How Debit Cards Can Make Life Easier

Let’s take a deep dive into debit cards and explore just how they could make your life easier;

Keeping Track of Spending

One of the biggest advantages of using a debit card is the ability to keep track of your spending. Every transaction appears on your statement, which means no more losing track of your cash expenses. By keeping track of your spending, you can budget and plan for financial goals more efficiently. Plus, it’s easy to view all your transactions online or with your bank mobile app, which makes it simple to monitor your finances.

Cashless Transactions

Debit cards are convenient and save time. You can go cashless and leave your cumbersome change behind. Simply carry the small plastic card that fits even into the smallest of pockets. You can buy things online or at point-of-sale locations, making it easier to transact. Many places even have gone cashless and only take debt or credit in terms of payment.

Increased Security

Debit cards are also more secure than carrying cash with you. Unlike cash, a lost or stolen card can be reported and canceled, right from our mobile app, which ensures that no one else can use your funds. Debit cards have revolutionized the way we spend money, especially for people on the go. They add a convenience that can’t be matched by using cash. From keeping track of spending to earning rewards and managing your account from your phone. Source

How Much of My Credit Should I Use?

Good credit management can have a significant impact on your overall financial health. With the right credit habits, you can reach many important goals, like buying a home or getting a car. But, if you're new to credit, one question that you may have is how much of your credit you should use. While the answer differs based on your personal circumstances, there are some things that you should keep in mind to make more informed decisions about your credit usage. One thing you may want to consider is your credit utilization ratio.

What is a credit utilization ratio? 

Your credit utilization looks at the amount of available credit that you're using on your revolving accounts (like credit cards) as a percentage. Your credit utilization ratio makes up 30% of your credit score and lower credit usage is better for your credit score. Credit utilization is important because lenders want to see how you're managing the credit currently available to you. If you're using too much credit, it may show lenders that you're overextended.

How can I calculate my credit usage? 

You can find your credit utilization ratio by dividing the amount of debt you owe on your revolving credit accounts by your total available credit. You can usually find this information by logging into your credit card account.

What should my credit utilization be?

Since your credit utilization accounts for 30% of your credit score, you should keep your available credit limits high and your debt low. The Office of Financial Readiness suggests a credit utilization ratio of 1-10%. If you max out your credit cards, you may increase your utilization ratio. This leads lenders to view you as a potentially risky borrower. So, if you're using a high percentage of available credit, you should try to pay down your balances as quickly as possible to lower your usage.

How can I improve my credit utilization ratio?

Since your credit limit and current debt makes up your credit utilization rate, you may be able to lower your ratio if your available credit increases or if you lower your credit card balance.

Pay off your credit card balance

One way that you may be able to lower your card utilization is to pay off your credit card debt. If you’re close to maxing out your credit cards, you run the risk of your utilization becoming too high. You can try to make more than one credit card payment a month to help you keep your balance low.

Ask for a credit limit increase

If you want to increase your spending power while keeping your credit utilization low, one thing you may be able to do is get a credit line increase. You can request a credit limit increase from your credit card company. It’s important to note that there’s no guarantee you’ll get a credit line increase. If you recently opened your account or haven’t managed your account wisely, you may have issues getting an approval.

It’s still important to keep in mind that you can still run up your credit card balance (even with a limit increase) if you don’t practice good credit management.

Apply for a new credit card

You can get a new credit card to increase your total available credit. It’s important to carefully consider this option because applying for a new credit card may impact your credit score in other ways. But you may find it easier to keep a low credit utilization ratio if you have more than one card. One thing you can do is see if you prequalify for any credit card offers. When you prequalify for cards, you typically only get a soft inquiry, and you can compare different card features to find the best credit card for you.

For example, a $1,000 balance on a single credit card with a $10,000 limit equals a credit utilization ratio of 10%. If you have another card with a $100 balance and a $5,000 limit, your credit utilization on that card would be 2%. Your total credit utilization on both cards would be about 7%.

Keep your old credit cards open

You should keep your old credit cards open even if you don’t use them much because closing a card could lower your available credit, which in turn can give you a high credit utilization ratio.

Monitor your spending

A good budget can help you manage your credit utilization rate. Limit your spending on your cards and always pay your credit card bill on time. You can get text or email alerts when a minimum payment is due on your credit card bill. You should also check your credit utilization on your individual accounts, and make sure you’re not going over on any one card.

