Accepting credit card payments can seem like a complicated step when you’re a new business or a service based business. While cash and checks are still universally being used, more and more consumers are leaning heavily on purchasing with debit and credit cards. Many are even using their phones to pay, with Apple Pay users increasing by 65 million between September 2019 and September 2020.

Here are the basics on how to accept credit cards and the simplest way to implement this for your business.

How Credit Card Payments Work

When a customer slides their credit card (or inserts, or taps, or waves their phone over the machine), there are four entities at play. There’s you, the merchant, who receives the payment. There’s the cardholder, the customer who is making the purchase. The issuing bank gave the customer their credit card, basically extending them a loan. And then there’s the acquiring bank, the financial institution accepting the payment and processing the credit card on your behalf.

Instead of having a merchant bank account with an acquiring bank, you can use a payment processing service. Commonly known providers are Paypal, Square, and Stripe.

Options for Credit Card Processing

There are three options for accepting credit card payments that can fit a variety of business setups. In all cases, you pay fees on either hardware, recurring subscriptions, credit card transactions, or a combination of all three. What is the best way to accept credit cards? It depends on your business setup and clientelle.

Traditional POS (point of sale)

This is what you’ll find at most brick and mortar stores. There’s a small machine where you can swipe, insert, or tap your card, enter your PIN if you’re using a debit card, or sign for credit.

You can work with a POS system that specializes in your industry, like restaurants and retail. You’ll also want to find a good match based on your company size, sales volume, costs, and customer service and support.

Mobile POS

Mobile POS systems are a more modern and simple solution for collecting credit card payments. There can be lower fees, especially upfront for the hardware. Mobile POS systems turn a phone, tablet, or computer into a sort of register for accepting card payments. The hardware for scanning the cards is usually plugs into your phone or tablet or connects via bluetooth.

These setups are especially convenient for retailers that sell offsite or want to be able to collect purchases directly from the sales floor. Many mobile POS providers offer ways to collect credit card payments in person and online.

Online Payment Processors

You can accept payments fully online or remotely with a payment service provider like Paypal. You can send invoices or use software plugins for your ecommerce store. This may be the easiest way to accept credit cards. It can be extremely quick and simple to get setup with an online payment processor and pay minimal or zero upfront fees. However, the more you sell the more costly the fees since your payment processing risk goes up. Funds can also be delayed or put on hold due to suspicion of fraudulent charges.

How to Choose a Credit Card Processor

Ask yourself the following questions:

• Do I have or plan to have a physical location where I want to accept card payments?

• Do I plan on expanding into multiple locations?

• Do I need to collect payments off-site or on-the-job?

• Do I have or plan to launch an ecommerce store?

Now look for options provide the features you need. Compare all prices and fees. Watch out for setup, hardware, and recurring monthly or yearly fees. And compare what percentage is charged for each transaction. Calculate out the costs for an average month or year of sales. And do thorough research on the provider’s customer service and tech support. Lastly, check out what security protections the card processor company offers both for you, the seller, and your customers.