As some of the contributors to this blog have noted, cash as a payment method has largely been usurped by more convenient, trendier payment methods – namely credit cards in their many forms (present, non-present, mobile, digital wallet, etc.).
As consumers and other businesses demand credit card acceptance, businesses have (begrudgingly) acquiesced to those demands and put credit card acceptance procedures in place. For many businesses, those procedures run more like three-ring circuses than standard practices, and most business owners or accounting teams simply don’t know any better–and, for that reason, businesses waste a good deal of time and spend money needlessly on those procedures.
Over the past decade or so, the credit card processing game has changed considerably, bringing new, exciting technologies to the table. Here are five ways most any business can use those innovations to make their payment processing practices quicker, cheaper, and safer.
#1. Do you create sales orders or invoices? Integrate your processing to your ERP system
Most B2B companies and some B2C businesses use an accounting program for creating invoices or sales orders. Most of the these accounting systems come with built-in credit card processing functionality, but, for a variety of reasons, these options are left unexplored. Integrated processing is meant to save businesses time, as it automatically applies a card payment to an invoice–and, depending on how many of these transactions you accept each day, it could save your business an untold amount of time. If your current procedure involves spending time manually entering payments into your system at the end of the day, this option will work famously for you.
#2. Do you run daily and monthly reports? Use a virtual gateway
If for any reason a full accounting system credit card integration isn’t feasible for your business, a virtual gateway is the next best thing. With a virtual gateway, you can accept payments wherever you have internet access–not just at the card terminal–and, unlike with a physical terminal, you can monitor your batches in real time with a virtual gateway and create reports based on the data with just a few mouse clicks. This turns what may have been an arduous process into something you hardly have to think about.
#3. Are you in the B2B realm? Qualify those company credit cards correctly
A great deal of B2B companies pay needless credit card processing fees because the business- or corporate-type credit cards (and government purchasing cards as well) come up “non-qualified” or “standard” or showing some other downgrade on their processing statement. This is not, in fact, a death sentence, and actually means you can improve your procedures. Seek out a credit card processor that can help you better qualify these specific types of credit cards and you’ll end up paying less without changing your acceptance process.
#4. Are you ready for EMV? Time to start thinking about it
EMV cards are equipped with special computer chips that communicate with corresponding card readers, adding an extra layer of security to card-present transactions. By October 2015, merchants will be solely liable for fraudulent transactions committed with EMV credit cards and non-EMV card readers. Banks are doing their part and supplying their customers with chip-equipped payment cards, but are you doing yours? EMV chips have already curbed fraud significantly in Europe and other areas that have already adopted the technology.
Special EMV terminals (and even EMV readers for virtual gateways) cost about as much as regular credit card terminals. Set aside the $200-$300 and buy one if you haven’t already. (And, don’t bother leasing a terminal. We lease cars so we can get something better later on, but, are you really going to stand in line for that hot new credit card terminal in a year’s time? Most per-month lease prices are equivalent to about a quarter of the full price of a terminal anyway, so it’s really not a great idea from any angle.)
#5. Does your system use tokens? You might think about that, too
Tokens aren’t just for the arcade these days. In data security, tokens can replace actual credit card numbers, and, if a hacker breaks into your server, he can’t do anything malicious because the tokens by themselves are meaningless. Mainstream news certainly doesn’t support this idea–if the hundreds of articles on the Target and Home Depot data breaches are any indication–but, 70% of data breaches occur in small businesses, not huge companies. And, of those businesses whose information is compromised, a full 60% of them close their doors permanently within six months of the event.
Unlike EMV terminals, credit card processors are beginning to offer tokenization simply as a benefit of doing business, so look for a credit card processor that will supply you with this technology either in an ERP integration or a virtual gateway–or both.
#6. What’s your pricing structure like? Stay away from three-tiered programs
There may be thousands of merchant services companies sprinkled across the United States (and even more throughout the world), but not all of their business practices are the same. On the surface, using a three-tiered pricing structure may appear better than an interchange pass-through plan; with a three-tiered plan, your processing statement is much simpler, as you don’t have many individual acceptance prices to deal with–just three (or four, if you accept American Express), called “Qualified” (or QUAL), “Mid-Qualified” (or MQUAL), and “Non-Qualified” (or NQUAL).
Unfortunately, the lack of detail allows a processor to assign one of just three different prices (the tiers) to your customers’ credit cards regardless of the card’s actual price–and, each of the 300+ card types has a different price. It’s not even that three-tiered programs try to price for a worst-case scenario; most tiers are priced far above the most expensive possible credit card type for that category.
When it comes to pricing, opt for more detail so you know exactly how your cards qualify every month. If you absolutely can’t handle all the additional information, ask for a flat rate plan, something customized for your business and the cards your customers usually use. In addition to having very few numbers to analyze, you’ll know exactly how much your company will devote to credit card processing fees every month.
Images: ”Moment of payment with a credit card through terminal/ Shutterstock.com“
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