Remember, a credit card can be a great tool to help increase your spending power and give you access to more money than you have on hand. But it’s important to use your card wisely by keeping your credit utilization low. By establishing good credit habits, you can help secure your financial future.

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Payment Gateway vs. Payment Processor: What Is The Difference?

Payment gateway and payment processor are two key links in the payment processing chain. As a business owner, you’ve probably heard these terms and wondered what the difference is.

Let’s start here: There are four parties involved with every credit card transaction:

• The merchant
• The customer
• The issuing bank that issued the customer’s credit card or debit card
• The acquiring bank that collects the funds from the issuing bank
• The role of payment processors and payment gateways differ, yet each is a vital component in accepting credit card payments.

What is a payment processor?

A payment processor executes the transaction by transmitting data between you, the merchant; the issuing bank (i.e., the bank that issued your customer’s credit card); and the acquiring bank (i.e., your bank). The payment processor also typically provides the credit card machines and other equipment you use to accept credit card payments. To accept credit cards at your business, you’ll set up a merchant account with a merchant service provider.

What is a payment gateway?

A payment gateway is a tool that securely transmits the online payment data to the processor to continue the lifecycle of the transaction. It also authorizes payments for card-not-present transactions, mostly for eCommerce websites. Think of it as an online point-of-sale terminal for your business. 

The difference is a payment processor facilitates the transaction and a payment gateway is a tool that communicates the approval or decline of transactions between you and your customers. 

What’s the difference between a payment gateway and payment processor?

To put it in perspective, the main differences between a payment gateway and a payment processor are:

Payment Gateway;

• A payment gateway is the technology that encrypts and transmits the payment details from the point of entry to the payment processor. It also communicates the approval or decline back to the merchant or the customer.
• Payment gateways are commonly used for eCommerce transactions, but can also be used to accept payments with a credit card reader, POS system, or software integration.

Payment Processor;

• A payment processor is responsible for relaying transaction details to and from the customer’s card-issuing bank and the merchant’s acquiring bank.
• Payment processors are necessary for all card-based transactions, whether the sale happens online, in-person, or through a mobile app.

Payment gateway vs. payment processor: Which do I need?

The most common use of a gateway is to accept payments for goods and services online; however, in today’s payments landscape, gateway technology has expanded to create a seamless buying experience across all sales channels and devices. In addition to eCommerce transactions, a gateway can also be used to integrate payments with your accounting or CRM software or process transactions at a point-of-sale system or on a mobile device. Not all merchant account providers have a payment gateway. Some providers use a third-party payment gateway, which can be a hassle when you have a dispute. Who should you contact when you have a problem?

It may be best to select a merchant account and a payment gateway from a single provider. Using a payment gateway to securely process integrated payments can reduce errors, speed up transaction processing, and ease reconciliation. If you don’t want to invest in credit card readers, or if you don’t have an eCommerce website, you can use a virtual terminal to process transactions, as long as you have an Internet or data connection.

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What Is a Merchant Service?

A merchant service is any one of a group of services that businesses can use to accept and process electronic payments from their customers. Merchant services facilitate these transactions and may involve a combination of point-of-sale (POS) systems, credit card readers, payment gateways, and online transaction processing, among others.

How Merchant Services Work

Merchant services encompass a number of processes involving merchants, their customers, and their respective banks. They include:

The Customer Payment Process

Customers encounter merchant services when they initiate a transaction using a credit card, debit card, or other electronic means. This may happen through a point-of-sale (POS) device at the merchant’s physical place of business, such as a shop or restaurant, or through an online payment gateway or portal on the merchant’s website.

In a typical scenario, the POS device or online portal will collect the pertinent details from the customer’s card, then forward that information to the card-processing network associated with that card, such as American Express, Discover, Mastercard, or Visa.

The information will include the account number and other data identifying the cardholder. During in-person credit or debit card transactions, the POS device obtains it by reading the card’s magnetic stripe or EMV chip, where the information is embedded.

In some cases (such as American Express and Discover), the network will also be the company that issued the card, known as the issuing bank. It can either accept or reject the transaction and relay its decision back to the merchant’s terminal. Mastercard and Visa are simply networks or associations, and not card issuers, so they will seek approval from the issuing bank.

