Small business should i accept credit cards

We feature products and services from companies we find reputable, whether or not they are our advertising partners. No partner can guarantee placement or favorable reviews on AdvisorSmith. As a small business, preparing to accept credit card payments can be a confusing and complex process, but being able to accept these payments can greatly increase your revenue and customer satisfaction. Accepting credit card payments is necessary for most companies. Although some businesses may find the cost to accept credit cards to be expensive, accepting credit card payments will ultimately increase your sales and revenue.

In the end, the increased profit is sure to outweigh the costs. Before you set up credit card payment accounts, you will need to determine what your business needs are. Will you offer in-store payment, online payment, mobile payment, phone payment, or some combination of these options? The answers to these questions affect what hardware and software you will require and what providers would be easiest for you to work with. To accept in-store payments, you will need a merchant account or payment service provider and a credit card terminal or point-of-sale POS system.

Credit card reading hardware and software can range from small card swipers that work with your mobile device to standalone terminals.

Some systems can also track inventory and help you manage employees. Some payment service providers or merchant accounts will include hardware and software with your account, while others will require you to lease or purchase it. Online payments require an online purchasing system, a merchant account or payment service provider that accepts online purchases, and a payment gateway. Payment gateways connect with credit card companies to authorize online purchases.

These methods come with their own technology needs and incur different fees. These transactions involve the customer presenting the card to make a purchase. Because the cardholder and card are present for these types of transactions, they pose a lower risk of fraud, so in-person transactions typically have lower fees than the other types of transactions.

E-commerce shops, restaurants that accept orders online and companies that provide digital services are examples of businesses that rely on online credit carding processing. Card-not-present transactions typically take place over the phone and are commonly used by restaurants to pay for takeout orders. This process involves the customer sharing their credit card number with the merchant, and the merchant manually entering that information into their card reader.

These types of transactions typically incur the highest processing fees because they pose the greatest risk for fraud. The payment terminal conducts these critical security measures in just a few seconds as soon as a customer swipes, taps or dips their credit card. There are usually no monthly fees for credit card processing.

Instead, most providers charge fees per transaction. While fees vary based on the type of card Visa, Mastercard, American Express or others and processing provider such as PayPal, Stripe, Square , they typically range from 1. The bad news is, there is no one-size-fits-all solution. Note the fees below are all based on transactions in USD. Rates vary by currency.

While PayPal began as a way to send money to friends and family online, the company now offers various merchant solutions for processing credit cards both online and in person. PayPal charges the following processing fees for credit card payments:.

Shopify is an e-commerce platform that helps businesses sell products online. With Shopify Payments , they also support in-person and online credit card payments. Shopify charges the following processing fees for credit card payments:. Square is known for its innovative, petite card reader that can be attached to smartphones, turning any device into a payment terminal. Thanks to its compact hardware offerings, Square is great for mobile businesses like food trucks, market vendors or in-home service providers like plumbers.

Square charges the following processing fees for credit card payments:. Stripe was built with online businesses in mind and offers sophisticated payment processing solutions that can scale as your company grows. Stripe charges the following processing fees for credit card payments:. Venmo is known for its safe, mobile money transferring service. Then, customers will be able to use the Venmo app to make payments through the credit cards linked to their accounts. Cash-only businesses were already losing billions of dollars a year as of , and as this trend continues, businesses that don't even accept standard credit cards will be viewed as even more outdated.

A study by the Pew Research Center showed a steadily climbing trend toward cashless payment transactions , especially among high earners under As the expectation for customers to pay for goods and services through cashless transactions grows, the odds that you're losing money by refusing to accept credit increase as well. This is especially true if you're trying to appeal to high-income people and people under Multiple studies from banking institutions and independent research associations show that fewer Americans are carrying cash , and the trend appears to be continuing.

Key takeaway : The pros of cash-only businesses mostly pertain to simpler operations, and the main cons involve the potential for fewer sales. Most small business owners have three major concerns about accepting credit cards: interchange fees, chargebacks, and the adoption of new technology such as swipe or chip systems.

However, there are many affordable options available to small business owners. There are transaction fees associated with credit card processing, but they are lower than you might think. The fees vary by type of credit card and are significantly lower for debit card payments than for credit card payments. The most widely accepted debit and credit cards have fees of 0.

A chargeback is when a customer who has paid for a transaction with a credit card gets their money back. The most common type of chargeback is when a customer returns a purchase and is issued a refund, but a customer can also request though they might not necessarily receive a chargeback if they feel they were unfairly charged for a good or service. This might occur if an employee accidentally charges a customer twice for the same good or service or otherwise overcharges them, but customers might also attempt to receive fraudulent chargebacks.

Chargebacks carry a processing fee, which is paid by the business owner and is part of why some businesses post policies such as "no refunds" or "store credit only. If your business has a high percentage of returns or refund requests, you may want to institute a policy to offset chargeback processing costs. Learn more about credit card receipt signatures.

If it's been a few years since you last considered implementing credit card processing, you might want to revisit it, because the days of bulky POS systems that require thousands in upfront costs are in the rearview mirror. While those systems are still around, they're no longer the only option; in fact, it's much cheaper to set up a credit card system than it ever has been. There are lots of lightweight POS-style solutions that are ideal for small spaces and even mobile businesses , such as Square , which makes it easy to swipe on the go.

There are online-only credit processing solutions too, like PayPal , which works very well for both low-volume and high-volume online businesses and even side hustles. Key takeaway: Credit card processing options with low fees and low-cost technology are available. A cash-free society might not be just around the corner yet, but refusing to implement the systems necessary to accept credit cards could seriously hurt your bottom line.

Here are some ways to accept cards while keeping your processing costs as low as possible. Ever wonder why some retailers ask if you want to pay with debit or credit? It's because the interchange fees for debit cards are much lower than for credit cards. Asking a customer this reminds them they can pay with debit, which could help you cut down on monthly fees.

Credit card processing services always charge fees for accepting payments, but some businesses choose to use surcharge policies to pass the fee on to the customer. Before you start a surcharge policy, however, you should be aware of all the laws and regulations surrounding surcharging and how it may affect your business, such as by upsetting your customers.

Key takeaway: You might be hesitant to implement credit card payments in your business, but there are easy ways to keep your costs low. However, this does not influence our evaluations.

Our opinions are our own. Here is a list of our partners and here's how we make money. Yet, American entrepreneurs face so many challenges involved in running a small business that one would hope credit card acceptance would be an obvious benefit. It can prove to be a gigantic hassle. Here are the pros and cons of accepting credit cards, if you run a small business. Capture more customers: You have a much greater chance of capturing consumers if you accept plastic. Higher revenue: A number of behavioral economics studies have concluded that consumers are likely to spend more at a given location if they pay with credit instead of cash.

The reason is rooted in the nature of the currencies involved. Cash is real, tangible, and your wallet has less of it after you spend it.