Taking Credit Card Payments

Overview: Accepting Credit / Debit Cards

Taking credit card payments, rather it be in person, over the phone or online; is one of the most important points in the circle of commerce. This is typically the entry point for most businesses and an area commonly overlooked when it comes to understanding the basics.

With new and emerging technologies today, taking payments with mobile phones (iPhone / Android) is now a feasible possibility for all businesses. In addition, setting up an internet storefront or ecommerce solution is easier than it has ever been. Behind the scenes, technology and fraud prevention algorithms are developing at a rapid pace, allowing the payment ecosystem to stay in balance.

With all of these new and exciting changes, there are still three basics that are very important to understand, track and document when it comes to taking payments. These three critical areas impact many areas of your business but most importantly impact three important money areas listed below.

 

1. How Fast You Get Your Money (Funding)
2. How Much Money You Pay In Fees
3. How Safe Your Money Is (Security)

 

These three important areas that must be understood in order to maximize your businesses cash flow, minimize costs and protect your money are listed below.

 

1. How You Take Payments (Merchant Type)
2. Merchant Agreement / Contract
3. Technology (Device) Used To Take Payments

 

How You Take Payments (Merchant Type)

The type of merchant you are classified as, or more specifically, how your business accepts payments impacts all three important money areas. Unfortunately, the details are commonly glossed over. Most businesses primarily take payments via the following methods.

• Retail (Face-to-Face)
• Mail Order / Phone Order (MOTO)
• Internet / eCommerce

Some business accept payments through only one method however, most merchants take credit cards through a combination of the three areas above. For detailed information on this be sure to check out our Acceptance Methods post.

 

Merchant Agreement / Contract

One of the key areas of payment processing that can potentially have a large impact on funding (cash flow) and processing fees, is the merchant agreement. This contract between the sales organization and the merchant serves as an application, fee schedule and terms of credit card processing. Most agreements are fairly similar with a few stipulations to look out for. The major items to be aware of when it comes to fees are as follows. For further explanation see our Merchant Agreements page.

• Interchange Fees
• Discount Rate / Transaction Fees
• Monthly / Support Fees

 

Technology (Device) Used To Take Payments

Commonly the focus with taking credit cards is the device, hardware, software, etc. that will be used to accept payments. While this area has the smallest impact on fees (other than outlay for device / technology) it has a large impact on the security of both the merchant funds and the personal information of its customers. It also can play a role on how quickly funding takes place.

For a discussion about the most common types of devices today, view our Payment Technology page.