, which can lower your interest rate for business loans and other expenses.\n3. Perks, miles, rewards, cashback, discounts\nNearly all credit cards offer perks and advantages to members, and for small businesses this can be a huge asset. You might get a price break or increased cashback for using your business card to pay vendors and suppliers.\nBusiness owners who rack up lots of airline miles using one of these cards can pay for a significant portion or even all of their business travel expenses, get discounts for business expos, enjoy free concierge service, get free car rental insurance and discounts, and much, much more.\n(Image)\n\nSome businesses use their cashback bonuses to improve their business, buy equipment, pay for employee team-building events, pay for company car maintenance, or even pay utilities. The uses for rewards points/cashback bonuses are almost limitless.\n4. Paying all your vendors, suppliers, and bills with one card vastly streamlines your accounting process\nWhen you have to keep track of expenses and bills for your business, the simpler the better. If you can move all of your monthly business expenses and vendor payments to a single card, it’s much easier to keep track of, plus you get the benefit of your credit card statement to help you keep things accurate.\n5. It’s more secure than writing a check\nWhen you pay with a credit card, your issuer and processor help absorb the risk of fraud. (This is one reason they charge fees for the service.) When you mail someone a check, you are giving them your bank account (via the routing number and account number) and your signature. \nSolo makes it easy to pay and get paid\nSolo is not a bank, but is a financial super-app for small businesses, freelancers, sole proprietors, contractors, and more. Solo is the easy way to pay and get paid. Your customers don't have to sign up to pay you, and can use several payment methods, including Apple Pay, Google Pay, and cards. QR codes make it easy to get paid, and you can easily cashout your Solo account balance for free, or spend it using your Solo Cash Card anywhere Visa is accepted. Learn more at\n \nSolo.co\n.


Advantages of paying vendors and suppliers with a credit card

In this article:\nWhat is credit card processing?\nSteps and parties involved with credit card processing\nHow can credit card processing help your business?\nMost businesses are familiar with the concept of credit card processing. It allows customers to purchase items or services with their credit or debit cards in person and online. But what you might not know is that this process is much more complex behind the scenes. \nThroughout this article, we’ll walk you through how credit card processing works and why it’s important for pretty much any business. \nWhat is credit card processing?\nThe basic concept of credit card processing is that a customer swipes, “dips,” or taps their card on a terminal or enters their card information online, the payment is authorized, and the transaction is complete. However, that’s only what happens on the surface. This process is much more intricate than it seems, and it can be helpful for business owners to understand how this works. \nHow does credit card processing work?\nSo, what are the steps involved in credit card processing? It can help to understand all of the parties that are involved first. \nOf course, you have the cardholder, or customer, and the merchant (your business). Other participants include:\nThe merchant’s bank: The bank that is receiving the payment from the purchase\nThe processor: This is usually a POS (point of sale) service provider that is used for to process the payment. It may be a traditional payments processor, a third-party payments facilitator, or some extension of your bank that provides the ability to process credit cards\nCredit card network: The provider of the card itself, like Visa or Mastercard. They act kind of as a liaison between the payment processor and the banks involved\nIssuing bank: The customer’s bank that issued the credit card and where the payment is being pulled from\nKnowing each party’s involvement in the process will help us to explain exactly how this works behind the scenes. \nThere are three main steps that take place in processing a credit card transaction:\nAuthorization\nAuthentication\nClearing and settlement\nWhile it seems that everything happens immediately and the payment goes through with ease at the counter or online, the entire process can take 24-48 hours. \n(Image)\n\nLet’s start with step 1: Authorization. \nThis is the part the most of us are pretty familiar with. In this phase, the issuing bank as to give approval to the merchant to proceed with the transaction. \nThe customer gives their card to the merchant to swipe on a terminal provided by the processor, or provides their credit card number into a field online. Then an internet connection or phone line is used to send the credit card information to the merchant’s bank. \nThe merchant’s bank then passes those details along to the credit card network, and the credit card network requests authorization from the issuing bank. The authorization request includes the following information:\nCredit card number\nExpiration date\nBilling address\nCVV or security code\nTransaction amount\nStep 2: Authentication\nAuthentication is the final step that takes place in the store or online as the transaction is completed, but it isn’t the final step of the entire process. This just allows the customer to go through with their purchase and accept their goods or service. \nIn this phase, the issuing bank uses fraud protection tools like Address Verification Service (AVS) and the card’s security code to verify the credit card. \nThe issuing bank gets the authorization request from the credit card network and validates the card details and checks to see if the customer has any funds available in their account. The issuing bank then approves or declines the transaction and sends this back through the credit card network, which then passes that information onto the processor or merchant bank. \nWhen the merchant receives approval to move forward with the transaction, a hold is placed on the purchase amount in the customer’s bank account. \nThen the customer receives their receipt and continues on their day.\nThese first two steps take place in a matter of seconds, but it’s good to know how much is going on behind the scenes so that is something does go wrong, you can assess the situation from a point of knowledge and understanding. \nStep 3: Clearing and settlement\nThe final stages of the credit card process occur at the same time and over the course of the next 24-48 hours. \nAt the end of each business day, the merchant will send all approved transactions to their payment processor or bank. The processor then sends the approved transactions back to the credit card network, where the forward each approved transaction onto the issuing bank. \nThis is where the customer might see a hold or “pending” amount in the bank account until the transaction is finalized. Within 24-48 hours the issuing bank will send the funds back through the credit card network and to the processor and merchant’s bank. \nAny fees that are owed to the credit card network or payment processor will come out of these funds, and the merchant will receive the remaining amount. \nOnce everything goes through, the hold will be removed from the customer’s account and they’ll see their transaction information posted on their account. \nHow can credit card processing help your business?\nCredit card processing isn’t a new concept for small businesses. Most businesses offer some form of credit card processing, whether online, via a terminal, or even over the phone. Because it isn’t common practice to carry cash around and fewer people even have checkbooks anymore, customers expect businesses to accept credit cards. \nHaving some form of credit card processing will allow your business to have more opportunities for sales, whether you’re in retail or the service industry. \nOne thing that prevents some business owners from getting a credit card processor is the fees that are associated with it. These fees can vary a lot and may be a percentage of each transaction or a flat rate per transaction required by your service provider. While these can add up and be intimidating, the increased sales that you are likely to get from offering credit card transactions will more than make up for the increased cost. \nYou may also like: \nWhat are alternative payment methods and why should your business consider them?\n


