A simple guide on how to receive credit card payments
There are almost as many ways to receive credit card payments at your business as there are credit card payments to be made, and there are multiple alternatives when it comes to the credit card machines or systems used to accept the payments that you receive. How you receive credit card payments is a function of a number of things including: how your business operates, how your customers buy and pay, and other goals you have for your business, e.g. enhancing data security, preventing more fraud, or increasing the types of payments you can receive. Here's a quick look at some of the devices and payment systems used most to receive credit card payments.
Swipe machines have been the most common path to receive credit card payments for years. These devices are driven by the magnetic stripe, or mag stripe, on the back of cards. The advent of chip cards and chip card technology, however, make swipe machines a less likely road for your business to follow. Magnetic stripe data is subject to fraudulent use by card criminals if that data is stolen through breach or if the physical card is stolen. Stopping the use of fraudulent card data at the point-of-sale is the principal driver behind EMV.
EMV cards are chip cards. EMV terminals can read the chips on the cards, which are processed differently than mag stripe cards. A chip card is "dipped" or inserted into a terminal that can read the card. EMV terminals contain a slot, like an ATM's card reader, into which the customer card is inserted. Long accepted in Europe, the rollout of EMV in the United States is fully underway. Chip cards and EMV acceptance are designed to help you keep from accepting fraudulent credit cards in-store. Many of chip card-ready terminals also include near field communication technology, NFC, which is the technology that powers certain mobile wallet payments such as Android Pay and Apple Pay. Best of all, no additional fees are passed off to the merchant if they decide to accept NFC payments processing.
Should you consider upgrading to EMV terminals? Absolutely, if for nothing other than avoidance of fraud liability. As of October 1, 2015, liability for fraud at the point of sale shifts largely in the direction of merchants, whether they're small or big. The shift occurs across the card brands and generally places liability for point-of-sale fraud on the weakest link in the chip card equation. That means, if a merchant does not supply an EMV terminal, they eat the fraud chargeback. Read more on the path to EMV in Vantiv's piece, EMV made easier for SMB—a study guide.
A so-called virtual terminal can turn basically any internet-connected device into one capable of processing payments. First used with mail-in and telephone orders (think infomercials), virtual terminals have also become popular for web stores and any business where orders often come in to a fulfillment center. They allow a business to pick, pack, ship and process. Today, virtual terminal configurations can come with the security and fraud layers (think tokenization) that work to keep card data safe. For many businesses, based on their specific needs, virtual terminals are a cost-effective – and cost avoidance – solution when compared to typical hardware and software configurations.
First introduced in specialty retail niches like restaurants, the point of sale (POS) system has emerged over the last few decades as the desired way to receive credit card payments for many. Retail segments and businesses that desire or require significant integration with other systems, such as order management and inventory management, have looked to POS systems as their solve to receive credit card payments. More and more, POS systems are specialized by industry verticals, providing software to manage the unique needs of a range of business types from the dentist office, to the property manager, and the bistro down the street. Today's POS systems typically provide for a range of payment acceptance needs, including mobile wallets. Most importantly, these systems and the software that run them are generally fully or semi-integrated with payment processing solutions. That means, one or more payment processing systems are baked right into the system, allowing you to select your processor easily.
As you consider options on the devices you'll use to receive credit card payments, think first and foremost about customer and business needs. The configurations available to you and the costs, should match your specific needs. When in doubt, ask.