How to Accept Credit Card Payments for Small Businesses

One reason consumers are so loyal to their credit cards is that so many cards come with perks nowadays. If they pay with a credit card, they can get cash back, frequent flier miles, or other rewards. As a small business, you will have to give up a transaction fee to the credit card companies. It usually runs 2.5% to 5.5% of the sales. However, the risk of getting stiffed on receivables goes away. When that transaction is authorized you know you will get your money, but you should always conduct a business credit card comparison.

Fortunately it is easier than ever to set up your small business to accept credit cards.

The first step is to establish merchant status with the credit card companies. To accept Visa or MasterCard, you have to establish a merchant account with any one of the thousands of banks that issue those cards. These are known as "acquiring banks."

You can go directly to the bank or to an independent credit card processor - a company whose business is processing credit card transactions for small businesses. Whether a bank or an independent processor, they will evaluate your product or service to determine the potential for chargebacks - funds returned to customers over disputed transactions. They may ask you to put down a security deposit that they can access in case chargebacks end up being more than your account balance.

Shop around for the best bank or processor. This will affect the percentage you pay for each credit card transaction. Compare services, fees, and terms to find the best overall deal for you. Also evaluate the hardware (like those little Verifone terminals) and software and decide if you can master it easily. Make sure you get yourself a small business credit card in the process to, many banks will offer deals to premium clients.

Make sure that the transaction equipment and software for accepting credit cards integrates with your company's computer and accounting procedures. Usually it does, but you don't want to get caught out on this one and have to hire a programmer to fix the problem. In fact, some small business software manufacturers integrate credit card processing directly into their software.

Once you have your merchant accounts set up and integrated into your software, start accepting the cards. Put card logos on your front door, website, and your invoices. The processing companies will provide these logos for you to use. Sure, you might cringe at first thinking of the 3% or so you're paying for each transaction, but once you see your sales go up and problems with accounts receivable go down, you'll be glad you took the leap to accepting credit cards.