Small business guide: What is credit card processing?

In this article:\nAccepting credit card payments without a merchant account\nPros and cons of using a third-party payment facilitator\nAdditional resources for credit card processing\nIn this day and age, it is absolutely essential for your business to have the ability to process credit card payments, no matter what type of business you have or how small it is. Customers expect the ability to just swipe their cards or run their credit card numbers to easily pay for your products or services. \nThe traditional method of running credit card payments is to apply for a merchant account through a bank, and/or get set up for accepting credit cards via a merchant processor. This can take anywhere from a few days to several weeks to get the account approved and have the ability to start processing payments. However, you can possibly get better rates and  more personalized service via a traditional merchant processor, so keep that in mind.\nIf you choose not to get set up with your own merchant account and/or processor in order to accept credit card payments, today’s third-party payment facilitators are good option, particularly for truly small, one-person businesses.\n \n\nHow to accept credit card payments without a merchant account\nThird-party payment facilitators or “aggregators” (like Square, Stripe, etc.), allow you to get set up to accept credit cards quickly and usually will give you a basic card reader for free. These third-party companies generally offer simple, flat-rate processing, which some businesses prefer, though you should be aware that you’ll generally pay about 20% more for flat-rate processing than if you go throught the hassle of getting set up with a traditional payments processor and use “interchange plus” pricing.\nOne reason that you don’t need a merchant account to use a third-party payment facilitator is that each facilitator has their own large merchant account that all of the funds go through. \nSo, funds from your customers’ credit cards go through your payment facilitator, into your payment facilitator’s large merchant account, and then into your bank account. \nOne of the largest problems that business owners face with third-party services is deciding which one to use. There are dozens of options out there to choose from, so narrowing it down can quickly become overwhelming. \nNot sure if a third-party service is right for you? We’ll go over some of the pros and cons to help you make an informed decision. \nPros of using a third-party payments facilitator\nThird-party payment processors have gained popularity with new business owners in particular because of the following:\nQuick and simple set-up process that doesn’t require extensive documentation\nEasy-to-understand, flat-rate transaction fees (but remember, you may be paying more for this convenience)\nCapabilities for customers to pay online or in person\nUsually no long-term contracts\nCons of using a third-party payments facilitator\nWhile third-party solutions are simpler to set up and understand than some merchant processor accounts, there are several drawbacks to the third-party facilitators:\nThere is little to no flexibility on rates, and you will probably pay a little more for processing. Traditional merchant processors will often negotiate their rates and fees, while third-party services keep it simple with one rate system for everyone (but again, you may pay more for the convenience)\nService interruptions or cancellations can occur for businesses in specific industries (For example, some third-party facilitators don’t allow clients to sell firearms or related products—they may even let you set up an account but then cancel it when the first order goes through)\nLimited customer service; not all third-party providers offer free customer support or 24/7 support which can be a problem if your system has a malfunction late in the day. In addition, you may prefer interacting with a real person, such as your processor’s merchant-level service agent, who can talk you through the process, explain and modify your processing agreement, help with any issues, and become a trusted business advisor\nJust be sure to do your research and find the payment processor or facilitator that best suits your needs. \nCheck out this articles for more information about credit card processing fees: \nCredit card processing fees: what small businesses need to know\n\nWith almost too many credit card payment processing solutions to choose from, this task can quickly become a burden on any small business owner. We want to help make that process a little easier for you.\nSolo makes it easy to pay and get paid\nSolo is not a bank, but is a financial super-app for small businesses, freelancers, sole proprietors, contractors, and more. Solo is the easy way to pay and get paid. Your customers don't have to sign up to pay you, and can use several payment methods, including Apple Pay, Google Pay, and cards. QR codes make it easy to get paid, and you can easily cashout your Solo account balance for free, or spend it using your Solo Cash Card anywhere Visa is accepted. Learn more at \nSolo.co\n.

