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In this article:\nWhat kind of payment processing solution is best for your business?\nWhat does the application process look like for payment processing?\nWhat documentation do you need to get approved to accept credit cards?\nHow much does credit card processing cost?\nAccepting credit card payments is table stakes for today’s businesses, even for small, local shops or roadside stands. If your business isn’t accepting credit cards as a form of payment, then you are losing out on valuable opportunities to gain more revenue and valuable customer data that can power your marketing and customer retention efforts. \nLet us help you make this process easier by walking you through the application and approval process to start accepting card payments.\nWhat kind of payment processing solution do you need?\nBefore you can ever apply and get approved to start accepting credit cards, you need to decide what you want and what you need. What solution is going to work best for your business?\nAsking yourself these questions can help guide you down the right path:\nWhat type of payments do you need to accept? (Cash, checks, gift cards, credit cards, online payments, etc.)\nWhat are the pros and cons of each payment type?\nWhat are the fees associated with processing credit cards using different providers?\nHow quickly do you need to start accepting credit card payments?\nDo you need any equipment like a terminal or mobile card reader?\nDo your research to determine which solution will be best for your business. And don’t just stick with the first payment processor you come across. Call at least two or three other service providers and processors to get an idea for their rates, approval process, and setup time, and then make a more informed decision from there. \nWhat does the application process look like?\nDepending on the type of credit card processing solution you choose, your application and approval process can vary a lot. \nMost credit card processors, whether merchant account or third-party solution, have an online application that you can fill out. \nTraditional merchant accounts through a financial institution often have a much more in-depth and rigorous application process than other third-party payment processors. \nWhichever solution you decide to go with, you will need to have specific information ready in order to even apply. Oftentimes, your service provider will also ask for additional information to help mitigate their risk of doing business with you.\nMost providers have some sort of underwriting process to help them gather and validate the information they need. \nIn order to give your business the best chance to get approved, you’ll need to provide in-depth information about your business, including\nBusiness information\nArticles of incorporation\nFinancial statements\nBank account information \nCredit cards you want to accept \nOther supporting documents\nOnce you’ve completed the application for your desired solution, then the approval process begins. For some providers, the approval process can happen as quickly as the same day and for others, it can take up to several weeks. \nWhat do you need to get approved to accept credit cards?\nLet’s go into a little more detail about each of the items above that you may need for the application process. Understanding what these service providers are looking for and providing as much information as possible will give you a better chance to be approved. \nBusiness/personal information\nThe application you fill out will ask for several pieces of information regarding your business, and depending on your circumstances maybe even a few personal items. Most credit card processors will ask for at least the following information:\nOfficial business name (this should match what your bank account has on record)\nBusiness phone number\nBusiness email address\nBusiness address\nWhat you are selling (this is important because some payment processors won’t work with certain types of products like live animals, firearms, adult entertainment, etc.)\nEIN, tax ID, or social security number\nThese are the basics that most credit card processors will ask for, or start with anyway. For several third-party solutions, you may be able to sign up for your account with this information, provide your banking information, and get started the same day. But you should be aware that you will generally pay more for processing with a third-party payments provider than you will if you get set up with a traditional processor with competitive rates.\nRead more in our article explaining all the different \ncredit card processing fees\n.\nArticles of incorporation\nIf you are applying for a merchant account or other provider that requires more in-depth information, you may want to have your articles of incorporation ready. Of course, this only applies to corporations. This will help your service provider to verify that your business is legit. \nAlong with this, whether you have a corporation or not, providing your business license and other permits can be helpful to prove your legitimacy. \nFinancial statements\nFinancial statements can help a service provider further determine how risky it will be to work with you. Depending on the statements they ask for, these may reveal your debts, your income, and other financial obligations that you have. \nSome documents to have ready:\nBank statements\nProcessing statements (which might include transaction history, refunds, and chargebacks)\nCredit report (not all providers will ask for this, but it’s good to have ready just in case)\nMerchant account providers are generally looking for fraud risk when they ask for this information. \nBank account information \nIn order to get the money from your transactions, you’ll need to provide your business bank account information. This will usually include your business name, a checking and routing number, and sometimes a voided check. \nHave all of this ready before you start filling out your application so that you can get through the process as quickly as possible. \nCredit cards you want to accept \nSome service providers will accept most credit cards (Visa, MasterCard, AmEx, etc.) and you won’t have to worry about this. \nHowever, some providers may only accept certain credit cards or require you to choose the credit cards that you want to accept. The reason for this is often the fees associated with each credit card network. They each require interchange fees for the use of their networks, which are the fees that your service provider has to pay them—and this is usually passed on to you. Some networks are more expensive than others.\nOther supporting documents\nIt’s always a good idea to be overprepared, so try to have as much information ready as possible. Depending on the service provider you choose, you may be asked to provide additional information after you’ve submitted your application. \nThis additional information is just to help mitigate the provider’s risk of doing business with you and help them see that you run a legitimate business. \nSome of the supporting documents you may be asked for:\nMarketing materials with your branding and business name\nBusiness plan\nBusiness policies, like returns and cancellations or shipping policies\nSales forecasts\nInventory reports\nEver service provider may handle this process differently, so it’s always a good idea to ask upfront what kind of information they require to approve your business to start accepting credit cards. But this list will give you a good starting point and idea of what to expect. \nHow much should I pay for credit card processing?\nDifferent processors and payments providers all have different rates and ways of determining your costs for accepting credit card payments. Let’s go over the main options briefly. \nInterchange plus pricing\nSome base their fees on what is called “interchange plus” pricing, where they pay the current “interchange rate” charged by the big credit card networks and add a markup to cover their cost and profit margin, and generally a per-transaction fee on top of that.\nFlat rate pricing\nOther payments service providers charge what is called “flat rate” processing, which means that you simply take a percentage of the total cost of an item, generally between around 2.4% and 3%, plus a per-transaction fee, typically between $.10 and $.30. The percentages and fees can change depending on how you process the payment (for example, manually entering a card number is usually more expensive than “dipping” or inserting a chip card), but you can generally count on the fees for each type of transaction being the same for all of those types of transactions.\nSubscription flat rate pricing\nThere’s another processing pricing model called “subscription flat rate processing,” where you pay a monthly subscription fee, generally between $20 and $60, and a flat percentage above the interchange rate, plus a transaction fee per transaction. Some businesses can get competitive rates using this model, depending on how large your typical sale is and how many sales you process per month. Read this \narticle comparing credit card processing costs\n for more details.\nGenerally though, a traditional processor using a competitive interchange plus pricing model will be able to get you a lower overall cost… and you can save up to 20% or more compared to third-party payments providers with faster setup and “simpler” rates. \nBe sure to read our \narticle explaining all the different credit card processing fees\n so you understand what to look for… and what to watch out for.\nSolo makes it easy to accept credit cards\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 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.\nSources:\n
\nhttps://www.businessnewsdaily.com/4394-accepting-credit-cards.html\n
\nhttps://paymentdepot.com/blog/merchant-account-requirements/\n