If approved, the transaction will go through. Most of this process—often referred to as authorization—happens behind the scenes and virtually instantaneously, making it largely invisible to the customer.

The Merchant Payment Process

The merchant doesn’t receive its money right away. That involves a separate, multistep process.

When a transaction is given the green light, the merchant will receive an authorization code from the card issuer. The merchant will forward that code to its payment processor (often along with other transactions it completed that day, a procedure known as batch processing).

The processor will send the information to the appropriate card network, which will then forward it to the issuing bank, if different. The issuing bank will then begin the settlement process, in which money finally changes hands.

The Settlement and Funds Transfer Process

In the settlement process, the issuing bank will transfer funds to the merchant’s bank, the acquiring bank. That bank will then deposit the funds in the merchant’s merchant account. This process typically takes 24 to 48 hours.

The issuing bank will also add the amount to the cardholder’s balance, which will be reflected on their next billing statement. In the case of a debit card, the issuing bank can simply withdraw the money from the cardholder’s account.

Components of Merchant Services

Merchant services rely on a combination of hardware and software. Some common components:

Point-of-Sale (POS) Systems

In their most basic form, point-of-sale (POS) systems are computers that allow a consumer to use their credit or debit card to purchase something at a merchant’s place of business. They then transmit the information to a card-processing network, initiating the payment process.

However, these systems have become increasingly sophisticated and allow merchants not only to conduct transactions but also to monitor their inventory, record sales data, and perform other useful business functions. Some POS software can also link to accounting software, making bookkeeping easier.

Credit Card Readers

A credit card reader, or payment terminal, is a piece of hardware that allows the POS to collect the data it needs. Card readers work in different ways, some relying on the older magnetic stripe technology, others allowing for the newer EMV chips or wireless NFC technology for contactless payments from smartphones and other devices.

Payment Gateways

A payment gateway is the virtual equivalent of a POS system, performing the same basic functions but for online transactions. Because the physical card isn’t involved—these are often referred to as “card-not-present transactions”—the gateway must verify its legitimacy in other ways. This typically involves asking the cardholder to provide a validation code. Technically known as a CVV, CV2, or CVV2 code, it’s a three- or four-digit number found on the front or back of today’s credit and debit cards.

Online Transaction Processing (OLTP)

Used in conjunction with a payment gateway, online transaction processing allows merchants to process large numbers of transactions in real time, while also recording that information for accounting and other purposes. OLTP is a vital tool in ecommerce, where speed is key.

Benefits of Merchant Services

Merchant services cost money, but they also provide benefits beyond what merchants would be able to do on their own. Those include:

Enhanced Payment Security

Merchant services have a number of built-in safeguards to protect both the merchant and their customer (as well as the card networks and banks) from fraud and theft.

Payment gateways, for example, provide a secure online connection between the merchant and the customer, making it very difficult for hackers to infiltrate the system. For in-person transactions, POS systems and the security features embedded in credit cards work in tandem to protect consumers’ information and thwart potentially fraudulent transactions.

Merchants that accept card payments must typically comply with industry standards set by the PCI Security Standards Council, known as PCI DSS, the “DSS” standing for data security standard. The rules vary depending on the size of the business, based on the number of transactions; the bigger the business, the more complex the requirements. Merchants that don’t comply are subject to fines.

Because most merchants have other work to attend to, they often delegate maintaining their PCI DSS compliance to merchant services providers. The PCI council itself advises merchants, “In most cases, using a wholly outsourced third party to capture and process payments is the safest option.”

Increased Sales Opportunities

While some consumers still prefer to use cash and some merchants may not accept any other form of payment, trends continue to move in the direction of electronic payments. A Federal Reserve study found that in 2022, credit cards accounted for 31% of all transactions and debit cards for 29%, while cash trailed at 18%. Clearly, merchants that aren’t set up to handle electronic transactions put themselves at a disadvantage when it comes to sales.

Streamlined Payment Processing

In addition to greater security, state-of-the-art payment systems speed transactions both online and off, reducing time and labor costs. The less time that customers have to wait in line and the less effort they need to expend in completing an online transaction, the more likely they are to come back.  

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What is a Payment Channel?

