Finding the right credit card acceptance system for your business
It’s an exciting time to own and operate a business. The revolution in mobile technology allows us to conduct business almost anywhere. Payment technology for credit card acceptance has come a long way, too, making it easier than ever to get paid.
Card payment systems come in many shapes and sizes. Understanding the landscape of card acceptance options will allow you to find the best mix for your business. Small business owners don’t have the time or the desire to become payments experts. But doing a little homework can help you get payments right from the start, saving your business real money.
We’ll begin our look at credit card acceptance methods by introducing payment processors. We’ll then dive into how credit card processing works, both in-store and online. We’ll wrap up with a glimpse into how these worlds are colliding to transform payment experiences.
What is a payment processor?
Selecting the right credit card acceptance system starts with a payment processor. There are a lot of steps that happen quietly behind the scenes, but in essence a payment processor allows businesses to accept credit, debit, and other forms of electronic payments.
Payment processors connect businesses, consumers, banks, and card networks such as Mastercard and Visa. Imagine having to connect your business to the bank of every customer who ever makes a purchase. Payment processors make all those connections for you. Payment processors make it easy for customers to make purchases and for businesses to get paid.
How do businesses accept credit cards in-store?
Accepting payments in-store has completely reinvented itself from the days of manual credit card imprinters and physical carbon copies. Accepting credit cards is easier than ever. Many of the basics remain, and merchants of decades past would still recognize the same basic underlying functions in each method described below.
Accepting credit and debit cards in-store are called “card-present” transactions, because the cardholder is in possession of the card and uses it to make a payment in-person. As you become more familiar with credit card processing you’ll hear the terms “card-present” and “card-not-present” to describe the major differences between accepting payments in person (CP) or online and over the phone (CNP).
Let’s take a look at three major methods for accepting card payments in-store: credit card terminals, integrated POS systems, and self-service kiosks.
Credit card terminals
Credit card terminals are the most common and familiar type of method for in-store card acceptance. They come in many shapes and sizes and with different levels of sophistication. Each of these devices is capable of performing basic transaction processing for credit and debit cards.
- Point of sale terminals are small countertop hardware devices for swiping and dipping cards. Many terminals feature a PIN pad for customers to enter passwords. Most new models are equipped for EMV chip cards as well as NFC mobile payment acceptance.
- Smart terminals are tablet-like devices with a display screen and built-in software as well as the swipe/dip function of stand-alone terminals.
- Mobile card readers (aka “dongles”) attach to ports on mobile devices like smartphones or tablets forming a mobile point-of-sale terminal that can accept payments virtually anywhere.
Simple point of sale terminals stand the test of time and still service millions of merchants. “Simple” is also a little misleading, as even today’s most basic terminals are equipped with sophisticated EMV chip card security. Many “simple” credit card terminals can even accept payments from smartphones with NFC technology allowing for payments with mobile wallets like Apple Pay and Google Pay.
Customizable smart terminals are a great solution for businesses that want a little more sophistication than stand-alone terminals offer, but aren’t interested in the functionality or investment of a fully-integrated POS solution.
Mobile card readers and other innovations in mobile acceptance free businesses to accept credit cards anywhere. It’s remarkable to think about how accepting electronic payments on the go is still such a new phenomenon, yet it’s hard to imagine modern business without it. From food trucks to babysitters, from service calls to emergency towing, mobile payment acceptance is truly revolutionary by allowing commerce to thrive everywhere.
Integrated point of sale (POS) systems
An integrated point of sale (POS) system combines the functionality of a robust terminal with other essential business systems, like accounting and inventory. In this context “integrated” means the payment processor’s software is directly built into the POS system to ensure perfect compatibility and ease of use. POS systems are directly integrated with platforms of payments partners like Worldpay. POS systems are highly customizable, and can evolve as the business grows and changes.
POS systems play a much larger role in the operation of a business, so they tend to be optimized for use in particular industries. The leading industries using specialized POS systems include:
- Restaurant systems manage menus, kitchen orders, bar orders, delivery schedules, inventory, sales by operator, and more
- Retail systems can check inventory in real-time across multiple locations, scan items, manage global pricing updates, etc.
- Hotel POS systems offer built-in folio management software to handle reservations and third-party bookings, room service charges, and cancellation fees
- Service providers are a growing POS segment with built-in software to manage client scheduling (even for multiple providers or vendors), product add-ons, co-pays, billing, and subscriptions
Self-service checkout is a rapidly evolving feature of the retail landscape. Customers love self-service as it gives them the freedom to guide their own checkout experience. Businesses love self-service because it introduces operational efficiencies and cost savings, freeing staff to add value in other areas. The self-service checkout era is still emerging, offering great promise for payment innovation.
