Accepting credit card payments for small businesses is easy but it depends on the method you use and payment can be done either online, in-store, or through email.
Lots of people with small businesses keep asking about the best ways to accept credit card payments. Well, the process is easy, all you need to do is process your card service and collect your customer’s credit card information. Read on for easy steps.
Accept Credit Card Payments
To begin accepting credit cards, you only require two essential things: a credit card processing service and a method to gather your customer’s credit card details. Inside each of these, you’ll have some options to decide on, which might seem a bit overwhelming. To simplify things, we’ll break down each aspect so that you can concentrate on how it suits the requirements of your small business.
When it comes to the processing service, you’ll need to choose between having a merchant account or using a third-party payment processor (such as PayPal or Square).
Regarding the collection of card information, you’ll need to think about whether you’ll be taking payments online, in person, or over the phone.
Let’s take a closer look at your options.
Merchant Account vs. Payment Processor
A merchant account is like having your dedicated bank account for credit card transactions, offering more control but often requiring a credit check and setup fees.
On the other hand, a payment processor, like PayPal or Square, is a third-party service that handles transactions for you, making setup easier but potentially with higher processing fees and less control. However, your choice depends on your business needs and preferences.
So, how can you determine the best option for your needs? If you conduct a significant number of credit card sales, bargaining for your fees through a merchant account might lead to cost savings over time. Conversely, many small businesses opt for the ease and reliability of a Payment Service Provider (PSP).
How to Accept Credit Card Payments Online
To enable online credit card payments, you’ll require a tool known as a payment gateway.
A payment gateway is like software that ensures your customers can securely provide their credit card details to your payment processor.
For instance, when you encounter a PayPal button on a website or when you go through the checkout process on a Shopify shopping cart, you’re interacting with a payment gateway.
Most payment service providers typically offer a payment gateway as part of their service. This gateway can either connect directly to your website or lead to an external account portal.
Helpful Tip: Many payment processors integrate seamlessly with HubSpot payments, allowing your customers to make payments directly on your website. Additionally, you can generate shareable payment links that can be sent via email, text, or even embedded within an invoice.
How to Accept Credit Card Payments in Person
Once you’ve set up your merchant account or payment service provider (PSP), the next step is to find a way to securely gather your customers’ card information. The method you choose depends on your business type, and here are various options to consider:
- Point-of-Sale (POS) System: This software not only helps manage your products and inventory but can also handle sales transactions. It may come with a card reader or allow manual input of credit card information. Ideal for restaurants or retailers with diverse products.
- Card Reader or Terminal: These devices enable customers to swipe, insert, or use contactless payment methods with their cards.
- Mobile Card Reader: Transform your smartphone or tablet into a credit card terminal with this compact accessory. Great for businesses on the move, such as food trucks and farmers’ markets.
- QR Code: Display a customized QR code for your customers to scan. It directs them to a payment app, where they can input their credit card details on their smartphones.
Many payment service providers often offer some form of payment entry as part of their package, usually at no additional cost.
How to Accept Credit Card Payments by Phone
If you wish to take credit card payments over the phone, you’ll require a point-of-sale system that permits you to manually enter the card information provided by your customers as they read it out. This type of transaction is known as a “card-not-present” transaction and is commonly used by businesses like restaurants and florists.
Keep in mind that card-not-present transactions typically come with higher fees due to the increased risk of fraud.
To receive credit card payments using your smartphone, you’ll require a mobile card reader.
- These readers can connect to your phone either by plugging in or via Bluetooth.
- Mobile card readers come in different types, including magnetic swipe (magstripe), EMV chip, or contactless options.
- Payment processors such as Square or PayPal offer these mobile card readers.
How Much Does it Cost to Accept a Credit Card Payment?
Industry analysts, according to Reuters, place the typical processing cost between 1.5 and 3.5%.
The fact that PSPs frequently impose a flat fee on merchant accounts is a benefit of using them. For instance, regardless of the type of credit card your consumer uses, HubSpot purchases cost 2.9%.
There might be setup fees, device expenditures, and monthly subscriptions in addition to transaction fees. Added fees like these are more typical with a conventional merchant account. The majority of PSPs exclude these expenses from their pricing or waive them as part of special deals.
Best Ways to Accept Credit Cards for Small Businesses
Below are the best ways to receive credit cards for small business:
Stripe: Best for Online Payments
Fees:
- Online: 2.9% + $0.30 per transaction
- In-Person: 2.7% + $0.05 per transaction
- Other Costs: One-time fee of $59 for basic card reader
This is one of the best online payment options for small business owners. However, it accepts swipe, chip, or contactless payments from the same card reader. Furthermore, the online experience includes 1-click payment, address auto-complete, and payment method reuse.
HubSpot Payments: Best Overall
Fees:
- Flat 2.9% of transaction amount
HubSpot payments is a seamless payment tool integrated into your CRM (Customer Relationship Management). It simplifies the process of receiving payments by allowing you to accept major debit and credit cards, ACH payments, and recurring payments. Moreover, you can conveniently collect payments directly from your website or generate shareable payment links for emails, texts, and invoices.
What makes it even better is its integration with Sales Hub, which instantly merges your sales data with customer records and reporting.
HubSpot payments are accessible to Sales Hub users based in the United States with a starter account or higher. There are no extra setup fees or monthly charges, and the transaction fees are straightforward at a flat rate of 2.9%.
Square: Best for Mobile Payments
Fees:
- Online: 2.9% + $0.30 per transaction
- In-Person: 2.6% + $0.10 per transaction
- Card-not-present: 3.5% + $0.15 per transaction
- Other Costs: Upgrade your card reader for a one-time $49
Square introduced the original mobile card reader, which remains highly popular. It’s user-friendly – simply plug it into your phone, download the app, and you’re all set. Additionally, you get your first magstripe card reader for free. If desired, you can upgrade the card reader to accept chip cards, contactless payments, Apple Pay, or Google Pay.
Square extends beyond mobile payments, offering POS software, retail registers, and manual entry capabilities. They also provide invoicing and appointment scheduling software. For online solutions, Square enables you to add a payment portal or create a free online store using their store builder.
Shopify: Best for E-commerce
Fees:
- Online: 2.9% + $0.30 per transaction
- In-Person: 2.4% of the transaction amount
- Card-not-present: 2.9% + $0.30 per transaction
- Other Costs: Starts at $29/mo.
Shopify is primarily recognized for its e-commerce platform but also provides in-person and online payment solutions. Offering a drag-and-drop store builder for websites and seamless integration between online and physical retail sales through its POS system.
PayPal: Best All-In-One
Fees:
- Online: 2.9% + $0.30 per transaction
- In-Person: 2.29% + $0.09 per transaction
- Card-not-present: 3.49% + $0.09 per transaction
- Other Costs: One-time fee of $29 for card reader
PayPal is trusted by customers and offers versatile payment options, including credit cards, peer-to-peer payments, Venmo, and various in-person payment methods, making it suitable for a wide range of businesses.
FAQs
Can I Take Credit Card Payments On My Own?
Even if they don’t have a business license, individuals can accept credit cards using a payment processor like PayPal, Stripe, or Square.
Can I Take Credit Card Payments Using PayPal?
PayPal enables you to accept credit cards online, in person, or through a mobile app in addition to peer-to-peer transactions. All of the major credit card companies, including Mastercard, Visa, and American Express, accept payments through PayPal.
Can I Use Venmo To Accept Credit Cards?
As a payment processor, Venmo cannot be used to accept credit cards. On Venmo, credit card payments are possible, but they come with additional cash advance fees and a 3% processing fee.
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- How to Accept Credit Card Payments on Phone
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