In today's digital currency world, more and more people are using credit cards for everyday purchases. What’s more, the average Canadian carries more than one credit card in their wallet.
Accepting credit card payments has several advantages for business owners, such as improved cash flow, competitive advantage and increased volume of sale transactions. If you’re not currently accepting credit card payments you may be losing out on potential business. Or customers who would have otherwise make a purchase due to the ease of a tap.
Credit card processing can be a confusing and overwhelming topic for some merchants, especially if they're just starting out. There are a lot of myths floating around about credit card processing, and it can be hard to sort out fact from the fiction. This blog post will debunk some common misconceptions about credit card processing.
5 Myths and Facts About Credit Card Processing
Here are a few of the common myths and facts about credit card processing.
Myth #1: Accepting credit cards costs too much.
Fact: Contrary to popular belief, the cost of accepting credit cards is actually not too high. While it's true that there are fees associated with processing credit card payments, the fees are generally reasonable. It is important to look at the big picture and understand that most businesses pay only a small percentage of the total transaction value in fees.
Your business may lose even more money if you don’t accept credit card payments.
Consumers value speed and convenience above all. Contactless payments and mobile payments are growing rapidly, and many customers don’t carry cash. During the pandemic, 42% of Canadians said they’d avoid shopping at businesses that didn’t offer contactless payment options. Card and electronic payments are now essential for online ordering and click-and-collect options.
By accepting credit cards, your business can increase sales, attract new customers, and improve cash flow. Given that the total value of credit card transactions in Canada reached $615 billion dollars in 2019 alone, it’s clear that you’re missing out on revenue if you don’t accept credit cards.
So yes, there is a cost to accepting credit cards, but the cost of not accepting them is even higher.
Myth #2: Keeping cardholders and sensitive data safe is an unsurmountable task.
Fact: When it comes to data security, many businesses assume it’s just too difficult and expensive to keep cardholder and sensitive data safe. However, this is not the case.
Businesses can take several simple steps to protect their customers' information. For example, you can protect your data with encryption both at rest and in transit. You can also implement strong authentication measures, such as two-factor authentication. In addition, you can build and implement a robust incident response plan to address a data breach.
Accepting credit cards also means you have to deal with PCI compliance, and that’s not always easy. Anyone who has contact with cardholder data is responsible for making sure their business practices are PCI-compliant. PCI compliance is not mandated by law, but there are serious penalties for businesses that aren’t compliant, and these could cause both immediate and long-term financial damage to your business.
The good news? A good payment processor will take care of the requirements that keep your business PCI-compliant, so look for one that supports this option.
Myth #3: My funds will be held, and I won’t get paid immediately.
Fact: There is a common misconception that businesses who accept credit card payments will have their funds held, and they won’t receive payment until the customer’s bank has processed the transaction. However, this is simply not true. When a customer pays by credit card, the funds are typically transferred to the merchant within one to two business days. In some cases, the funds may be available even sooner.
The probability that your funds will be held or delayed depends on your type of processor. There are two main options: a merchant account provider or a processing aggregator. A merchant account provider sets you up with your own dedicated merchant account. Applying for your own merchant account is a bit more comprehensive than applying for a regular account: the processor will need information about your business, such as high and low processing volumes and average transaction tickets. This will help avoid interruptions to your cash flow.
With a processing aggregator, the application process is simpler. This lets businesses start processing card transactions quickly and easily. But because aggregators combine several similar businesses under one umbrella and allow them to use a communal merchant account, they also carry higher risk. As a result, they are very vigilant about potential security risks. They don’t know regular processing details about your transactions and will not hesitate to temporarily hold your funds—often without warning—to investigate any suspicious activity.
So, if you’re worried about your business’s cash flow, there’s no need to be. Accepting credit card payments is a quick and easy way to get paid.
Myth #4: I’ll need to buy expensive equipment.
Fact: Many small businesses assume that they must invest in expensive equipment to accept credit card payments. The good news is that’s not the case. There are many affordable options available that can provide you with the ability to process credit card transactions.
Many payment processors offer multichannel payment solutions for your business. These give you options to process credit card payments using equipment you already own, like your mobile device, tablet or laptop.
Mobile payments: Using a mobile app and a card reader, you can accept credit card payments on the go, anywhere you do business.
Web terminal: Also known as a virtual terminal, this payment method lets you securely accept credit card payments by inputting the details into a web browser. All you need is an internet connection.
Recurring billing: Does your business support a subscription billing model? Recurring billing is an efficient solution, and just like the web terminal, it’s accessible on any web browser.
E-commerce: Selling goods and services online is another way to avoid buying additional equipment, plus you can expand your market and accept credit card payments worldwide.
Invoicing: With digital invoices, you can email branded invoices to your customers. They can pay in just a few clicks using the invoice's embedded payment method.
But you'll need a traditional terminal if you want to accept debit, chip and PIN or contactless payments. Luckily, there are options for traditional terminals that won’t break the bank. If you rent a terminal, the cost is billed monthly and is more digestible. Another benefit to renting: if there’s a problem with your terminal or if the technology updates, you’ll be sent a new terminal.
Myth #5: There are too many monthly and additional fees.
Fact: For many business owners, one of the biggest concerns is whether or not they will be able to afford the fees associated with credit card processing.
Depending on your business, there is some truth to this one. If your business doesn’t process many monthly credit card payments, the additional fees may not make sense. In this case, you may be better off partnering with an aggregator.
It’s worth noting, however, that most aggregators offer flat rates based on volume, and fees go up as the number of transactions rises. Consider a merchant account provider if you expect your card transaction volume to increase. They can typically customize credit card processing fees when a business processes more than $40,000 each year. Pricing is optimized based on your individual business and considering factors like high and low average transaction sizes.
While the fees are customizable, additional fees and obligations may be associated with merchant account providers, like monthly fees and contracts. These additional charges often give you access to a wide range of value-added services: a dedicated support rep for your business, more payment processing tools and channels to help your business grow, robust data and analytics, higher processing limits, etc.
Is Credit Card Payments Really Worth It?
The answer is yes. As a merchant, giving your customers as many payment options as possible is critical for business. Although there are some myths about credit card processing, the truth is that it's a quick and easy way to accept payments from your customers.
Simply put: the benefits of accepting credit card payments outweigh the costs. Accepting credit card payments can help you increase sales, help retain customers, improve your cash flow and give you a competitive advantage.
Overall, accepting credit card payments is good for business and should be a consideration for any business owner.
How Can Merrco Help?
At Merrco, our payments experts have experience working in the cannabis space. Contact us today, and we can guide you on which solutions you should consider. Call +1 (800) 747-6883 or email email@example.com.