Small business basics: getting set up to accept credit cards

In this article:\n5 advantages for your hair and nail salon of paying vendors and suppliers with a credit card\nBelieve it or not, business-to-business credit card payments are still in the stone age, for the most part. In fact most businesses still pay at least half of their bills using paper checks. Smaller businesses like local hair and nail salons including one-person shops and freelancers typically pay even more of their bills with paper, or the cumbersome “online bill pay” method where you have to have a different login for each vendor or business you have to pay.\n \n\n\nCredit card processors\n and \nthird-party payments facilitators\n usually 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. \nSo small suppliers or local vendors may not be set up to accept your credit card payments for their services.\nWhy should you care? Because there are quite a few advantages for you to paying all of your vendors, suppliers, rent, utilities, etc. with a credit card.\nLet’s go over a few perks you can benefit from when you pay your salon’s bills with a credit card, and then we’ll talk about ways you can pay everyone using a credit card—even if they don’t accept credit card payments (nope, we’re not kidding!).\nYou may also like: \nWhat’s the cheapest way to accept credit cards?\n \nAdvantages to your salon of paying vendors and suppliers via credit card rather than by check or online bill pay\nNow let’s talk about some of the benefits to salons who pay vendors, utilities, suppliers, and everyone else, using a credit card, rather than sending paper checks.\n1. Credit card payments save time and improve cash flow for businesses\nSending 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 salon supplies or make improvements, a business credit card with an appropriate limit can make that easy. (Just be sure to pay it off quickly once you have what you need.)\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 local, small like hair and nail salons 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.\nSalon 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 small business expos, enjoy free concierge service, get free car rental insurance and discounts, and much, much more.\nSome salons use their cashback bonuses to improve their facilities, buy equipment or supplies, pay for employee team-building events, pay for salon maintenance, or even pay rent and utilities. The uses for rewards points/cashback bonuses are almost limitless. This is assuming the card you choose allows you to spend your cashback bonus how you choose.\n(Image)\n\n4. Paying all your salon’s vendors, suppliers, and bills with one card vastly streamlines your accounting process\nWhen you have to keep track of expenses and bills for your hair or nail salon, 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. 

