How to Take Card Payments

If you're the current owner of a small business, you know that cash is obviously king. Still, are you aware that you could be missing out on a major portion of your revenue by not accepting any credit card payments for small business services?

In fact, according to a recent survey of over 2000 adults in the UK, it was found that approximately 83% of people prefer to purchase things with their cards. Naturally, that’s a huge market you could be tapping into!

The business landscape is competitive enough as a smaller organisation, but falling behind on the clear demand for cashless transactions only makes things harder for your chances of success. 

However, worry not, as we'll be exploring all you need to know about setting up card machines for small businesses within this article. From why people prefer to pay on a card these days to understanding your options when it comes to card readers, we've got you covered at Compare Banks.

Towards the end of the article, we'll also walk you through the process of setting up merchant accounts and what tips might be helpful for keeping your customers' information secure.

So, whether you're running a classic brick-and-mortar shop, an e-commerce website, or any other kind of small business, we'll arm you with the insight necessary to survive in this industry. If you're ready to level up your company, continue reading.

Understanding Credit Card Payments

In this first part of the article, we’ll be providing a more basic overview of how contactless payments actually work, which includes the different variants of card payments and what separates a merchant account and payment gateway.

Before we get into all the details, let’s start with a brief explanation of what card payments actually are. There’s nothing particularly difficult to understand about them, so adapting to this shift in consumer behaviour doesn't have to be a chore for any business owners that might be slightly less savvy with technology.

In essence, these are just a form of electronic payment that lets your customers pay for any goods and services you sell by using a card instead of cash. Whenever the customer uses their card to pay, the payment process will authorise the transaction and transfer the funds from their account to your merchant’s account.

You might be thinking, though, “Are all the cards you can use to make payments the same?” Well, while they have similar functionality, there are a few alternative types of card payments you might expect customers to make, and they're not all made equally. Let's explore them a bit further.

Different Types of Card Payments

When making card payments, there are three ways that consumers typically choose from: credit, debit, and prepaid cards. Each one of these comes with its own array of pros and cons for the consumer, so we'll take a brief look at these also.

Credit Cards

To begin with, credit cards allow people to lend money from a bank or other kind of financial institution in order to make various kinds of purchases. These cards normally come with rewards programs and other forms of benefits, so you’ll see a lot of customers using these cards for small purchases.

In addition, many people opt for these cards because of the role they can play in building your credit score, but it’s crucial to mention that they can have the inverse effect and lead to debt if you’re not careful.

Debit Cards

Next up, we have debit cards.

These are fairly similar to credit cards, but instead of having access to a credit limit that lets you lend a certain amount of money, debit cards only hold the current balance within the account. Whenever customers use these to make payments, the bank will deduct the funds from their account and send them to yours.

While debit cards are an incredibly straightforward way for customers to make purchases, they’ll typically not come with the same kind of rewards you might expect with a credit card.

Prepaid Cards

And last, but certainly not least, we have prepaid cards. These are slightly less common options than the two we've already covered, but they work fairly similarly anyway. These cards get loaded up with a set amount of funds prior to you receiving it, and they can be used until you've fully exhausted the balance.

Prepaid cards can be pretty useful for consumers looking to budget better and have a firm grip on their expenses, but there are a bunch of other monthly fees and limitations that make this a bit less of a popular option. 

Merchant Account vs. Payment Gateway

Now that we’ve gotten some of the fundamentals out of the way, let’s make the distinction between merchant accounts and payment gateways. These are both necessary components if you’re looking to accept card payments, so it’s vital you’ve got a firm understanding of them.

Firstly, let's look at merchant accounts. These are fairly easy to get your head around and are ultimately just referring to a form of bank account that lets your business accept credit card payments. Whenever your customers go to make a payment, the funds from their bank account get deposited into your specific business account.

Here you can transfer the funds back into your regular bank account, but you could also keep it in the merchant account for whatever organisational reason you can think of.

