Most small businesses need to accept payments by credit and debit card.

There are a number of hardware and software options, each with their pros and cons. “Traditional” methods include point of sale (POS) systems and swiping machines, while newer solutions include mobile devices (smart phones and tablets) and with a conventional computer via the internet. Depending on what system you choose, you may need a merchant account, which is a bank account that enables you to accept payments via debit or credit card. There are four basic approaches:

Credit Card Terminal

This is the credit card “swiping” device found at many checkout desks. You can use the terminal to accept face-face payments with the card present, or you can key in card numbers to process phone orders. A merchant account is required for credit card terminals.

Point-of-Sale Systems

A POS system is an all-in-one solution that typically includes a cash drawer, keyboard and monitor or touchscreen, receipt printer, barcode scanner, and a card swiper.

The greatest advantages of a POS system are its inclusiveness and its interconnectedness. It is tied into your inventory and accounting systems, so transactions only need to be entered once to register throughout your business. If you go this route, you will need a merchant account.

Mobile Device Card Processors

A mobile device card processor consists of a small swiping device that plugs into the headphone jack of your smartphone or tablet and an app that you download. You do not need a merchant account for this option, because transactions are handled by the device supplier, like PayPal or Square, and are tied to your own credit card account. It enables you to process transactions anywhere in the store. This choice works well if you process only a few card transactions per day. For higher-volume businesses, other options offer lower transaction costs.

Payments via the Internet

If all your selling is online, all you need is an e-commerce application. This can be an e-commerce site hosted by a third party (like Shopify or Big Commerce) or a third-party marketplace like eBay, Amazon, or Etsy. You tie your site account to your credit card or bank account, so you do not need a merchant account.

Setting up a Merchant Account

A merchant account is established with a bank that will process payments made with MasterCard, Visa and possibly other cards. Both the bank and the card issuers have rules you need to follow.

The merchant account provider can provide the equipment you need to receive payments, such as credit terminals, POS systems, wireless terminals, and more. You’re not obligated to use your merchant bank’s hardware, however. You may get a better price and more functionality with equipment from an outside source.

Types of Merchant Accounts

There are three basic types of merchant accounts. Businesses that own storefronts use retail merchant accounts. They swipe the card through a payment terminal with the card owner present. Internet merchant accounts are for businesses that operate online. Companies that take payments via telephone or direct mail need a mail or telephone order (MOTTO) merchant account. Merchant accounts may be combinations of two or all three types.

When planning to accept credit and debit cards, find out the payment system that will work best for your business. Do comparison shopping to see how much you will pay per month and per transaction.

To learn about accepting credit cards and managing payments in southern New Jersey, contact Max Payment Solutions: 856-825-2000.