Do I need a merchant bank account to accept credit card payments?

In this article:\nWhat things affect credit card processing fees?\nWhat types of fees and rates are available to small businesses?\nWhat are some add-on fees you need to be aware of?\nAs a small business owner, you obviously need to get paid for your offerings, whether you own a small retail business, hair salon, pet services business, or something else entirely. Credit cards have grown to become and will continue to be (in some form) the most common form of payment from your customers, so it’s important to have the right tools to be able to accept credit cards. \nWith credit card processing providers and platforms, you can offer this payment method to your customers and use it to your advantage in gaining new customers. But credit card processing can be complex (and expensive), and there are many little things that you should know and understand before committing to one processor or payments provider over another. \nWe want to walk you through the complexities of credit card processing fees, including what you should be paying, and some things you should watch out for. \nWhat are credit card processing fees?\nCredit card processing fees generally refer to the transaction fees associated with accepting a credit card or debit for payment. Many popular processing companies that cater to smaller businesses charged a fixed dollar amount plus a small percentage of the total transaction each time a credit card is processed. \nThis fee will typically vary depending on how the card is processed (in person, swiped, hand entered, online, via the phone, etc.) and other factors, which we’ll discuss below.\nThere are other fees that come into play when you decide to start processing credit cards too. We’ll go over each of these fees so that you know what to expect as you start shopping for the best credit card processing solution for your business. \nLearn more: \nSmall business guide: What is credit card processing?\nWhat things impact credit card processing fees and rates?\nBefore we dive into each type of processing fee, we want to cover some of the basic things that can impact your fees. Be thinking about these as you try to determine which platform to use. \nMethod of processing\nThe processing method of the credit card can impact your fees. Swiping or inserting a chipped credit card in-person has a lower risk of fraud and chargebacks, which allows your process or or payments provider to offer you lower processing fees. \nWhen a card isn’t physically processed—like if your customer enters their information online or pays over the phone, or if the magnetic strip or EMV chip isn’t working correctly with your point of sale (POS) hardware and the cashier has to enter the number manually—there is a higher risk for fraud since it is more difficult to protect the information, resulting in higher fees. \n(Image)\nSize of your average transaction\nMost credit card processors require a small fee to be paid with each purchase, on top of the percentage that they require. If your average purchase size is low, then you might be paying a lot more in transaction fees. \nFor example: Let’s say you have 100 $5 transactions and 5 $100 transactions and your service provider charges $0.10 for every transaction. You’d pay that $0.10 fee 100 times for the smaller transaction, but only and five times for the larger transaction. This is one reason some retailers have a minimum purchase amount required for credit card purchases. For very small purchases, it might actually cost you money to sell those items! \nConsider what your average transaction size is as you look at fees from different companies. \nBusiness type\nEvery business has a Standard Industrial Classification Code and a Merchant Category Code. These codes help card providers and processors see what kind of business their customers are involved with. Riskier businesses generally have higher fees associated with their transactions. \nThere can also be a certain amount of social pressure for processing companies to charge higher fees (or avoid providing service altogether) for some types of businesses. Firearms-related companies or shooting ranges, adult entertainment companies, and cannabis businesses are only some that have had issues getting credit card processing services at various times.\nWhat types of fees are associated with credit card processing?\nWhen it comes to credit card processing, the fees can really start to add up, which is why we encourage you to shop around and look at several different options before signing a contract. It’s important to understand what types of fees exist and how your individual business can be impacted by them. \nRemember the things that can impact your fees as you explore what types of fees generally come with credit card processing. \nMerchant account fees\nIf you are using a merchant account, there are generally two types of fees you’ll have to pay in order to process credit cards. \nInterchange fees\nInterchange fees are non-negotiable fees determined by the issuing bank and card network (like Visa or Mastercard). Whenever a customer uses their credit card, an interchange fee is charged. It’s usually a fixed dollar amount plus a small percentage, like 2% + $0.15. So, on a $10 transaction, the interchange fee would be $0.35. \nMarkup fees\nMarkup fees are the negotiable fees that your provider adds on top of their interchange fees. This is the “markup” they get for providing you this service. Again, this is generally a small percentage and fixed dollar amount on top of the interchange fee. \nOne-time fees\nSome fees are unavoidable, like transaction fees and equipment