Idaho Finance

Jun 22 2018

How Can My Small Business Accept Credit Card Payments, best credit card processor for small


How Can My Small Business Accept Credit Card Payments?

Best credit card processor for small business

Accept Credit Cards

credit card and hand image by Warren Millar from

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Businesses need to be able to accept credit cards as a form of payment from their customers. By accepting credit cards, small businesses are making it more convenient and easier for customers to make larger purchases as payments are delayed for the consumer. This is especially true online where cash is not an option and consumers are weary about using bank account information when making a purchase. Small businesses must apply to be able to accept credit card payments from their customers.

Set Up Merchant Account

To accept credit cards from customers in your retail storefront, you will need to set up a merchant account through your bank or financial institution. This merchant account involves an application process and generally will approve you to accept the most common credit cards of Visa and Mastercard. Other credit card companies, such as Discover and American Express, may have a separate application process to be able to process these cards.

Obtain Processing Equipment

After the merchant account has been approved, you will lease or buy credit card processing equipment through your financial institution. In most cases, this will be a card reader attached to a modem. By doing this, you will receive instant verification if the card is approved or declined at the point of sale. It is the retailer s responsibility at the time of the sale to verify the validity of the card and the cardholder by asking for identification or comparing signatures on the charge slip and the back of the card. Keep in mind that a credit card that has not been signed on the back is not a valid card.

Online Processors

If your storefront is only online, you can obtain a merchant account through the traditional means or you can use an online payment processor, such as PayPal. Access PayPal (see Resources) and set up an account. You will need to enter your business information, verify a bank account where money will be transferred and enter your own credit card information if you wish to be able to transfer more than $500 per month. The transaction fees associated with a PayPal account are generally similar, if not lower, than those imposed by traditional merchant account providers. Many consumers who shop online tend to trust sites that use PayPal to process payments and know that their financial information is never viewed by you, as the business owner. This provides an extra layer of security online.

Understand Fees

Many credit card processing accounts will charge a discount fee per transaction. This is a percentage of the total purchase amount that will be charged to the retailer for processing the credit card transaction. In addition, many will also charge a per transaction fee of 20 cents to 50 cents. Some merchant accounts will also charge a monthly, quarterly or annual fee. It pays to shop around and find the best credit card processor based on the needs of your business. Remember that many times, the processor will charge for every transaction that is made, including for refunds.

Know Rules

Even though the retailer is charged fees for accepting credit cards, it is against most credit card processing agreements to pass on those fees to the customer. When you agree as a business owner to accept credit cards, you agree to the fees that are associated with the privilege of doing so. It is not acceptable to charge the fees to the customer or require a minimum order amount for the customer to be able to charge the purchase. Maintaining these practices may result in the loss of your merchant account.

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