A payment channel is any way that a customer can make a payment, or anywhere that the merchant might accept a payment. Payment channels are specifically associated with how the payment is made and include the following:

• In-Person
• eCommerce
• Mobile
• Contactless

Payment Channels & Best Payment Processing Solutions For Your Business

Having multiple payment channels may not be necessary early on, but in order to pick the best payment solutions as your business grows it will be important to expand your channels. Depending on your business you may need to start with a physical POS (point of sale) system, while someone in the digital space may need to focus on mobile payments.

In-Person Payment Processing

In-Person payments can utilize a physical or virtual POS system to take customers’ payments inside your business. Some Physical POS systems can serve a dual purpose as a terminal, giving customers the ability to swipe directly through a single piece of hardware. Others allow you greater flexibility, enabling you to easily connect terminals via a Bluetooth device. The right terminal expands payment options for customers, allowing them to dip, tap, or use Apple Pay and Google Pay to make payments.

Physical POS Terminal

The physical POS is a traditional payment channel, supported on a cash register, where customers pay right inside your store. Stax offers two forms of POS retail solutions for business owners. The first are standard EMV smart terminals, a simple countertop terminal solution, the second is a Mobile Checkout POS system.

Mobile Checkout POS systems are an all-in-one point of sale system right at your fingertips. When collecting customer payments, you are even able to use a tablet, or phone device to securely process sales from any location.

Virtual Terminals

A virtual terminal gives you the power to process and manage over the phone and face-to-face transactions in real-time. Because there’s no need for a physical or traditional credit card terminal, a virtual terminal uses software to process transactions. This solution is generally for merchants who don’t have a brick-and-mortar business and often take customer information over the phone or online.

The Stax platform offers companies the ability to process and manage telephone and face-to-face transactions giving you the best payment solutions. It is great for service-based companies, B2B companies, or anyone who does recurring billing. As long as you have an Internet connection, you can process payments directly through Stax. All transactions are securely tokenized and are compliant for your best payment solutions.

Businesses can also continue using their existing POS systems as the Stax platform seamlessly integrates with most terminals.

eCommerce Payment Processing

For businesses looking to process payments through their website or create an online shopping store, eCommerce payments solution allows you to expand purchasing capabilities online. Businesses can collect and manage payment transactions online without the need for a physical or traditional credit card terminal.

Stax’ digital payment solutions and eCommerce tools like an online shopping cart or webhooks allow businesses to engage digitally with even more customers. Stax also supports the ability for businesses to build their own or integrate with a provider like Authorize.net for an eCommerce shopping cart.

Mobile Payment Processing

Mobile payments are vital for businesses that are on the go or those that want to keep hardware to a minimum. Many businesses find using mobile payments works better and faster for them in comparison to physical POS systems. This can be a great solution for service professionals that operate in the field and need to accept payments on location.

Contactless Payments

Contactless payment devices allow businesses to accept in-person payments without the need for physical contact. From Text2Pay to touch-free terminals, you can quickly and safely process payments on the go.

As an example; Contactless by Stax gives you immediate access to tools that can pair perfectly with your online shopping cart. Offering Text2Pay gives customers the ability to pay for their purchase in just a few taps from wherever they are. Businesses can personalize their customer’s experience by answering questions and making updates to an order via text.

All of these payment channels and more are available for businesses to easily collect payments from customers and maximize their revenue.

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Strategies to Optimize Operations and Do More for Your Business

6 Ways to Start Optimizing Your Business Today

Here are six ways you might start optimizing your operations and get your company to work harder for you: 

1. Assess your organization’s cost structure and cut where you can. If you’ve been running at high speed fulfilling customers’ requests and working one-on-one with clients, you may not have stopped to assess your cost structure and make some necessary adjustments. Consider identifying all business expenses, including both variable and fixed costs. You may then want to prioritize these expenses by importance and pinpoint any that aren’t contributing to your company’s success.

Inventory that’s sitting in your warehouse, insurance policies that could be shopped around for better rates, and unused monthly subscriptions are all good starting points. Once you’ve made the cuts, start monitoring spending every month to avoid having to go through this exercise again. 

2. Take a close look at existing processes. Time is money for small business owners and team members who only have a limited number of hours in a day. Redundant processes, rework, and tasks that are taking too much time to complete are all good targets for optimization. Talk to your employees about their biggest time-wasters and help them get those projects finished faster.

Automation might help in this area. For example, if your accounting manager spends too much time generating customer invoices, find a software solution that automates some or all of that process. Consider outsourcing non-core tasks like payroll, customer service, or graphic design to free up yourself and/or internal resources to focus on more strategic projects.

