There’s often a lot of confusion when it comes to accepting credit cards, so we thought we would debunk some of the common myths around credit card processing. If you’re thinking about accepting credit cards for your business, read the five myths and facts about credit card processing below.
1. Myth: The cost of accepting credit cards is too high
Fact: While accepting credit cards comes with a cost, you may be losing even more money by not accepting electronic payments. Apart from the benefits that come with accepting credit cards (such as improved cash flow and increased sales), $127 billion dollars were added to the economy through card usage between 2008-2012 alone. One thing is clear: you’re missing out on potential revenue by not accepting credit cards.
Cash is steadily decreasing in popularity; more and more consumers are turning to credit cards and mobile payments for everyday purchases because it’s easy and convenient. Accepting credit cards is not a fad, and it’s only gaining in popularity.
Today’s consumer values speed and convenience, and they will gravitate towards the brands that cater to those preferences. Many consumers will have no qualms about switching to your competitors who are accepting credit cards.
So yes, there is a cost to accepting credit cards, but the cost of not accepting credit cards is even higher.
2. Myth: It’s difficult to keep cardholder and sensitive data safe
Fact: Accepting credit cards means you have to deal with PCI compliance – which is no easy feat. Anyone who comes into contact with cardholder data is responsible for making sure their business practices are PCI-compliant. This is to ensure a secure and healthy payment ecosystem for all involved. PCI compliance is not mandated by law, but there are serious penalties involved with non-compliance – both financial and long-term damage to your business.
The good news is that a good payment processor will take care of the requirements needed for your business to be and remain PCI-compliant – look for one that will do it at no extra cost.
3. Myth: My funds will be held, and I won’t get paid immediately
Fact: The probability that your funds will be held or delayed depends on what type of processor you go with: a merchant account provider or a processing aggregator. A merchant account provider sets you up with a dedicated merchant account that you own. The application for your own merchant account is a bit more comprehensive; the processor obtains information about your business such as high and low processing volumes and average transaction tickets to avoid interruptions to your cash flow.
A processing aggregator forgoes the lengthier application process to allow merchants to start processing quickly and easily. Since aggregators carry higher risk by combining several similar businesses under one umbrella and allowing them to use a communal merchant account, they are very vigilant about potential security risks. They will not hesitate to hold your funds temporarily — often without warning — to investigate any suspicious activity as they don’t know regular processing details regarding your transactions.
If you partner with a merchant account provider, you’ll typically see funds in your account within 1-2 business days.
4. Myth: I have to buy expensive equipment
Fact: Many payment processors offer multichannel payment solutions for your business. This means that you have many options to process credit card payments using equipment you already own like your mobile device, tablet, or laptop.
Mobile payments: Using a mobile app and a card reader, you can accept credit card payments on-the-go anywhere you are.
Web terminal: Also known as a virtual terminal, this payment method allows you to securely accept credit card payments by inputting the details into a web browser — all you need is an internet connection.
Recurring billing: If your business can support a subscription billing model, recurring billing is an efficient solution – and just like the web terminal, it’s accessible on any web browser.
eCommerce: Selling your goods and services online is another way that you can avoid buying additional equipment – plus you can expand your market and accept credit card payments worldwide.
Invoicing: Invoicing has now gone digital. Email branded invoices to your customers and they can pay in a couple clicks via the embedded payment method on the invoice.
But if you want to accept debit, Tap and Pay, or Chip and PIN payments, you will need a traditional terminal. Luckily, there are options for traditional terminals that don’t involve paying an enormous amount. If you rent a terminal, the cost is monthly and more digestible. When you rent, if there’s anything wrong with your terminal or if the technology updates, you’ll be sent a new terminal.
5. Myth: There are too many monthly and additional fees
Fact: This one is half true, depending on your individual business. For businesses that are not processing a lot in the way of credit card volume each year, the additional fees will not make sense for them; they’re better off partnering with an aggregator.
However, most aggregators offer flat rates which don’t serve high-processing businesses well because the more you process, the more fees you will pay. A merchant account provider typically has the ability to customize credit card processing fees when you process more than $40k/year. Pricing is optimized based on your individual business, taking into account factors like high and low average transaction sizes.
While the fees are customizable, there are often additional fees and obligations associated with merchant account providers like monthly fees and contracts. These additional charges often give you access to a wide range of value-added services: a dedicated support rep for each account, more payment processing tools and channels that will help you grow your business, robust data and analytics, higher processing limits, etc.