Why you should pay your hair or nail salon’s bills with a credit card

In this article:\nWhat is an alternative payment method?\nCommon types of alternative payment methods\nAdvantages to accepting APMs\nHow to get your business set up to accept alternative payments\n“Business” has at its core the process of buying and selling, or the exchange of goods and services for payment. Your small business isn’t going to be around very long if you give your products and services away for free, so you obviously need to get set up to accept payments.\nMost successful businesses (by far) are set up for \ncredit card processing\n. However, a growing number of consumers are looking for “alternative” payment methods to use, even when dealing with small, local businesses.\nLet’s look at some common alternative payment methods and why you should consider using one or more of them.\nWhat is an “alternative payment method”?\nDefinitions vary depending on context, but for our purposes here when discussing small businesses, an APM or alternative payment method is any method of transferring funds from consumer to business other than the usual payment by cash, credit/debit card, or check. \nSome popular APMs include prepaid cards, store cards, eWallets or digital wallets, mobile payments, money orders, bank transfers, and “buy now, pay later” instant financing programs. Some of the big names currently are APMs like Apple Pay, Google Pay, Samsung Pay, Fitbit Pay, Zelle, PayPal, Venmo, Square Cash, Alipay, Afterpay, and Affirm.\nPrepaid cards generally work like any other credit card, so for the business owner, you usually don’t have to get “set up” to accept this particular form of APM if you’re already able to accept credit or debit cards. \nAnd not many local businesses have the wherewithal to extend in-store lines of credit or “store cards” (anyone remember the old Sears card?). However, since many of today’s customers use mobile payment, digital wallets, or other payment services providers, you should consider discussing these types of payment with your merchant services provider or payment processor, or whoever helps you process digital payments or facilitates your POS (point of sale) hardware and software.\nAPMs came into being to reduce payment friction. Example: PayPal\nPayPal was the first widely accepted alternative payment method and gained popularity during the explosion of the Internet in the 1990s-2010s. PayPal was for a while the only practical way two non-commercial parties could pay each other online without getting a bank transfer involved, or sending a check, money order, or cash via the mail.\n(Image)\n\nPayPal got so popular on eBay (since it made the sending and receiving of funds between eBay buyer and seller so much simpler) that eBay bought PayPal for about 1.5 billion dollars in 2002, and the two companies grew together until eBay split PayPal off into a separate publicly traded company in 2015. PayPal is worth about $100 billion currently.\nPayPal payments can be sent online (via the website) or using the PayPal app, and funds can be drawn from a linked credit or debit card, or a linked bank account. PayPal has also issued its own credit card, just to confuse things further.\nVenmo (owned by PayPal) was intended to be a “social networking” app that allowed P2P (person to person) payments. They’ve (wisely) dialed back on pushing the social networking functionality over the years but Venmo has exploded in popularity because it’s very quick and easy to use, and is free for friends or acquaintances to connect their bank accounts to the Venmo app and pay each other, split a check, etc. \nHowever, there's still considerable "friction" for individuals or small businesses that want to accept payments via Venmo, since you have to have your buyers/payers sign up for accounts, download the app, and connect their bank accounts before they can make payments.\nWearables, “smart cards,” and other contactless payments\nWhile so-called “contactless” payments may certainly be considered “alternative” compared to the more traditional way of processing credit card payments, they may or may not fit into our definition of an APM, depending on how they are funded.\nContactless payments can be made via certain credit cards, debit cards, key fobs, smart cards, “wearables” (such as wristbands, watches, rings, etc.), or other devices including smartphones, that are capable of using radio-frequency identification (RFID) or near field communication (NFC). These cards and devices allow payments to be made without actually requiring any physical contact between customers or their devices/cards and your payment terminal or employee, and without forcing the customer to carry any other form of payment or ID.\ncustomer paying with a contactless payment wearable\nThis has obvious advantages in speed and convenience for both businesses and customers, and is particularly useful during a pandemic since there is no required physical contact between the device/card/wearable and the payment terminal, nor the exchange of any item between cashier and customer.\nSome well-known contactless examples include Apple Pay, Samsung Pay, Google Pay, and Fitbit Pay. Your bank’s mobile application may also support contactless payments, and you more than likely have a “smart card” in your wallet. These are simply standard credit cards with RFID chips embedded in them that allow near-field validation of your card at compatible payment terminals.\nWhy should local businesses consider accepting alternative payment methods?\nToday’s customers expect that businesses they like will move toward a more “omnichannel” business model for providing goods and services via multiple avenues, allowing for convenience and flexibility for their customers.