3. Ask your suppliers for better deals, terms, and perks. The business environment is always in flux; nothing stays the same. If you’ve been paying the same prices and getting the same service levels and terms from suppliers for some time now, you may want to revisit those contracts and negotiate for lower prices, discounts, or extended payment terms. Come to the table with information about industry trends and market prices, and be sure to emphasize your value as a repeat customer.

Negotiations that work out in your favor can also help you offer your customers more competitive pricing, improve your company’s cash flow, and increase its profit margins. As a bonus, these interactions will also help solidify supplier relationships because your vendors know you’ll come to them with these requests, versus just taking your business elsewhere.

4. Put business credit cards to work for your company. Used properly, business credit cards might help improve cash flow, simplify expense tracking, and maintain better controls over employee spending. For example, a business credit card used for travel expenses can be closely monitored and used to establish spending thresholds. Credit cards can also be used for larger purchases that can then be paid off over time versus coming out of your business bank account.

Most business credit cards also come with expense tracking tools, real-time transaction notifications, and other functionalities that streamline financial management. Finally, you can use credit cards to establish your company’s creditworthiness and position it for a “yes” answer on that future loan or financing application.

5. Take advantage of rewards programs. By strategically using rewards programs, you can save money on expenses that range from travel to office supplies and technology. Most business credit cards offer cash back, miles, or points on every purchase. Most office supply stores offer loyalty programs, while suppliers may also have rewards programs for repeat buyers.  

Sign up to use these programs to your advantage. When you earn cash back for everyday expenses or accumulate points that can be applied to hotel stays, you’ll be contributing to your company’s bottom line without much added effort. With business payment cards, your small business can earn valuable discounts, rebates, and rewards.

6.  Use goals and KPIs to track progress and then adjust accordingly. Small business optimization isn’t a “set it and forget it” exercise. For best results, consider it an ongoing task that involves your entire team. Set some specific goals and key performance indicators (KPIs) to help keep the progress on track and identify new areas of improvement. If you want to increase sales this year, for example, consider tracking metrics like revenue growth, customer acquisition costs, and average order value.  

If these KPIs aren’t meeting your expectations, explore the underlying causes and adjust accordingly. For example, if your average order value is lower than you’d like, you may want to test out some upselling and cross-selling opportunities on your e-commerce site or in your physical store (e.g., someone who orders a kayak probably also needs the accessories, garb, and sun protection to go along with it). If revenues aren’t meeting expectations, it could be time to diversify into new lines of business or start marketing to new customer segments.

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What You Need To Know About Payment Processing Fees

The number of payments made by card has increased over the past year, thanks to the convenience and safety of online shopping and touchless checkouts. But for business owners, there is a cost to all those extra swipes and clicks: more payment processing fees. “Not only are there many kinds of fees, but it’s often difficult to decipher which ones cover which aspect of a transaction, which makes it hard for merchants to know what they’re paying for,” says Riaz Bhamani, senior vice president with Merchant Services at Bank of America.

The following breakdown can help you understand exactly what fees you’ll likely encounter and how to decide which pricing plan works best for your business.

Typical credit card processing fees

Every time a customer uses their card, you’ll need to pay processing or transaction fees. The largest transaction fee is the interchange fee, which is determined by the payment network (e.g., Visa® or Mastercard®). Other per-transaction fees include a small fee charged by the payment network and the fee charged by your merchant account provider.

While that might seem straightforward, transaction fees can be confusing, since they vary depending on numerous factors, including whether the customer paid with credit or debit, which payment network is involved, what type of business you operate, and whether the purchase is made online or in person, among many other criteria. In addition, they may be calculated as a percentage of the transaction amount, a flat fee (such as 30 cents per transaction) or some combination of the two.

You may also need to pay one-time or ongoing fees that are not tied to the volume of transactions and may not even be related to credit card processing. Examples include startup or annual fees, monthly statement fees, minimum processing fees and a gateway fee if you use an internet merchant account. In addition, if a customer disputes a transaction, you may also be responsible for chargeback fees.