So, where does the payment gateway enter the picture? Put simply; payment gateways are a kind of software application that'll connect your website or point-of-sale system to the card payment network.

These act as digital middlemen, securely transferring your customers' payment information to the payment processor, which lets the funds get transferred to your merchant account.

Choosing the Correct Payment Processor for Your Small Business

There are a few different factors that are worth considering when choosing a payment processor, so definitely make sure you know what you're looking for and aren't simply choosing the first option you see.

The Most Important Factors to Consider

Let’s explore some of the most important factors before diving into your options:

Fees

Have you ever tried to pay for something in a corner shop, and the shop assistant tells you there's a minimum spend for card payments? While you might think they're just trying to persuade you to spend more (and in some cases, this is true), a lot of the time, it's because they're trying to compensate for the fees taken by the payment processor. 

Depending on which payment processor you choose, you’ll be charged a flat rate or a percentage fee for every transaction you make with their machine, so business owners like yourself have to ensure the funds they receive are worth the fee.

In general, try to pick a processor that offers fairly competitive rates and be wary of any hidden charges they might have too.

Security

In today’s day and age, we’re seeing data breaches and online fraud become much more commonplace, so choosing a payment process that takes this security seriously is paramount. 

While they can’t always work miracles and malicious attacks can always slip through the cracks, try to make sure the payment process you ultimately settle on offers a range of security measures such as fraud detection and data encryption.

Ease of Use

You never want to choose a payment processor that feels difficult to set up or use. That last thing any business owner wants is a queue of customers going out the door, only for the payment processor to malfunction or experience major lagging issues. 

In general, if a customer has to wait around and try three times to make a payment, there’s a high chance they might just give up and shop elsewhere (this goes for both online and physical shop locations). 

To avoid any unnecessary complications, ensure you’re shopping for a payment processor that offers a fairly easy process for website integration. In addition, it always helps if there’s clear instructions or support, which leads us on to our next point.

Customer Support

As we’ve already touched on briefly, there’s plenty of stuff that can go wrong with payment processors that can pose major risks if you’re unprepared with a backup. For this reason, you’ll want to always ensure that your payment processor comes with a customer support team that’s never further than a phone call away. 

If you’re lucky, you’ll be able to find one that can offer 24/7 support, be it through email support, live chats, or phone calls, so always be on the look out for this sort of thing.

Comparing Payment Processors

Now that you know what to look for in a payment processor, let's take a closer look at some of the most popular options. Before we do, though, it’s worth mentioning that most payment processors have exactly the same features, it’s just the fees that have a tendency to change.

WorldPay

One of WorldPay's major selling points is their fraud prevention schemes, meaning you can use their services without as much risk of maligned behaviour. For those that run an ecommerce website, they also provide you with a range of customisable payment pages, so you can design the landing page that best reflects your company's themes.

Lastly, WorldPay is based in the UK too, so you shouldn’t ever have to worry about what time it is if you’re in a desperate need to contact their customer service team.

PayPal

While you can send money to your friends and family without incurring any kind of charge, you’ll typically be charged a 4% fee for any payments made through the ‘goods and services’ option. This provides you and the buyer with security and prevents any scamming, so this may be a necessary hit for business owners to consider. 

Fortunately, PayPal is incredibly intuitive to operate and set up for any kind of small business, so you shouldn’t have any trouble integrating this payment process into your everyday business transactions.

Stripe

All in all, Stripe’s a great option for any small business looking to offer their customers a seamless checkout experience, whether that’s in-store or online.

Setting Up Your Payment System

As evident at this point, card payment machines are undoubtedly a game-changer for any small business owner looking to boost their sales and the overall customer experience.

Let’s be honest though, it doesn’t sound the easiest to set up, and those without the technical experience might find the whole process fairly daunting.

Well, it doesn’t have to be! In this part of the article, we’ll be breaking down how to install your card machine in an easy-to-follow guide. Let’s continue:

Choosing a Payment Processor

We’ve already covered this part in detail earlier, so feel free to scroll back up if you need to refresh yourself on how to choose a card payment machine. Remember, it’s vital that your payment processor meets a few different standards, namely reliability, affordability, and reputability. 