\nThe same thing goes when it comes to payments. The more ways you have for customers to pay, the better it is for them—and thus the better it is for you.\nIf you suddenly had a lot of people coming to you wanting to pay with, say, gold bullion, you’d probably quickly learn all you could about gold bullion, determine how to accept it and value it correctly, and convert it into a form of currency you could use.\nIt’s the same thing with APMs. Cash is falling in popularity, particularly among younger consumers, who may also be skeptical of traditional credit cards (and don’t even think about asking them to pay with a check).\n\nModern customers expect multiple avenues to pay, even from small, local retailers, and some customers don’t even carry wallets, cards, or cash anymore. A smartphone or even a “wearable” can be enough for a postmodern consumer to carry out daily life and typical in-person purchases.\nWhat types of alternative payments should I consider accepting?\nFor the purposes of this article we are going to treat all “mobile payments,” app-based payments, online payments, digital wallets, and digital payments services as functionally identical. \nWhether customers’ funds are sourced from a linked bank account, a credit card, a PayPal balance, or stored digitally on the device in question is not really the main point where business owners are concerned.\nWhat you care about is how complicated is it to accept these payments, how much is the fee (if any), and how easy is it to get set up with your current POS system (if you have one). The best way to get a relevant answer to these questions is to discuss them with your specific payment processor, merchant service provider, or business advisor familiar with the payments process. Or check out \nSolo.co\n and learn why it's perfect for small businesses, solopreneurs, freelancers, contractors, gig workers, and more!\nGenerally the fee (when a fee is charged) is similar to what your processor would charge you to accept a traditional credit card payment (perhaps around 3%) but in some cases it can vary, and it may be lower, which is another reason you might consider APMs.\nZelle is free for consumers and person-to-person transfers, but your bank may charge you a fee depending on several variables. Your business account will also need to be with a bank that offers Zelle if you wish to accept that type of payment.\nKnow your customers and tailor your APMs to them\nAnother thing to consider is your customer base. In some places and for some businesses it may make sense to go through the process to accept, say, Fitbit pay, and in other places it may not, due to lack of customer adoption. Talk to your customers and fellow business owners and see what people are using and what they want to be able to use.\nAlipay is a good example as well. Alipay is an online and mobile payments system that is huge in China and growing in popularity in the US, particularly where there are large Chinese populations or in locations where Chinese tourists frequently visit. \nIf this describes your business, you may want to get set up to accept Alipay, because it can greatly reduce friction for payments where communication is a problem and cross-border payments can be complicated. If you never deal with any customers wanting or expecting to be able to pay using Alipay (or WhatsApp pay or whatever else), it may not make sense for your business.\nDepending on what kind of store you run, you might consider partnering with an instant consumer financing company like Affirm or Afterpay that allows customers to get their purchases immediately (after a short approval process) and pay over time, sometimes without any fees. \nGenerally the merchant (you) get your full amount up front (minus the financing company’s fee), and the 3rd-party financing company handles any installments, fee collection, and the repayment process from there. This type of purchase is exploding in popularity and it might make sense for you.\nHow do I get set up to accept alternative payment methods?\nChances are, you already have the capability to accept one or more APMs. Many POS systems (depending on the processor) already come with the capability to accept mobile- or app-based payments.\nYou may need to upgrade your POS hardware if you don’t have the capability to accept “contactless” payments made with RFID/NFC enabled cards, phones, and devices, but since more and more customers are moving toward this type of low-contact payment, it may be worth it to you. \nBartering, trading, discounting\nWhile not technically part of the strict definition of “Alternative Payment Methods,” bartering or trading for goods or services is pretty much the O.G. of the payments world, and in some business models this “alternative” can still make sense, depending on the attitude and willingness of the parties involved.\nA dairy farmer might trade fresh milk to a local piano teacher in exchange for weekly lessons. A baker might barter a couple of dozen hot donuts for a local printer to make up some business cards. A tax preparing firm might offer free analysis and tax return preparation to all members of a local chamber in exchange for waiving annual dues. These are just a few examples of how this might work.\nOf course, be sure to comply with all regulations related to your industry and adhere to proper tax laws.\nSolo can help you accept APMs\nSolo is the easy way for small businesses, solopreneurs, freelancers, and sole proprietors to pay and get paid. Buyers can pay you using cards or APMs like Apple Pay or Google Pay, and they don't have to sign up for an account to pay you! Check out \nSolo.co\n and learn why it might be perfect for you.