Pricing plans

Many providers allow you to choose how your transaction fees are calculated. Below are common pricing models:

Interchange plus

This model adds the interchange fee, which is set by the payment networks, to the fees charged by the merchant services provider. Hence, interchange plus. This is the most transparent type of pricing plan because you can see how much each party charges to process a transaction. It’s also typically the most cost-effective structure — but it can be unpredictable, complex and hard to understand because there are hundreds of interchange rates, depending on card type, issuer, industry and more.

Flat rate

As the name implies, flat rate pricing allows you to pay a fixed amount for all transactions. For instance, if most of your customers use debit cards or no-reward credit cards in-person, which tend to have the lowest transaction fees, you may not benefit from a flat rate system. On the other hand, if you get a lot of cards or transactions that have high interchange rates, you could significantly benefit. Either way, the flat rate structure is easy to understand and offers predictability for the merchant, so many businesses like to start with flat rate pricing and move to interchange plus later on, when they can better evaluate their transaction history, says Bhamani.

Tiered

This less common model offers a middle ground between flat rate and interchange plus. It takes the hundreds of different interchange-plus rates and organizes them into buckets, or tiers, based on the type of transaction. While the tiered model seems fairly easy to understand because there are limited price points, it is difficult for the merchant to know whether a given transaction is categorized into the correct tier, says Bhamani, which can make it hard to compare pricing.

 The best pricing structure for your business depends on multiple factors, including the most common types and volume of your transactions. When comparing providers, make sure to review the fee schedule in detail, taking into account one-time and miscellaneous fees, as well as typical monthly costs. Also consider whether the transaction rates are guaranteed for any length of time, and whether there are any termination fees if you decide to go with another provider.

Also keep in mind that many providers offer services that are not core to taking payments but can enhance the efficiency and security of your transactions or help you streamline some of your business operations, such as enhanced fraud management capabilities, automatic recurring billing for subscription-based businesses and business management software. Before you sign up with a provider, consider which, if any, of these services you might want and whether and how it would affect your ongoing costs.

As the shift from cash to electronic payments accelerates, you can expect the amount you pay for processing fees to increase, too. Understanding what goes into the fees and how they’re charged can help you better manage these expenses. Source

How Mobile Payments Are Transforming Transactions And Payment Security

Mobile technologies are revolutionizing the way the world shops, as well as how they pay for their purchases. In less than two decades, smartphones and wearables have forever transformed the commercial ecosystem, including the ways payments are made, as well as their safety from digital criminals. Mobile payments are secure transactions that occur using an Apple or Android phone, or a wearable device such as a smartwatch or fitness tracker. They are made possible thanks to NFC technology and can also happen via apps. In the recent past, purchases were generally made with cash, checks, or credit cards. They required that a shopper have money, a check, or a physical credit card available to facilitate the purchase.

Since today’s mobile payments take place with devices such as tablets, phones, or wearables, they do not require a customer to have anything else in hand. These devices use near-field communication (NFC) to facilitate Tap to Pay on iPhone or Android. After inputting payment details into a digital wallet app on the phone, buyers simply unlock their device, place it near the merchant’s reader, and wait approximately two seconds for the payment to be authenticated, authorized, and completed.

Mobile payments can take various forms. They can occur via the digital wallets described above or can happen contactless for in-person customers. In supported apps and on websites, users simply select their preferred method, authorize the payment, and complete the transaction without needing to enter all of their details every time. Mobile payments bring numerous advantages to buyers and sellers. These include convenience, speed, efficiency, security, added payment options, boosted sales, and boosted insights. Mobile payments have transformed the commercial universe for the better. Because they are wireless, they can take place anywhere, and they happen in an instant.

Each time a mobile purchase is initiated, the data is changed into a random series of digits. This tokenization process renders it useless to hackers and allows you to increase security.

Moreover, mobile devices can accept a wide variety of payment types including debit and credit cards, digital wallets, and even bank accounts. This flexibility has brought added sales to merchants, who can now also tap into a rich set of analytics that enable them to make more accurate sales forecasts and marketing decisions. Source

What Are The Benefits Of Working With A Payment Processor?

Five Key Benefits That Payment Processors Offer Business Like Yours...

#1 – Accept credit card and debit cards

The first and most important benefit payment processors deliver is the ability to process credit cards and debit cards payments. This insight may seem obvious but consider for a moment how your business might operate without the ability to accept card payments.

