3 strategic tips to process credit card payments the right way
If you have a small business or are starting one, inevitably you’ll find yourself walking down the labyrinthine path of credit card processing. There is a learning curve, and it can be confusing to say the least. Your path can have pitfalls around every bend and at every turn. So, where do you begin?
Sometimes knowing what not to do is the best way to find your way.
Although every business is different and has different needs, let’s take a look at a hypothetical small business and what could go wrong when setting up a system to process credit card payments.
A small business credit card story, gone wrong
Artist Rachel McGarvy had practiced yoga for the past ten years, and it had become one of her life’s passions. In the past last year, she received her yoga instructor certification and began teaching classes on her friend’s beachfront property. Those who showed up for Rachel’s classes paid a modest cash “donation.” In the meantime, Rachel created a line of yoga mats, designed with her own artwork. Her students loved them.
Rachel decided to sell her mats online and soon discovered she needed to find a credit card payment processor so she could accept payments on her up-and-coming eCommerce website. Since Rachel was in a hurry to jumpstart her site, she selected a payment processing aggregators that didn’t require any underwriting. It enabled her to get her site up and running quickly.
When students started to overflow her classes, Rachel decided to open an indoor yoga studio and things got even more complicated. Rachel’s students were thrilled with being able to practice yoga on the beach and at the new studio, not to mention all of her customers were head-over-heels about her artistic mats and wanted more.
Unfortunately, because Rachel jumped into her business rather quickly, she hadn’t prepared in advance for potential growth and what that might mean when it came to payment transactions and business operations.
She was now selling inventory from her studio, online, and on the beach. She was able to accept credit card payments online, but she could only accept payments in cash in every other instance. She hoped to develop new mat designs to accommodate consumer demand, but didn’t have the time or the immediate cash flow. Online payments were slow to process, sometimes taking days to nearly a week before funds were deposited.
In addition, Rachel was teaching in a number of locations. She ordered a credit card terminal so she could accept payments at her studio, but that meant she needed a different payment processor, racking up even more fees. Plus, because she had two different processors, her studio and online payments didn’t sync up. And she was still accepting cash when teaching at the beach. She needed to hire three employees to help her out and regularly felt overwhelmed trying to keep track of everything––even her employees’ schedules!
If this is what success felt like, Rachel didn’t want it.
What not to do when setting up a payments processor
We can learn a lot from Rachel’s predicament. Let’s take a look.
1) Don’t rush. Many times, entrepreneurs know they have to get a product to market first, before competitors, in order to establish market share. This rush can lead to rash decisions and poor planning. Take some time to think about your small business’ big picture, the possibilities, and how you want to grow. Then, develop a business plan before you select your payments processor.
2) Don’t buy individual products—unless, you want your small business to remain very small. Again, here’s where the growth plan comes in. It may be challenging to foresee what services you might need in the future, but understand that each part of the credit card payments process may charge fees: from acquirers to merchant accounts to payment processors. Plus, you might need a variety of payment acceptance hardware, all with upfront costs. In fact, if you want your business to grow, you may want to consider an integrated payments processing system.
3) Don’t limit your customers or your business. If you don’t give your customers payment options, you could slow growth, lose business, or, at the very least, not make a good impression. If customers have a number of ways to pay, they’ll be more likely to make a purchase. In addition, make sure your credit card funds will be deposited into your business bank account and be accessible quickly, so you have cash flow if you need to invest in your business.
Rachel’s small business story, the better way
Here’s a different version of Rachel McGarvy’s story:
Once Rachel found out there was demand for her unique yoga mats, and before she opened her studio, she looked into her payment acceptance options. Since she would be selling mats from multiple locations, including online, she needed hardware and services that could help her track everything.
Rachel opted for an integrated point-of-sale (POS) system and a merchant account provider that could handle the payment process from beginning to end, plus help her track inventory, sales, orders, vendor invoices, and customer data and analytics––whether she was doing business online, at her studio, or at the beach.
She needed an integrated solution that would be versatile for a business that had many possibilities. Rachel chose a countertop POS terminal that was capable of accepting EMV chip card payments, plus digital wallets, such as Apple Pay® and Android Pay™. Her studio system integrates with a mobile POS (mPOS) device, so she can take credit cards from wherever she might need to accept payments. She was referred to a merchant account provider that was also a payments processor, helping to make credit card transactions secure and seamless––online and in person––offering her quick access to her funds, and providing her with exceptional customer service as her business grows.
For now, Rachel has hired just one employee. Her credit and debit card payments are processed quickly, securely, seamlessly. The operations at her studio are streamlined, and she’s considering her business’ scalability. She may be able to open another studio across town without much additional work. Plus, cash flow is good, giving her the confidence to expand her line of yoga mats with a whole new series of artistic designs.
This is what Rachel imagined business could be: all the pieces coming together, everything in the flow. Kind of like the yoga she teaches.