What are alternative payment methods and why should your business consider them?

For ordinary consumers, paying bills with a credit card can be a great way to rack up rewards points, build credit, and get more flexibility with payments. But can businesses get similar benefits by paying their expenses, vendors, and suppliers with a credit card?\nThe answer is yes, but with some caveats. The first is that not all vendors and suppliers (or mortgage companies, utility companies, internet providers, etc.) even \naccept\n credit cards. Roughly half of American businesses still need to pay at least 50% of their bills using paper checks. (More on this later.)\nAnother “gotcha” with using your business credit card to pay expenses and bills is that you have to be very careful to pay it off on time each month, otherwise you end up paying significantly more for your expenses, due to credit card interest charges (or heaven forbid, late payment fees).\nAlso, though using a credit card to pay business bills can help \nimprove cash flow\n, you have to resist the temptation to pay bills with a credit card if you don’t have the cash to pay the bill—or won’t have by the time the credit card statement is due. Never use a credit card to pay a bill if you don’t know how you’re going to come up with the money.\nBenefits of using a credit card to pay business expenses\nNow let’s go over some of the benefits of using a credit card to pay your business bills and expenses.\nMiles, rewards, perks, cashback, discounts\nNearly all credit cards offer special member advantages and perks, and for small business owners this can be a huge asset. \nBusiness owners who rack up lots of points or 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.\nSome small business owners use their cashback bonuses to buy equipment, pay for employee team-building events, or even pay utilities. The uses for rewards points/cashback bonuses are almost limitless, and the more you spend, the more rewards you earn.\n\nPaying by card saves time and can improve cash flow\nMailing a check can take quite a few days—or even weeks—process the payment. When you pay your expenses, vendors, and suppliers using a credit card, you speed up the process and free up cash for other business expenses.\nNow, please note: “free up cash” does not mean you can simply put those bills on a credit card and then forget about them. You obviously need to pay them off. \nHowever, You get a grace period, or effectively a 0% interest loan, when you use a credit card… as long as you keep paying off your balance on time every month. Since you haven’t spend that cash or sent it out as a check, you can use it to run your business or whatever else you need until your credit card statement comes due.\nRegularly using your card improves your business credit\nYour business has a credit score (from 1 to 100) just like you as a consumer do. The better your business credit is, the lower your rates for business loans, financing on essential equipment, etc.\nIf your credit card company finds you regularly pay your credit card statement on time and use much of your available credit, you can typically ask them to increase the credit limit available to your business which can further improve your business credit rating (and allow you more flexibility and more purchasing power).\nAgain, you need to make very sure you’re paying your card balance off on time to keep these benefits coming.\nPutting all your bills on one card simplifies bookkeeping \nWhen you have to keep track of expenses and bills for your business in addition to running your business, simpler is better. If you can move all of your monthly business expenses, rent, utilities, supplier payments, etc. to a single card, it’s much easier to keep track of.\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 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.

Is it smart to pay business bills using a credit card?