Reliable payment processing is on the short list of essentials for most businesses to function properly. It has been found that together credit cards and debit cards accounted for over half (42%) of eCommerce and three quarters (74%) of in-store consumer payments in the US in 2017. That makes accepting credit and debit cards as important as electricity for daily operations.

This essential benefit is available whether you contract for payment processing directly, via a value-added reseller (VAR), or however you may access your payment processor.

#2 – Offer your customers alternative payment options

Your customers want choice—especially when it comes to how they pay. Credit and debit cards are essential but they’re far from the only important payment option. Today’s consumers want to use an emerging set of alternatives, like paying via their smartphones with mobile wallets.

Payment processors help businesses determine the best mix of payment alternatives to serve your customers. From direct bank transfers to pre-paid cards, gift cards to buy-now, pay-later options, payment processors help you maintain happy customers by letting them pay the way they want.

How you connect to your payment processor can determine whether you can offer all the payment alternatives your customers want. Whether your business is working directly with a payment processor or through a third-party, take the time to understand what alternatives are available before you make a commitment.

#3 – Integrate payments with your own systems

The business world is full of specialized systems. Integrations that allow separate business systems to talk to one another are essential to develop business efficiency—and to maintain business sanity.

Payments don’t take place in a vacuum. Leading payment processors seamlessly integrate payments with other business workflows like accounting, billing, customer relationship management (CRM), and more.

#4 – Direct pricing, direct relationships

Value-added resellers (VARs) bundle payment processing with other business services. Independent sales organizations (ISOs), merchant service providers (MSPs) and eCommerce providers also offer payment processing, though one step removed from the source. These and other third parties often resell the services of a payment processor as part of their business services package as part of the wealth of value-added services they provide.

Yet many businesses prefer direct payment processor relationships. Direct relationships offer can offer more extensive payments expertise, superior customer service, 24/7 troubleshooting, data security assistance, fraud protection and more. Direct relationships with payment processors can also mean direct pricing models that can result in significant savings.

#5 – Flexibility to grow with your business

Payment options are evolving fast—just like your business. Leading payment processors help businesses like yours stay ahead rapid changes in the payment marketplace. Full-service payment processors that operate at scale partner with businesses at every stage of growth.

Many third-party services that resell or bundle payment processing are designed for early-stage small businesses. From sole entrepreneur start-ups to enterprise businesses on a global scale, leading payment processors can not only grow with your business, the best can also help you achieve that growth. Source

What Is a Merchant Account?

Traditionally, a merchant account is a type of business bank account that connects with a payment processor, credit card issuer and your bank to let you receive electronic payments such as credit and debit cards. The merchant account receives money from credit card companies so it’s available to you immediately, instead of after the customer pays their credit card bill.

However, modern payment service providers combine the functions of merchant accounts with payment processing, so many small businesses don’t have to worry about setting up this type of account separate from signing up for a payment processor.The most common merchant account fee models for small businesses include flat-rate fees, interchange-plus fees and tiered rates. 

Understanding the pros and cons of each is key to finding the best merchant services provider for your particular needs;

Flat-Rate Fees

With flat-rate pricing, businesses pay one low rate based on the type of sale, with fees typically ranging from 2.5% plus 10 cents to 3.5% plus 30 cents per transaction. With flat-rate structures, in-person sales where the card is present have lower fees than online sales, but fees don’t vary based on card brands or rewards programs. Plus you don’t have add-on fees for PCI compliance or monthly statements.

Interchange-Plus Fees

Interchange-plus merchant services add a minimal markup percentage or fee to the base interchange rates set by the card associations, such as Visa, MasterCard and American Express.

Markup fees typically range from 0.10% plus 5 cents to 0.50% plus 25 cents per transaction, based on the sale type. Providers including Payment Depot and Stax use subscription-based pricing instead of percentage-based markups. This model pairs a monthly subscription fee with a minimal per-transaction fee, ranging from 5 cents to 15 cents per charge.

Tiered Fees

Tiered plans break card processing rates into three groups, which are called qualified, mid-qualified and non-qualified tiers. Each tier’s rates are based on a merchant’s overall processing volume, industry and typical transaction types, such as online or in-person sales.

Tiered rates can be tricky to understand, the monthly statements can be very detailed and many require lengthy contracts and charge early termination fees. High-volume sellers can save with contracted rates on tiered plans, but flat-rate and interchange-plus are typically better for startups and small businesses.

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