Credit card payment

On this page we will feature different elements of the sales process.  This year we have teamed up with acceptcards to assist enterprises on everything you need to know in relation to accepting credit & debit card payments.

All you need to know about accepting card payments

 Benefits of Accepting Credit Cards

1. Increase sales. Studies show businesses that accept credit & debit cards can see a significant increase in sales volume.

2. It will legitimise your business. Studies show that when you display card logos as forms of payment you accept, these logos create a sense of ‘trust’ in your customers mind, and if they trust you, your customers will buy from you.

3. A merchant account improves cash flow. Accepting cards has a huge positive effect on business cash flow. Even if sales don’t increase (and they almost always do) your business will benefit by having the money from the card sale instantly delivered to your bank account. No more waiting for a cheque to clear, or sending out time consuming invoices, waiting for payment. With cards you get your money from your customers quickly and easily.

4. Over 90% of web purchases are made using cards. If you are selling ANYTHING on the web and you are not accepting cards, you are eliminating 90% of your potential buyers.

5. Grabs Impulse buyers. Credit card holders buy more on impulse, are more affluent, and buy 2.5 times more merchandise than non-card holders.

6. Convenience. Let your customer decide the most convenient way to buy from you. Many customers want to use cards because of reward points or reward miles associated with their cards. Customers are more likely to buy from a business that accepts cards than one who does not. Don’t lose a customer to a competitor just because you don’t accept cards.

7. Larger orders. The average order size of someone paying via card tends to be larger than someone paying by cash or cheque. And larger orders = more profit. In addition, customers paying by card tend to place extra orders and order more often.

8. Competition. Your competition is likely to be already accepting cards.

9. A merchant account is inexpensive. Gone are the days of high rates and fees. In fact, usually the increase in sales a business receives when they do accept cards more than covers the small costs involved. As a result, by accepting cards many businesses make more money!

10. Quick and easy setup. Many businesses think getting setup to accept cards is a long and tedious process. No more! Most of the time you can be up and running within 7-10 days.

 

Types of card processing facility and costs:

Card payments can be accepted face to face, by phone, mail order and on-line via a website.  A card processing facility is split into two parts, being the processing account provided by the card acquirer (known as a Merchant Account) and the physical means of taking the payment (terminal, secure payment basket).

The costs charged by the acquirer for the Merchant Account are based on the card types accepted and the way you take payment.  Debit cards are charged at a pence per transaction and credit cards at a percentage, with higher rates for business/premium cards and for payments taken over the phone or on-line.  Other charges that may be applied are for refunds, charge backs, authorisation charges, PCI/DSS (compliance).

With regard to the terminals these are rented or leased with the cost relating to the length and type of terminal.  A typical cost ranges from £16pm +vat for a static terminal and up to £24pm+vat for a GPRS/Mobile terminal, but can be higher or lower depending on the contract length.

Most terminals issued are configured ready for contactless payments should your business benefit from this or you may wish to use this in the future.  This is ideal for high foot flow environments with low transactions values such as coffee shops, newsagents etc, as the cardholder simply taps their card on the machine with no chip & pin requirement.  Other services can be added to your terminal such as cash back and mobile top ups.

The charges can vary significantly from one acquirer to another, hence the importance of speaking to an independent consultant who will understand your requirements and support you in arranging the best solution.

 

What types of terminal (also known as Card Machines, PDQ’s) are available?

Static/Desktop- (also known as countertop) mainly used on shop counters and office use and will typically be connected to a phone line and electrical socket.  Transactions are authorised via the phone line, which needs to be considered if sharing the line with a fax or another line in use.  You may want to consider a static terminal that works from your IP/Broadband instead of a phone line, which also has the benefit of speeding up transaction times. Payments can be taken by chip & pin and also over the phone for card not present transactions.  See Virtual Terminal option below if you are mostly taking payments over the phone.

Wireless/Portable – Typically used in restaurants or businesses where the ability to walk around the premises is required.  The base unit is connected in the same way as above with the static terminal and the terminal sits on the base for charging and is removed and taken to the customer for taking a card payment.  This type can also be configured for use with IP/Broadband.

Mobile/GPRS – Operated by SIM card and can be used anywhere with a mobile signal.  A choice of network is available (Orange, Vodafone etc) and also roaming SIM’s that switch to the strongest connection. Ideal for mobile businesses such as plumbers, hairdressers or if you attend events/shows.  As the cost can be only on average £4/5 per month more than a wireless or static terminal, some choose this option for use in business premises.

Virtual Terminals – Ideal for those businesses taking payments over the phone or via mail order, with payments keyed into any computer with internet access.  The cost is less than a static terminal and multiple users can take payments at the same time so ideal for larger offices.

Mobile Phone – There are a number of mobile phone applications which work on the same basis as a virtual terminal and can be ideal if you are a mobile trader and only take a few transactions per month.  The monthly cost is lower, with short contract periods however the processing transactions for the Merchant Account are significantly higher than with chip & pin payments.  Solutions in this area are constantly changing.

 

On-line payments via websites

As with a terminal, for accepting card payments on your website you will need a Merchant Account with an acquirer and then choose a secure payment basket which is available from a range of suppliers (PSP’s).  All the security and handling of the transactions are taken care of by the PSP and they charge a monthly which covers a number of transactions.  Typical costs are £20+vat pm for 1,000 per quarter.  You will then pay the processing fees as above to the acquirer for handling the payment from the PSP to your bank account.

The processing charges are significantly lower than those charged by PayPal who charge a % on both credit and debit cards.  There is a point therefore when having your own PSP and Merchant Account is more cost effective than PayPal, which is in the region of £1,000 in card payments per month.

Most PSP’s will also provide a Virtual Terminal as part of the package which will also enable you to take payments over the phone if required.

 

For more information why not read our Card Payment Q AND A