- Do you feel like accounts receivable and check payment systems don’t pay you fast enough?
- Would you like to establish automatic client payments?
- Do you strive to provide a convenient customer experience?
If you answered yes to any of these questions, then your business should be accepting credit card payments.
Sherman Oaks Accounting & Bookkeeping powered by One Source Services, Inc. meets business owners every day who struggle with whether or not to accept customer credit card payments.
Many business owners, especially with new and smaller businesses, see credit card processing fees as unnecessary expenses. In some cases, they may feel overwhelmed by systems and technology they don’t understand.
But, being able to pay by credit card is indispensable in the eyes of many customers! It’s become increasingly difficult to remain in business at all without accepting credit card payments.
Not allowing potential customers to pay by credit card may prevent your business from seizing opportunities like supporting small or impulsive customer purchase decisions and remaining competitive with businesses that do accept credit cards.
Digital payments of all types, from credit cards to Apple Pay, have created tighter payment security, better bookkeeping efficacy, and an evolution towards a cashless society.
One Source Services, Inc. believes that reluctant business owners would be more likely to start taking credit card payments if they had a little more insight into why credit card processing fees exist in the first place.
When a business accepts a credit card payment in-person, such as at a point-of-sale terminal, the credit card information is collected from the customer via swipe or manual entry.
Then, the transaction data is forwarded to the business’s payment processor (sometimes called a merchant account provider) for the customer’s card-issuing bank to approve or decline.
The card-issuer will then either accept or deny the transaction depending on funds availability before communicating back to the business whether or not the payment went through.
Credit card payments that are taken online, on the other hand, require a payment gateway to encrypt and securely transmit data to the credit card processor before safely sending the processor’s approval or denial message back to the website.
Finally, the customer’s credit card issuer will transfer the approved payment funds to the business’s merchant bank and issue a payment statement to the customer.
The business’s merchant bank is responsible for administering the business’s merchant account and transferring payment funds into the business’s bank account within a few days. This processing time is called the “settlement period.”
Unsurprisingly, everyone involved in the approval and transfer chain requires compensation for their role and financial risk. Cue the processing fees.
In-person credit card transactions generally have lower associated fees than phone or online transactions, which makes sense when you consider the greater fraud risk for card-not-present transactions.
Chip reader transactions are the most secure and fees for these types of sales are usually about 1.5% to 3.0%.
Riskier remote credit card payments, on the other hand, have slightly higher processing fees, usually between 2.9% and 3.5%.
As with everything, business owners should thoroughly research merchant account providers before deciding on one. They should compare payment processing fees upfront, do a review of their existing merchant account at least once a year, and negotiate for better fees based on transaction volume, frequency, and type of sale. Sherman Oaks Accounting & Bookkeeping powered by One Source Services, Inc. can help with all of this.
It’s possible to find credit card processing fees that meet a business’s individual needs. And most accounting software programs, like QuickBooks Online, make it easy to correctly record credit card transactions.
If you’re still uneasy about accepting credit cards, would like assistance with selecting a merchant account, want smooth implementation and integration of credit card payments into your existing system, or for anything else – Sherman Oaks Accounting & Bookkeeping powered by One Source Services, Inc. is here for you.