Cash or Card: A Payment Processing Primer
Will that be cash or card? The payment processing conundrum
Sooner or later every business owner is faced with the cash or card conundrum, so here’s our simple primer on how to approach payment processing for your small business.There are a lot of good reasons to start accepting cards as well as cash.
The benefits of payment processing
Your customers will appreciate it
Over 28% of consumers state ease as the most important consideration when comes to paying for goods and services. Cards have become almost as common as cash, and yet data collected by Intuit shows that more than half of U.S small businesses do not accept credit cards.
Your sales will grow
This is a given. By accepting a wider range of payment types, you increase your potential pool of customers. Many customers value convenience over most other factors; offering a choice of payment options is one of the most basic conveniences nowadays. Further data collected by Intuit showed that 83% of businesses saw an increase in sales. 18% saw their sales increase by as much as $20,000 per month!
That little sign in your window proclaiming to your potential customers that you accept cards, not only adds a level of credibility to your business but just may be the deciding factor as to whether or not you get that sale.
Helps business cash flow
Card transactions are settled quickly and typically funds will be deposited into your account within 1-3 days. You won’t have to wait for cheques to clear and if offers protection against possible lost funds due to bounced cheques.
It's a Competitive edge
You may be losing business to competitors if they’re accepting cards and you don’t. More so now than ever, most customers expect to be able to pay by credit card and will have no issues walking away from you and over to someone else if they can’t.
Does your business even need payment processing?
Most would argue that yes, the advantages of accepting card payments far outweighs the added costs. Benefits aside, it’s up to each individual business to assess whether or not payment processing is right for them.
Know what services you need (and what you don’t)
- Which kinds of cards do you want to accept?
- How many terminals do you need?
- Do you need wireless or mobile terminals?
- Do you want to accept online payments?
These are only some of the questions you should be asking yourself before reaching out to any payment processing providers. This will depend on the structure and specific needs of your business.
Know the costs
Know and understand the costs associated with card payment processing:
- Setup costs
- Costs associated with Purchasing or renting terminals
- Statement fees
- Transaction fees
- Charge-back fees
- Merchant account set-up fees
Among others depending on which services you opt into. We’ve included a link to some these definitions and other handy payment processing terminology at the end of this post.
Once you’ve researched the various costs, it’s a good idea to calculate your breakeven point for payment processing. This is the point your profits are sufficient to cover any costs incurred for moving to payment processing.
There are a ton of companies both big & small that offer payment processing. A simple web search will bring you a wealth of information. You can also ask your bank or financial institution what kind of payment processing services they offer – if any. Or you can mosey on over to our Partnership page and check out our Financial Partners.
Review the terms
The Financial Consumer Agency of Canada breaks this down very clearly. You need to be crystal clear on things like:
- Any obligations, fees, and individual card rates
- Contract expiry dates and whether renewal is automatic
- How to cancel your contract and how much advance notice is required
- Contacts for implementation and support
Ask, ask, ask – and if you’re still not sure, ask some more
Don’t be shy; if you don’t understand something then ask. Make sure you are 100% comfortable before signing a contract and never sign anything if you’re feeling pressured.
Payment processing: “Clicks” vs “Bricks”
Payment processing requirements are a little different for physical businesses (“Bricks”) and online businesses (“Clicks”). If you want to accept payments online first you’ll need a payment gateway. If you have both a Clicks and Bricks business you can choose a provider that offers both or check out a number of third party payment gateway options, like PayPal.
Widen your payment processing vocabulary
Knowledge is power. Review these handy payment processing terms before beginning your research.