What are the options when taking payments through a Merchant Service Provider?

There are several options a business can choose to accept electronic payments through a Credit Card Processor sometimes referred to as a Merchant Service Provider.  A large percentage of businesses chose to just use a table top credit card terminal which we have all seen and is pictured above.  While this option will work for most as technology increases more businesses have adopted other ways to take payments.  We will discuss all the options below and explain the advantages that each procedure. 

First things First - How Payments work

This info-graphic helps show the cycle of how credit card payments work.  The example in the graphic is just a example the fee to the issuing bank will be different for each type of card that is ran. Basically, the bank is actually giving your business the money before it actually receives the money from the Merchant Service Provider because this is done electronically.   

How much does each Card Cost?

There are several different cost involved with credit card payments.  The wholesale cost of the card is set by the issuing bank in what is called Interchange Cost that is associated with Card Associations such as Visa, MasterCard, Discover and American Express.  Honestly there is no way to know exactly what a card will cost you when a customer gives you a card for payment. A good rule of thumb I use when explaining it to merchants is when you see a Double Sky Miles Card from Delta Airlines the consumer thinks that is awesome that Delta would offer double miles on purchases with their card.  Actually the person that is paying for the Double Miles is the merchant in the form of a higher cost for the card.  In summary Bank Issued Debit Cards will be cheapest to run and Reward cards will cost more. Click below to download the Visa and MasterCard Interchange Rates to learn more about the cost of running credit cards at your business.

4 ways to take payments

1. Tabletop Credit Card Reader

Taking payments through a credit card reader is the easiest way to take payments. These machines are usually offered for free from most processors.  Stay away from those Merchant Service providers that offer to lease the machine to you. 

2. Mobile Swiper or Terminal

Taking payments through mobile processing devices is an easy way to accept payments and the equipment most of the time is given to merchants for free. Some may charge but you should never pay over $100.00 for a mobile swiper and maybe more for Smart Terminal.  Mobile payments uses mobile data or 3G-4G cell phone towers to process payments over a mobile app or smart table top terminal like the PaxS920, Veriphone 680, PayAnywhere Terminals, Poynt Smart Terminals or SwipeSimple which 360 Merchant Group can provide for our customers. 

3. Virtual Terminal

Taking payments through Virtual Terminals like SpotOn Virtual Terminal, 360 Merchant Virtual Terminal or Authorize.net can be done with any access to the internet.  To easily explain this is a web form that you type information in like Name, Address, Card Information and process it through an online gateway. These are great for Mail Order Companies, Online Storefronts and businesses that have memberships that need a way to run the card monthly like Gyms, Clubs, Dance Class and many more. Most virtual terminals can store information securely and process cheaper than manually typing in the card info each month. 

4. Point of Sale System

Most Point of Sale Systems offer a way to integrate payment processing through 3rd party processing via a online gateway. Companies like Toast, Square, Clover and several others have built custom software that will only process through their gateways.  Be weary of these because generally without competition you can pay high rates to use the point of sale that the processor provides.  There are lots of benefits to using point of sale as your way to take payments including reporting, analytics and security.  Read our Choosing the Right Point of Sale for you Business Post for more information on Point of Sale Systems and their benefits.

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