Accepting Credit Cards

Guest Post by Justin. Justin is a small business owner and computer technician with Protocol16, supporting small and mid-sized businesses as well as consumers in the metro area of Portland, Oregon.

Many technicians that are just starting out would love to accept credit cards, but the idea of accepting them right from the start is daunting. While starting up my personal business, I ended up deciding to take credit cards right from the start, but I learned a lot along the way.

Your Business Needs

First, you need to think about your exact needs for accepting credit cards. Are you more of an on-site company or working out of a shop – or both? Here’s a quick run down of your options along with Pro’s and Con’s:

• Computer Based – Most smaller businesses use one of two products to create customer transactions and invoices: Quickbooks or PeachTree accounting. Fortunately, both offer credit card transactions directly inside the programs. The pro is that you don’t have to do anything else, just enter the details and your done. The con is that if that shop computer crashes, gets stolen, etc – you’re out of your credit card processing until your machine is replaced or fixed.

• Mobile Computer/Phone Based – Mobile based credit card systems, like what Merchant.com offers, are simple to setup and simple to deal with on the road. You just fire up your mobile laptop or phone, go to a webpage and enter the details. The pro for this is method is it’s cheap and works almost anywhere. The con comes in when you’ve just removed a virus from a customer computer and they’re hesitant about submitting information across the web.

• In Shop, Phone Line Based – In shop solutions are almost always a swipe machine of some caliber. These work either off of a secondary phone line or your internet connection. The pro is that these options are what most shops utilize and they offer a quick option for transactions that consumers are use to seeing. The con is that you are physically tied to your shop. Any remote credit card processing has to be done over the phone by calling the shop.

• Mobile, Cellular Based – Mobile solutions are typically swipe machines that work off of batteries and use a cellular connection instead of a phone line. The pro is that this solution will work in a shop or customer site. There are two cons to this option: your batteries can run out and you could be in a location that doesn’t get a proper signal (some machines offer phone line and network attachments as well.)

• Google/Paypal Based – This option is free, except the low transaction fees that you or the customer pays. The pro is, this is a well-known and generally accepted method of payment. The con is, this doesn’t look professional, at all.

Fees

I can’t talk about credit cards without talking about fees. I can’t be specific on fees and percentages since they vary by area, bank and business. This is where most people get scared. The fees are attached to specific card types and networks:

• In network – These are cards that have agreements with your bank. Typically, this is Visa and Mastercard, but can include others such as American Express and even Diners Club. Typically, these fees are the same across the board, but the actual credit card companies usually charge more fees on top of your bank.

• Out of Network – These are other cards that you’ve typically never heard of. They’re few and far between, but they are out there. These cards are charged more per transaction.

• Consumer Credit Cards – Consumer cards are self-explanatory. These are your typical cards that everyone carries around. Typically, it does not include debit-based credit cards.

• Business Credit Cards – These are the credit cards that your typical business owner carries around. These always have a company name on them. These cost more per transaction as well. Talk with your bank, because if you transact more business cards than personal cards, you may qualify for “wholesale” pricing on your transactions.

• Debit Based Cards – Debit transactions are not included with a typical machine, unless you request it. These typically cost more per transaction as well. If you choose this option, your machine must be programmed for them as well, which can cost more.

• Also, your fees are based on your average transaction amount. Someone that charges an average of $19.99 will pay a larger percentage rate than someone that charges an average of $199.99.

Hardware Fees

While I listed the pros and cons of machines, there’s actually a little more to consider. Leasing vs buying the machine as well as programming fees.

Leasing will offer you a lower price to start with, but much higher over the long run. A typical lease with a bank is 4 years. Multiply the price they give you by 48 and that’s the price you pay for the hardware over the lifetime of the lease. Leasing helps when your machines get abused on a normal basis. Your bank will be more likely to replace it if you lease. If you buy your machine, you can normally save over half the price of the lease! But, you need to be careful because if you break it, it’s already yours…

Buying gives you a cheaper price, in the long run, and you own the hardware. But, again, if you break it, oh well. This also allows you to put your logo on the terminal, when a lease option may not allow that. I would recomend that you buy any machine through your bank. Machines purchased from other parties may include pre-braned machines with another business or something has physically been done to the machine that can ruin your business (ie: an extra hidden SIM to phone ‘home’). Purchasing your machine from your bank will also allow you to save money since a pre-purchased machine will require fees for programming (as long as it meets the security requirements for your bank.) If you purchase the machine directly from your bank, you also save on shipping times – pre-purchased options could cost you 3-4 weeks in shipping things back and forth.

Ultimately, if you’re worried about credit card processing, the best thing you can do is do your homework on your bank’s website or speaking with them directly. You’re not going to get hurt just talking to the sales department. I personally spent about an hour on the phone with my bank and got my overall price dropped by more than $500 for my machine and my rates dropped a lot off the normal price due to my situation. The more the rep on the phone knows about you, the better things will go.