We’ve already covered PayPal, Stripe, and WorldPay, but other payment processors like Google Pay and Shopify are definitely worth taking a look at. If you’re running a small online business, the latter option is an excellent option too.

Create an Account

Once you’ve given each different payment processor its due diligence and have carefully deliberated over which option you’re landing on, it’s time to make an account! 

This is normally a fairly easy phase, and you’ll just have to give them some basic information about your business, i.e. your business name. Address, and your tax ID. In addition, you’ll also need to provide them with information about which bank account you want the payments to go into.

Integrate the Payment Processor

After creating an account, it’s time for the slightly trickier part — integrating the payment processor with your website/card payment machine. 

Firstly, let’s discuss the process for websites. Depending on the payment processor you ultimately decide on, you can typically use a plugin or some API to integrate it, so it’s actually not too bad for online stores.

If you’ve got some kind of point-of-sale system for your in-person business, you’ll have to connect the processor to it with a hardware device or another kind of software integration. 

If you feel like you might struggle slightly with this step, your payment processor should be able to walk you through the process with more tailored information. However you do it, integration is a vital step in accepting card payments, so there’s no getting around this part.

Test Your Payment System

So close to being done! After you’ve successfully integrated your payment processor into your website/card reader, all that’s left is to give it some quality assurance tests. Before you start to process card payments, try making a small purchase to begin with to double-check everything's working.

This gives you a bit of assurance that everything worked out smoothly, and it’ll also prevent you from missing any sales if card payments aren’t being accepted.

Ensure Security

Last but not least, it’s a huge responsibility for any small business owner to make sure their payment systems are totally secure. This entails using secure connections whenever you’re connecting to the internet, like HTTPS and SSL.

In addition, you’ll always want to make sure your payment processor is PCI compliant, meaning they’re meeting all the relevant security standards set by the Payment Card Industry. If you still feel like there are some vulnerabilities in your payment system, make sure you’re keeping regular tabs on it to identify possible blind spots or security threats.

Optimising Your Payment System

While it’s fantastic that you’re taking the steps to improve your business, simply accepting card payments isn’t quite enough — you need to optimise your payment system in order to increase sales and customer satisfaction.

Let’s take a closer look at a few different ways you can do this:

Reducing Cart Abandonment

If your small business is online-based, and you’ve got access to certain customer behaviour analytics, you’ll know all too well about the plight of cart abandonment. There's a few different reasons for customers doing this, but mainly it’s because of how complicated your checkout process is (as well as any hidden transaction fee).

If you’re looking to nip this issue in the bud, it’s vital to add things like a one-click checkout option or a guest checkout option to make the process as simple as possible for the customer. 

Improving Checkout Experience

Next up, let’s look at the other ways you can improve your business’s checkout experience. As most customers normally shop on their phones these days, it’s vital to ensure your website is mobile-friendly.

Try to lay out clear instructions to your customers to let them know how to complete the checkout process, and also see if you can include some sort of progress bar to show where they are in the process.

To reiterate once more, customers are always going to be hesitant to give their payment information when they don’t feel secure, so prioritise a safe connection at all times.

Accepting Different Payment Methods

Finally, what’s the harm in offering a bunch of different payment methods for your customer? In general, customers would rather pay with their preferred method, whether that’s with a credit card, mobile payment, or e-wallet. 

Basically, the more options you’re providing to boost your accessibility, the more opportunities you’re going to have for increased sales. As an example, accepting mobile payments can attract tech-savvy customers who prefer to pay using their smartphones.

Related Guides:

• Best Business Loans for UK Small Businesses
• A Small Business Guide to Making Tax Digital
• Capital on Tap Review — Small Business Credit
• Best Credit Cards for Business Owners
• Cheapest Way to Take Card Payments