Self-service checkout allows customers to can scan items, select options from a touchscreen, and pay with a credit or debit card all in one place. The customer’s card is present, but the sales clerk may not be, or is only nearby to assist customers when needed. Self-checkout kiosks are common in grocery stores, movie theaters, quick-serve restaurants and parking services.
What about accepting credit cards online?
Online commerce has transformed most businesses and industries. That revolution was (and continues to be) made possible by emerging options in online payments such as:
- Hosted checkout shopping cart
- Payment gateway
- In-app purchasing
- Direct eCommerce platform
Hosted checkout and shopping carts
Hosted shopping cart solutions are an excellent choice for small businesses to simply and affordably offer modern checkout experiences with cutting edge security. You continue to run your web site. At checkout customers are sent to a payment page hosted by a payments partner or other third-party service provider.
A hosted shopping cart protects your website from handling sensitive card data, reducing exposure (or “scope”) of PCI requirements. This keeps sensitive card data from ever touching your systems, saving your business money and making it safer from the threat of fraud.
Hosted shopping carts aren’t for everyone. Businesses commonly outgrow hosted shopping cart solutions and go on to develop that functionality in-house. Yet hosted shopping cart solutions are increasingly customizable and remain the best option for millions of businesses to securely accept card payments.
Many expanding businesses find themselves in need of a payment gateway. Payment gateways provide a point of connection between different systems, such as point of sale systems and card processing platforms.
Payment gateways meet their evolving needs of businesses by offering maximum flexibility to work with different software vendors and credit card processors. For established business with a physical presence and existing payment processor, for example, online payment gateways make expanding online easy. Gateways can also serve as important links connecting in-store acceptance to the broader payments ecosystem.
Payment gateways allow for businesses to work with more than one payment processor when the need arises. It’s also common to have more than one gateway service.
In-app purchasing refers to a customer using a mobile application and purchasing items/services without leaving the app. Apple’s iTunes app is a perfect example of the in-app use case. Customers can use the app to browse or organize music, and purchase additional songs without leaving the app or opening a mobile browser.
In 2018 the quick-serve restaurant industry is on the cutting edge of in-app payments and mobile commerce. While some of the most popular innovations are made by large restaurant chains, app development and integrated payments are increasingly within reach of many small and medium sized businesses. In-app purchases are also popular payment solutions for gaming apps that offer add-ons like power-ups, in-game currency, and bonus content.
Direct eCommerce platforms
Large enterprise businesses often connect directly to eCommerce platforms to process credit and debit card payments. With extensive resources comes extensive control for those businesses that decide to tackle eCommerce on their own.
Building your own solution puts the burden of PCI compliance on your business, requiring additional security protocols and potentially expensive technology solutions. This strategy requires extensive resources that aren’t typically within reach. But for those looking for maximum control, the sky’s the limit—just like with your business.
All together now: the rise of omnicommerce
This article has categorized different ways businesses can accept card payments. Categories help us understand new concepts. As a parting thought, let’s tie these categories back together.
An entire generation now has grown up with the internet. Even for those that recall a simpler analog world, as consumers we’re all immersed in the digital age. When we conduct business as consumers, we don’t think about channels… we think about products and services and experiences.
Omnichannel solutions seek to understand and respond to holistic consumer needs. Omnichannel solutions—also known as omnicommerce—mean providing consistent and seamless experience to consumers at every point of interaction, whether online, in person, or on the go. Omnicommerce is about providing the ability to get coupons and offers in app, browse and purchase inventory online, exchange it in-store, and share their positive shopping experience on social media.
Omnicommerce is about businesses meeting customer needs where and when they want, seamlessly. Omnicommerce solutions are unique, and every business can and should mix and match the services that provide the customer experiences they want to deliver. Full-service payment partners generally offer a variety of payment acceptance methods—Worldpay accepts over 300 payment types. Having a single payments partner also simplifies support issues, billing, and accounting.
A payments partner that meets your evolving payment needs can set you free to focus on growing your business. Worldpay is a global leader in payment processing. We understanding that navigating the world of payments can be difficult. We’re here to help businesses navigate their payment journeys, no matter where you start or how far you want to go. Connect with one of our payments experts today to learn more.