Understanding electronic payment systems and choosing the right one(s) for your business
Running a small business is no easy task. There’s inventory, employees, marketing … the list goes on and on. One of the most important decisions you’ll need to make is which type of electronic payment system will best meet your needs. Let’s help you understand your options and the pros and cons of each, hopefully making your decision not only a little easier, but really relevant to your business too.
What is an electronic payment system?
First things first. An electronic payment system provides you with debit and credit card processing (after all, we love our cards!). As that love moves us beyond cash and to cards, it’s also moving us in the direction of things like mobile wallet payments, something we’ll cover here. There are four primary systems available in driving electronic payments:
- Card terminal
- Integrated system
As we take a look at each, think about how your business (what you sell, how you operate), who your customers are and want they want (important consideration here)Consideration in those two areas shapes what you’ll need. For instance, how important is:
- Your initial investment
- Automating the integration of your payment system with your other operations such as inventory and accounting
- Accepting payments online
- Mobile payment solutions
Credit Card Terminal
Credit card readers and terminals are located in your physical location, in-store. Previously labelled “dummy terminals” they’re getting smarter, and smarter. Many terminal devices, through the magic of the cloud, are now connected to the world of apps, capable of doing, and connecting to, more than they ever. For the most part, they allow you to quickly and easily accept credit and debit cards, and other payments, while using the latest chip security technology.
Pros: Secure transactions including the latest EMV chip technology, accept NFC/contactless payments such as Apple Pay and Android Pay, better processing rates, easy to use, less expensive to implement than an integrated system, little training required
Cons: Cost to purchase and/or rent equipment, not automatically connected with other business systems you use
They’re often best if you have only one or two store locations, don’t have a website that you sell through and don’t require a lot of integration with other systems or connectivity.
So-called integrated point-of-sale (POS) systems have changed the game for a lot of growing small businesses, letting them lift up sophisticated, interconnected business systems once reserved for bigger businesses. They’ve also allowed smaller businesses to offer more advanced and value-adding customer service solutions, such as sophisticated rewards programs. An integrated system offers the same payment processing as the card terminal, plus more advanced capabilities such as the ability to seamlessly communicate with your inventory, accounting and other software. Integrated systems also give you the option of offering gift cards and loyalty programs.
Pros: Secure transactions including the latest chip technology, accept NFC/contactless payments, better processing rates, ability to integrate various business operations (such as inventory and accounting) and added marketing tools such as gift cards and loyalty programs
Cons:Cost to purchase and/or rent equipment, more expensive to implement due to training and programming required
An integrated system can help a business with multiple locations run more efficiently. They can power up connectivity between and among sales channels for any small business, while adding important features like those called out above.
Mobile payment solutions allow you to accept payments on your mobile device, giving you the advantage of accepting sales wherever you’d like, say at a flea market or sidewalk café, for example.
Pros: Accept payments at any location, easy to use, accept cards with EMV chips and NFC/contactless payments
Cons: Potential of theft or misplacing, cost of card reader hardware, mobile device failure, not dedicated to payment processing
Dongle-driven mobile payment systems are great for independent sellers, craftspeople, service people who make house calls—any kind of business on the go. Mobile payment features often are connected with other terminal or integrated systems so that when an in-store business needs to be on the go, it can be.
Web payment systems give you the option of taking payments online via your website.
Pros: Accept payments on your website
Cons: No chip reader, higher rates from merchant account
What type of electronic payments systems should you consider for your business?
|How do you sell?||Terminal||Integrated||Mobile||Web|
|Online and instore||X||X|
|On the go only (e.g. independent sellers, craftspeople, service people)||X||X|
|Instore and on the go||X||X|
|Instore from one location||X||X||X|
|Instore across several locations||X||X|
*Note that some web and mobile solutions, as well as smart terminals can perform many of the functions of an integrated solution, so it’s important to research your options.
So, what’s the best solution for accepting credit cards and payment processing? It all depends on your needs and the needs of your customers.
First, do you have a physical location? If yes, you’ll need to decide between a card terminal, integrated system or mobile system. Each has its pros and cons, but the decision comes down to the capabilities you want and the amount you’re willing to invest. An integrated system will provide you with a wide variety of solutions to not only process payments but also help you run your business, although it costs more to implement and maintain. A mobile system is easiest and least expensive to install, but has limitations such as theft (or loss) and device failure—and, based on who’s providing it, it can be loaded with value-adding features or have none. A card terminal fits right in the middle – quick, easy and secure transactions at a low cost but without the ability to integrate into your operations.
Second, do you want the ability to sell away from your physical location and take advantage of all the mobile payment solutions? If so, a mobile payment system could be your great choice.
And finally, are you interested in taking payments online through a website?
The good news is you don’t have to pick just one system. All of these systems can work together, giving you the ability to sell in any manner you’d like. Be sure to look for a quality credit card processing company that offers all of these electronic payment systems and can further explain each, along with provide a clear path to implementing all the payment solutions you decide you need.