4 Things to Consider Before Accepting Online Credit Card Payments

People are increasingly relying on credit and debit cards as payment methods through online payment gateway. It's simply because doing so offers advantages that cash payments cannot match.

For example, using a credit card responsibly allows customers to improve their credit score, earn significant rewards, and cover unexpected expenses.

On the business side, it can make cash flow management less stressful while also increasing sales and revenue. While accepting credit cards as a payment method appears to be a good idea, it is a complex undertaking that necessitates a significant amount of work and planning.

To help you learn more about processors, we'll go over the four things you should think about before accepting online credit card payments below.

Determine How You’ll Take Credit Card Payments

You can accept credit card payments in three ways. Before solely accepting them online, consider the type of business you run and how your customers use their cards.

Online Credit Card Payment:

If you have an e-commerce business or are a freelancer who primarily conducts business with clients remotely, this may be your best and only option.

In-Person Credit Card Payment:

If you own a retail store and the majority of your customers come in person, this may be the best method for you.

Mobile Credit Card Payment:

If you're a contractor or landscaper working on-site for your clients, this may be the most convenient option.

Remember that deciding how you will accept payment can help you determine what type of credit card processing equipment you will require.

Understand How Credit Card Processing Works

Allowing credit card payments will aid in attracting and retaining customers. But what happens when a customer uses a credit card to pay? Understanding how it works can give you an advantage when dealing with potential transaction issues.

Credit card processing occurs in the same way whether the payment is received in person or online:

Authorization:

When a customer enters their credit card information for payment, the card reader or payment gateway records it. The transaction will be communicated to the associated card network for approval or denial by the payment processor.

Settlement:

If the transaction is approved, the issuing bank debits the cardholder's account. The best payment gateway processor will then request that the funds be transferred to the merchant account by the issuing bank. The merchant may not be able to access the funds for several business days.

Think About Credit Card Processing Fees

Credit card processing costs vary depending on the payment processor you use or the company partner who handles these transactions. While some of them are unavoidable, you can negotiate or seek assistance from card processors to reduce or eliminate other fees.

Credit card processing typically costs a business 1.5% to 3.5% of the total transaction amount. The components to which these fees are applied are highlighted below.

Interchange:

Interchange fees are collected by the bank that issues the credit card. It should be noted that this constitutes the majority of the merchant discount rate. One way to reduce these fees is to settle your batch every day or to increase security measures, particularly when the payment is captured.

Assessment:

These charges are paid to credit card networks like Mastercard, Visa, American Express, and Discover. The assessment cost, like interchange fees, cannot be negotiated. You can, however, shop around for payment processors and pricing plans to reduce your fees.

Payment Processor:

These fees are paid to the company you choose to handle your credit card transactions. It is important to note that the markup varies depending on the payment processor you use. As a result, always conduct research and compare plans.

Select the Best Credit Card Payment Processor

The bank you work with, as well as the credit card processor you select, are critical. It's important to note that it's not just about the fees or cards you can accept. Aside from cost, consider the following factors when choosing the best credit card processor.

Fraud Protection and Security:

You'll need a processor that offers adequate transaction security. Check for additional safeguards such as encryption and tokenization. Check to see if they are PCI-DSS compliant as well.

Multiple Payment Methods:

Customers always prefer to have a variety of payment options. As a result, always inquire about the payment methods accepted by the processor and ensure that credit cards, debit cards, and digital wallets are on the list.

Customer Support:

You will occasionally require assistance with your online payment gateway processing system. You encounter some technical issues or decide to upgrade. Check to see if the credit card processor provides good customer service. It's also preferable if they provide onboarding and activation.

Final Thoughts

It would be a wise decision to provide your customers with an online credit card payment option. Although it may be difficult at first, you will become accustomed to it with the assistance of card processors. Also, make certain to select a reputable and secure credit card processor. Keep in mind that you will be held liable for every transaction your customer makes in your establishment.