The Small Business Guide to Accepting Credit Cards

Posted by on June 4, 2013 in Credit Card Processing [ 0 Comments ]

Credit Card ProcessingEvery second, nearly 40,000 credit card transactions are made in the US alone. (Tweet this stat!) If your business isn’t accepting credit card payments, you need to start yesterday.

There are a variety of ways that your small business can begin accepting credit cards – from the simple to the high-tech.

You can utilize a merchant account at your bank or a third-party credit card processing provider.

The choice will depend on your customers, your business, and your budget.

Related: Get a quick quote from credit card processing providers

Processing Methods

Your small business has several options for transmitting credit card data to your merchant account:

  • Wired card swiping: The system most commonly found in small businesses. The cashier or customer swipes the card on the POS terminal or attached hardware, and the transaction is processes through the retailer’s merchant account.
  • Wireless card swiping: Similar to the above, except the wireless terminal can be moved around as needed – a bonus for restaurants. An optional wireless printer can produce paper receipts for customers.
  • Mobile POS:  These systems range from a simple app that coordinates with a small card-swiper that plugs into your mobile device, to large multiple-device systems implemented by large retailers. In 2010, Home Depot spent $64 million to implement a fully functional mobile POS system in 1,970 of their stores (NCR).
  • Online card processing: Customers input their credit card information on an online form.  The ecommerce system provider or the business’s merchant account provider processes the transaction, takes out fees, and distributes the funds to the retailer’s bank account.

Related: Credit Card Processing: Mobile vs. Traditional

Rates & Fees

The fee structure involved with credit card merchant services is complex, as it involves charges that go to the bank that holds your customer’s card, the bank that holds your business account, and the processing provider that moves money from one to the other.

The interchange and assessment fees are composed of a flat rate plus a percentage of the transaction amount that goes to the bank that issues the card for each transaction; this fee is non-negotiable. The processor markup is the fee for your business’s merchant account and IS negotiable – the amount depends on transaction amount, type, and your company’s risk profile. This fee will vary amongst different providers, so shop around for the best rate.

  • Most of your regular transactions should be charged the qualified rate, the lowest possible rate for the processor markup. Rewards cards, business cards, and keyed transactions may be charged the mid-qualified rate. The non-qualified rate (the highest) is charged for risky transactions, such as those keyed without address verification or contains other missing fields.
  • You may also be responsible for application, per-transaction, monthly minimum, and monthly statement fees. Read your contract carefully to find out which fees will apply to you.

Related: 10 Ways to Save on Credit Card Processing Fees


Whenever you collect, transmit, or process credit card information, your business is held to the Payment Card Industry Data Security Standard (PCI DSS). This standard sets up security guidelines that businesses must follow in order to protect their customers from fraud and data theft.  The PCI DSS applies to your business no matter which method you use to process credit cards.

In order for you to remain compliant, you need to:

  • Maintain an encrypted wired or wireless network connection over which you transmit secure data.
  • Control – and minimize – who in your business has access to card information, through the use of separate logins for cashiers and varied levels of access.
  • Monitor your credit card processing system and regularly test it for weaknesses.

Whether you process credit cards at the front counter of your business or through an online portal, your business will be held responsible for fines, penalties, and other damages should customer data become compromised by your system.  When searching for a credit card processing method, look for one that boasts high security measures, fits within your budget, and most importantly, complements how your customers use their credit cards.

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