fees. But if you read the fine print, you can make sure you don’t have any hefty termination fees to pay later down the road. \nSetup fees\nSome providers charge fees for a technician to help you get set up on their payment processing software and equipment. These vary by provider, and some providers don’t require any setup fees. \nTermination fees\nTermination fees come when you cancel a contract or end your service with a provider. This is one where you’ll want to read the fine print. Make sure you understand the terms of your contract and termination fees before committing to anything. \nEquipment fees\nEquipment fees come into play when you need a terminal, phone add-on, or tablet for running credit cards in-person. Sometimes you can buy the equipment outright, and sometimes you may need to finance or lease the equipment, depending on the cost. \nRecurring fees\nBe aware of the different recurring fees you may see on your statements from credit card processing providers. Some of these may be completely unnecessary for your desired level of service, so make sure you understand exactly what you need to be paying for. \nMonthly subscription fees\nMany service providers require a monthly subscription fee for customer support and PCI compliance. If you don’t see this fee on your bill, make sure that you’ll still have access to some kind of customer support in case you run into problems. \nMonthly minimum fees\nSome providers require monthly minimum fees to ensure that they get their “cut” even when you are having a slow sales month. \nStatement fees\nIf you receive paper or online statements, your provider may require a service fee for each statement you receive. It may be called a “processing fee” or “miscellaneous fee.” Sometimes you can save this fee by opting out of mailed, paper statements.\nIRS fees\nSome providers might charge an “IRS reporting fee,” where they charge a fee to report your transactions to the IRS and provide you with the necessary documentation. This is a spammy practice that should be disputed. Most providers should do this for you at no cost. \nPCI fees\nIf your provider offers PCI compliance and support, then they may require a fee to help with this. This may be included in your monthly subscription fees. But sometimes this fee is charged when there is no benefit to the customer, so make sure you’re getting what you pay for. \nPayment gateway provider fee \nWhen you sell products/services online, those payments go through a payment gateway provider to ensure the information is encrypted and secure. Some of these providers may require fees, but several don’t have fees. Your payment processor may even have a preferred payment gateway provider that comes with their service.\nBe sure to ask if there are any additional fees for this service.\nProcessing fees\nThese fees are the general “credit card processing fees” that you may be somewhat familiar with, and they can encompass some of the fees we’ve already discussed. \nTransaction fees\nTransaction fees are the fees that occur each time a credit card is processed. They generally have a fixed dollar amount and a small percentage, similar to interchange and markup fees. Depending on the type of provider you are using, your transaction fees may be the interchange and markup fees. Some providers only charge one fixed rate per transaction.\nFlat fees\nFlat fees will vary between each type of payment processor. These are your monthly fees, equipment costs, and any other recurring fees that have the same rate each time you pay it. \nIncidental fees\nIncidental fees happen on a case-by-case basis. Generally, you’ll have an incidental fee if there is a chargeback or insufficient funds to cover the transaction. Card not present (CNP) fees may be considered incidental fees as well, if your processor charges an additional fee or a special rate for this type of transaction. \nBe sure to discuss the fee structure with your merchant services provider or processor representative so you have a very good idea of what to expect for all fees related to accepting credit cards so there are no surprises.\n(Image)\nTraditional vs. “new age” credit card processors\nTraditionally, every brick and mortar business would need to work through a merchant account and their bank to have the ability to process credit cards. It was a time-consuming and often expensive proposition to get a card reader hard-wired into the system, terminals set up at your place of business, approvals, etc. \nThis is where a lot of the fine-print (and potentially unnecessary) fees we’ve referred to can sometimes come into play. \nMerchant accounts generally have an interchange fee that is required with each transaction, and then on top of that you are required to pay the markup from your provider. \nYou can often negotiate with your merchant services provider to get preferred or lower rates, and sometimes salespeople will offer very low rates in order to sign your business. This can be to your advantage, so be sure to ask around and talk to several companies, and be sure to get the full details and read the fine print for whatever company you’re considering.\nSources:\n
\nhttps://www.creditdonkey.com/credit-card-processing-fees.html\n
\nhttps://www.fundera.com/blog/credit-card-processing-fees\n
\nhttps://www.merchantmaverick.com/clover-pos-cost\n

41 articles found in “Running your business”

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Small business guide: What is credit card processing?

Do I need a merchant bank account to accept credit card payments?

Credit card processing fees: what small businesses need to know

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