In this article:\nThe absolute least expensive way to accept credit cards\nWays to cut down credit card processing costs\nCheapest processing options for small business\nA big reason that many small business owners don’t accept credit card payments is because of the fees that are assessed as their customers make purchases. These fees can add up fast, but not having a credit card payment option can be a huge disadvantage to any business. \nToday’s customers expect even roadside carts and truly small businesses to accept credit cards, and the fees associated with that method of payment shouldn’t be enough to keep you from getting started. \nWe’ll talk about some of the cheapest options for credit card processing so you can find a good fit for your business. \nWays to cut down costs of credit card processing \nFirst, we have a few tips to help you reduce the cost of credit card processing. \nAvoid multi-year contracts\nWhether you opt for a third-party payment processor or not, try to avoid committing to any lengthy contracts. If possible, choose an option that either doesn’t require you to sign a contract, or sign for a year at a time. You may wish to switch services down the line as your business grows, and multi-year contracts often have heavy termination fees. \nHowever, be aware that you will most likely get the lowest rates if you opt for a traditional processor who offers “interchange plus” pricing. And if you want the absolute lowest-cost processing, you will likely need to sign a contract with a traditional processor. Plus, longer contracts can often result in lower overall costs because it’s beneficial for your processor to serve your business for as long as possible.\nWatch out for added fees for services you may not need\nBeyond heavy termination fees, there may be other fees included in your monthly invoices. As you are getting quotes from various service providers, ask for samples of itemized invoices so you can see the different charges that they assess. \nSome processors include potentially helpful add-on services by default (for an additional fee), and will automatically bill you for these services unless you specifically opt out before you sign a contract.\nThese services may be very useful for your business, so make sure you understand how these value-added services can benefit your business before you ask your processor to omit the services and any associated fees.\nAsk your processor or merchant level sales agent for discounts and other price breaks\nWhen it comes to credit card transaction fees, there are two main approaches: interchange plus and flat rate. Every credit card network (VISA, Mastercard, AMEX) charges an interchange fee that your service provider pays for each transaction. Because of this, most providers have some kind of markup on that cost so they get their cut. \nTraditional processors typically use “interchange plus” pricing, charging the current interchange rate plus their markup. Interchange rates are subject to change so you might not always be paying the same fees on transactions. \nHowever, the interchange rate is usually the smallest percentage of the fees you’ll likely be paying when you accept credit cards, so your final costs will likely not vary that much, even if you go with interchange plus pricing.\nIt’s in the processor’s markup and additional fees and services where you can negotiate a little wiggle room with your processor or merchant level sales agent. They obviously need to make a profit, but they also want to keep your business, and if you develop a trusting relationship with them you can often ask for preferred rates or get add-on services at lower costs, or even get “value added” services for free.\n\nA note on third-party payments facilitators or “aggregators” \nThird-party payment facilitators (i.e., Square/Block, Stripe, etc.) are potentially very straightforward to get small businesses set up and processing. Providers like the new third-party payments facilitators that use “flat rate” pricing charge a flat rate regardless of the fluctuation of the interchange fee. This can be somewhat helpful because you always know what you will be paying and won’t have to anticipate changes in costs as the interchange rate fluctuates. \nHowever, be aware that flat rate processing is nearly always more expensive than traditional interchange plus pricing, so make sure to weigh the costs against the needs of your business. Generally, a traditional processor can save you about 20% in processing fees compared to a third-party payments provider charging you a flat rate. \nRates and fees vary though, so be sure to check out all your options.\nWhat is the absolute cheapest credit card processing option?\nAs discussed above, if you want the absolute cheapest way to accept credit cards, you’ll probably want to sign up with a reliable credit card processor and negotiate a good “interchange plus” processing fee structure rather than using one of the new “aggregators” that uses flat-rate pricing.\nThird party payments facilitators currently charge between about 2.4% on the low end (if you meet certain requirements) to about 3% or more on the high end, plus an additional .$10-$.15 fee per transaction, to process credit cards. This may not sound like a lot, but for small businesses that sell a lot of low-dollar items, or those with very small profit margins like restaurants, these flat rate fees can make it actually unprofitable to accept credit cards in some cases. The ease of entry and convenience of use may make it worth it, though.\nIt does take more time to get set up to accept payments with a traditional processor. But your processor’s local merchant level sales (MLS) agent can be a very useful business advisor, particularly about new technology and offerings in the payments world. Not many small business owners have the time to keep abreast of all the latest technology and payments innovations, and your MLS agent is very interested in keeping you as a client.\nSo, you can typically get lower rates from a traditional processor, but you'll definitely want to shop around. 

17 articles found in “Cards”

Small business basics: getting set up to accept credit cards

Why you should pay your hair or nail salon’s bills with a credit card

What are alternative payment methods and why should your business consider them?

Is it smart to pay business bills using a credit card?

What’s the cheapest way to accept credit cards?

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