How to Accept Credit Card Payments In-Store or Online (2022)

Despite the proliferation of new payment options, credit card transactions still in power: 79% of US residents own at least one credit card. An MIT study shows customers are willing to spend up to 100% more when paying by credit card.

Many small business owners can make it easy for consumers to pay by connecting with a credit card processor. Yes, this payment processor charges transaction feesbut it may be offset by the larger transaction volume that often comes with credit card acceptance.

How do credit card payments work?

When a customer swipes, inserts or taps their credit card at your physical payment terminal, your payment processor exchanges a series of messages with the customer’s financial institution, which chooses whether to approve the payment.

A payment processor is the channel between the merchant (you) and credit card company. In exchange for providing this service, payment processors take a cut of your credit card sales—usually between 2% and 3%—and may also charge a small flat fee for each transaction.

If the payment is approved, the funds are transferred to your payment service provider. After one to two business days, the balance (minus fees) is transferred to your business checking Bank account, and the money is yours. Credit card companies also typically charge a merchant fee of 2.4% to 2.9% of the purchase, plus an additional flat fee for each transaction.

How to accept credit card payments

Before you can accept a credit card, you must provide a Bank account. A small business checking account will allow you to receive your income from credit card company. From there, the setup to receive payments depends on where the trade takes place: in a brick-and-mortar store, online or on the go.

How to accept credit card payments in store

In-store payments take place inside a traditional grocery store, restaurant or office. If your business operates at a physical location, you will need the following services and equipment to accept credit card payments.

• Payment processor. This is the vendor that actually processes the transaction when your customer pays with a credit card. Examples include Stripe and Square. You can also register with a merchant account providers such as Payment Depot or Stax. This service is like payment processor, but their rules allow them to serve high-risk businesses (such as telemarketing) or companies that need to process a large number of transactions in one day. Due to its more complex nature, merchant account can be overkill for most small business the owner. You can also bypass payment processors and merchant accounts by doing business through Shopify Payments. The platform does not require you to use a payment processor or merchant account to get paid.

• Point of sale system. This is one hardware and software a package for merchants that offers the physical and computing tools needed to complete payment transactions. The software component tracks your sales, monitors your inventory and keeps you up-to-date on tax remittances. Hardware components can include mobile card reader, fixed card reader and barcode scanner. These packages are sold by payment service providers such as Shopify, PayPal, Square, Clover, Toast and QuickBooks. You usually buy hardware and pay a monthly fees for software services.

• Payment terminal. A payment terminal is a physical device that can process credit and debit card transactions. Some merchants get their payment terminals as part of a point of sale (POS) system. If your POS service does not provide a payment terminal, you can purchase one a la carte. You’ll use this device to handle all physical credit card payments, including those with magnetic stripes, EMV chips, and tap-to-pay RFID chips.

How to accept credit card payments online

Online credit card payments, also called e-commerce payments, cover financial transactions made over the internet. Transactions on your Shopify ecommerce site count as online credit card payments.

Online payment systems work largely the same way as brick-and-mortar payment systems. The payment processor still sends the financial information, and the customer’s bank and credit card company either approve the transaction or decline it. As a seller, you can still expect money from these sales to reach you Bank account in one to two business days.

To perform this type of transaction, you need the following:

• Payment processor. Again, you need a payment processor or payment service provider, and you can switch to the same vendor you would use for brick-and-mortar sales.

• Payment gateway. Online purchases are carried out through a payment gateway. This works the same as a point-of-sale payment terminal, but is software specifically designed to handle payments over the internet. POS software subscriptions, including Shopify’s core offering, offer payment gateway services.

How to accept mobile credit payments

Mobile credit payments are useful if you are moving your business from one location to another. If you sell food in different places farmers’ marketsor t-shirts at different concert venues, you need to set up a mobile payment system.

Mobile credit card payments work essentially the same way as brick-and-mortar or online payments. Here’s what you need:

• Point of sale app. People routinely use mobile payment apps like Apple Pay, Google Pay, PayPal and Venmo to personal payment to transfer money to a friend. This service also works for retail sales. For retail alone, there are options from Square, Clover and the Shopify app, which offers industry-leading functionality.

• Point of sale hardware. To accept credit card payments on the go, you need a device that can process credit card chips and tap transactions to pay from a mobile device. Think of this hardware as the mobile equivalent of a checkout terminal at a grocery store. This card reader links to your tablet, smartphone or computer and allows you to process payments instantly. For Shopify users, there is Shopify Tap & Chip Card Reader for iOS devices, which can conduct transactions via chip insertion or tap to pay.

Credit card vs. Debit cards: What’s the difference for merchants?

Merchants can charge both credit cards and debit cards using the same point-of-sale software and hardware. Debit card transactions withdraw money directly from the customer’s bank account. Big banks can only charge a rate of 0.05% plus 21¢ per debit card transaction. Your payment processor may add additional fees on top of this, but as a merchant, you’ll still pay less than you would for a credit card transaction.

Credit cards allow consumers to spend more money than they actually have in their bank accounts, and this leads to higher purchase volumes for retailers. Many merchants welcome credit card payments because the high shopping cart volume offsets the additional fees charged by credit card company.

Final thoughts

By accepting credit cards, your small business will meet the demands of many customers who enjoy the convenience of paying with cards. Shoppers routinely choose cards over cash when making their biggest purchases. Yes, you will pay a fee for each credit card purchase, but you may benefit from the larger purchase volume that comes with credit card payments.

FAQ accepts credit card payments

How can I receive payment from a credit card?

You need to have a business checking bank account and a payment processing account. You can choose traditional payment processors like Stripe and Square or all-in-one payment systems like Shopify Payments. If you sell goods and services in person, you’ll also need hardware (such as a card reader) that allows you to process credit card transactions and tap-to-pay transactions from a mobile device. Once your hardware and payment services are set up, customers can start paying you via credit card. Depending on the vendor you choose, the money from the transaction usually reaches your bank account within two to four business days.

How do I accept credit card payments manually?

To accept credit card payments manually, you need a credit card reader, such as the Shopify Tap & Chip Card Reader for iOS devices. Such devices connect to your computer, tablet or smartphone via Bluetooth. It allows secure and encrypted payments that run through a payment processor and ultimately to your bank account.

How can I accept credit card payments without a physical card?

Your customers do not need to present a physical card in order for you to accept credit card payments. Using your payment service provider, you can set up card-not-present (CNP) payments that run through a web browser. You can then enter credit card information manually instead of typing or inserting a plastic card. You can also accept mobile payments in apps that run on platforms like Apple Pay and Google Pay and link to a user’s credit card. Customers simply pay your business from their account, which links to their credit card as the payment source.

How can I accept credit card payments without a reader?

If you lack a physical card reader, you’ll be able to manually enter customer card information into your payment provider’s software app. You can also ask customers to pay using in-app mobile payments through a platform (like Apple Pay) linked to their credit card. This payment then appears in your seller account. Or, you can process their payment through a web browser. This transaction is called card absent payment (CNP).

source: https://www.shopify.co.id/blog/how-to-accept-credit-card-payments