Introduction:
Nowadays, there are numerous ways for small businesses to process their credit card transactions.
It is not a coincidence that the majority of small-business owners have at least one credit card terminal in their office. However, with all the options out there, it can be difficult to figure out which is the best option for your business.
We discuss some of the most popular ways that small-businesses can process their credit cards. We highlight the pros and cons of each method. We will be covering the following three options:
1) Payment Gateway / Service
2) Credit Card Terminal
3) Bill Pay Service (i.e. Fastbill )
1) Payment Gateway/Service:
This is what most small-business owners use to process their credit card transactions. It is a credit card processing company that provides the merchant with a gateway that allows it to integrate its payment system directly with their operations system (i.e. accounting software, etc.) There are many different payment gateway services out there, such as: Authorize.net, Authorize.net (again), Worldpay, and Durbin Payments.
Pros :
- It is easy for a small-business owner to configure and set up the payment gateway. The most common configuration is to just link a credit card terminal to the gateway, thus removing the need for an onsite payment point employee. It is important to note that not all Payment Gateway services allow you to process EMV (chip) cards.
Cons :
- Traditional payment gateways are proprietary systems that are limited in their functionality and do not allow for easy integration into other systems such as accounting software or petty cash system.
- One of the biggest issues with payment gateway / service is that your credit card data travels across the network unencrypted. This means that the data can be intercepted and stolen by hackers or malicious employees. This can lead to major security breaches which can have a devastating impact on your business.
- Depending on which Payment Gateway service you use, there may be additional charges for each transaction processed, such as additional Gateway fees, terminal fees, statementing fees, and PCI compliance fees.
2) Credit Card Terminal:
Credit Card terminals are the place where customers will swipe their credit cards to pay for goods or services. There are several types of credit card terminals available on the market, including: e-Commerce / POS terminal with a built-in reader, and stand alone credit card reader.
Pros :
- Credit Card Terminal is the best way to handle credit card transactions for small businesses that do not have a built-in payment system. This make it easy for your business to accept all kinds of cards including new EMV (chip) cards. There are different types of credit card readers out there, such as: pen reader, pad reader (like cash register), pinpad, etc.
Cons :
- This can be an expensive investment for a small business owner who does not shop around. There are a lot of hidden fees, such as terminal lease, monthly charges, terminal replacement card fee, etc.
3) Bill Pay Service:
Bill pay services allow you to integrate your credit card processing needs in one place. For example, if you need to pay for your web services or accounting software or anything else that uses credit cards, you use the bill pay service. There are a few companies out there that provide these services including Citrus Bill Pay and Fast Bill Pay.
Pros :
- One of the biggest advantages of bill pay services is that they have all the tools such as free statements, free phone help line, and free customer portal. The customer portal will allow you to see all your transactions in one place.
- They are certified PCI compliant, which means they follow standard data security rules and thus safe from data breaches.
Cons :
- This can be an expensive investment for a small business owner who does not shop around. There are a lot of hidden fees, such as terminal lease, monthly charges, terminal replacement card fee, etc.
It is important to note that credit card transactions should always be processed through a credit card payment gateway or a credit card terminal. It is never recommended to process payments manually or by hand.
Conclusion:
It is important to note that not all payment gateways or credit card terminals are created equal. It is important to do your due diligence and research before purchasing any type of credit card terminal / reader or payment system. For example, if you already have a credit card reader that works with your payment gateway, then you shouldn’t need a new credit card terminal.
