In the age of instant payments and transfers, it would almost seem a given that every organization needs to be able to take credit and debit card transactions. Cash is increasingly used less and less as a payment medium and setting your business up to accept plastic can do wonders to increase sales.
One of the main issues small businesses have with accepting credit cards for payment are the fees that are often associated with the process. Thankfully, new products have been designed that can help you keep costs low while at the same time remaining current in the face of consumer demand.
A majority of credit and debit cards use merchant accounts in order to function.
A merchant account allows you to accept credit and debit payments through a central authorizing service. Normally, merchant bank accounts act as a holding place for funds until they’re approved. Once this is done, the money is transferred (minus fees and commissions) directly to the account of your corporation. Fees for these services can range anywhere from 2.5-3.5% per purchase. It should be noted that this percentage does not include those made by a credit card swipe terminal or any additional monthly fees that may be added by the service company. Business owners should be wary of low introductory rates offered by merchant account vendors. Too often these are used to secure a contract, but over time the rates may increase followed by additional fees and costs that are used to drive up profit and can cut into your bottom line. What starts as 1.50% rate can easily evolve into 3.50% plus money per transaction. This isn’t to say that merchant accounts should be avoided, as they are all but necessary in most industries, however due diligence should be pursued to make sure you get the best deal possible.
There are several ways that merchant accounts can be provided. Some of the main ones are as follows:
- Retail merchant accounts
- Internet merchant accounts
- MOTO (Mail or telephone order
Now some may be wondering how card security may be and what level of fraud protection is offered.
The majority of those providing merchant account services provide tools and credit card access for your business, while ensuring compliance with organizations such as the Payment Card Industry which gives oversight to all businesses that deal with personal credit card data.
In recent years, new options have become available for business owners that grant the benefit of traditional merchant account services but with less fees and so many devices. Square, Intuit and Paypal provide the leading options in this field. They can be used in small scale operations providing a solution that is both portable and easy to use when allowing your business to accept credit and debit based payments.
If you would like more information on how this can move your company forward or which service would be best for your organization, contact our team of Certified Public Accountants in Joplin, MO.