Recently, I was watching a show on television about these two girls who’d started a cupcake business and had to turn down credit card payment from a customer. The first thought running through my head at that moment was – “people still do that?” and the second one was to somehow make the budding entrepreneurs understand how easy it is to set up credit card processing for their fledgling business.
Plastic has become the favored currency of people all over the world. Not only is it more convenient (remember the time when your wallet would make a big bulge in your pocket from all the dollar bills stuffed inside?), but it also provides a measure of security.
According to Community Merchants U.S.A., 69% of consumers in the age group of 18-34 and 58% consumers aged 35-44 admitted they only shop at businesses that take multiple forms of payment. Imagine the amount of business you’re losing. In fact, I’ll tell you how much.
According to financial software firm Intuit, each business that does not accept plastic payment misses out on roughly $7,000 in annual sales translating into a collective revenue loss of over $100 billion. Food for thought? I think so!
It’s as easy as 1 2 3…
Most small businesses don’t accept credit cards due to the hefty fee associated with processing the payment. But just think about the additional revenue you’ll be generating if your business started accepting plastic payment and the numbers will begin to look a lot more attractive.
If you’re worried about the complexity it will add to your checkout process, don’t be. Modern technology has made it relatively simple and straightforward to set up credit card processing. Here’s what you need to do:
Account for it:
There’s no denying the fact that it’s not cheap to use a credit card processing system even though it’s become a lot more affordable than before. You need to ensure that your small business has the budget for it. The possibility that you may not be able to attract immediate business after setting up a credit card processing system is quite real, so make sure you can take the hit.
Assess your needs:
As a small business, it’s not necessary that you’ll need to process all types of credit card payments. The needs of a brick-and-mortar only store are very different from that of an exclusively e-commerce business. The former does not need services like payment gateway, shopping cart, and SSL encryption, while the latter doesn’t have to set up any point-of-sale or telephonic transaction system.
Irrespective of your business model, you will need to set up a merchant account to be able to accept credit card payments.A merchant account is an intermediary account where the money released from a customer’s card-issuing bank sits before flowing into your business account. Several financial institutions including banks and trade associations as well as many third-party companies offer merchant accounts. Like with everything else, it’s possible to compare merchant accounts/credit card processors online and find the one that best fits your needs.
Understand the fee structure:
There’s no uniformity in the fee structure across merchants. Some have a one-time setup fee; others may charge on a monthly, yearly or per-transaction basis; still others take a percentage cut from each transaction. You need to make sure that you’re absolutely clear about the fee structure and other terms of agreement between you and your merchant.
Set up the system:
Once you’ve signed the agreement, set up your credit card processing system using your preferred equipment. Your options include a credit card terminal, dedicated phone lines, or a desktop computer. Hand-held credit card terminals are available for delivery-oriented or mobile businesses (think florists and cab services). These days, you can also use a smart phone to process credit card payments.
Lo and behold, your credit card processing set up is complete. Easy isn’t it? There’s nothing wrong with starting small. But to be able to scale, you need to keep up with the times and acknowledge that plastic is the new king!