How to Accept Credit Cards for a Small Business

By Paul M. J. Suchecki

  • Overview

    Accepting credit cards through your small business can make a big difference to your bottom line. If you are opening a retail establishment or a restaurant, it's hard to compete unless you accept plastic. If you have an e-commerce website, it's absolutely essential. Even if you are providing a service as a consultant, accepting credit cards can speed payments to you in these precarious economic times.
    How to Accept Credit Cards for a Small Business
    • Step 1

      Decide on the scope of the credit-card transactions you plan to accept. Do you simply want to make that option available occasionally to your paying customers? Do you plan to offer a number of transactions each day on site? Do you attend trade shows where you plan to sell from your booth? Draw up a list of estimated transactions per month and where you plan to make them.
    • Step 2

      If you don't have one already, establish a checking account in the name of your business, into which you'll accept your processed transactions.


    • Step 3

      Understand that the simplest way to accept credit-card transactions on a website is through PayPal. There are no setup, monthly or cancellation fees. You can accept debit cards, credit cards or even bank transfers. The transaction fees are reasonable: up to 2.9% percent plus 30 cents per transaction. The process is not as convenient for your customers as direct processing, and you have to request that the money be transferred to your commercial account, but PayPal is a recognized brand, and you can easily set up and verify a shopping cart.
    • Step 4

      Explore your option to accept credit cards directly. You'll need both a gateway to do the processing --like E processing network, which will allow you to build a shopping cart--and a merchant bank, like Redwood Merchant Services, to handle the receipt of the transactions. This is more convenient for your customers, but invariably requires a monthly minimum of at least $35 in addition to the transaction fees. This is a convenient option if you are working the trade-show circuit, because you can always process the transactions on site with a laptop. Compare the various rates and speed of processing. Here, the transactions will deposited to your business checking account within a day or two.
    • Step 5

      If you're planning to offer credit-card transactions from a retail establishment, investigate the local commercial banks that will set you up with a dial-up credit-card reader. This is the fastest way to get your cash if you have your checking account at the same bank. Again, costs will vary, so do some comparison shopping.
    • Skill: Moderately Easy
    • Warning:
    • Be aware of the fees involved. A couple of years ago, one of my clients paid a major outstanding invoice by credit card simply because he had gotten caught in a cash crunch, yet the fees I had to eat would have paid for a romantic dinner in a good restaurant. It's a requirement of most credit-card companies that you don't apply a surcharge to your bill if somebody pays by credit card. However, there is nothing to stop you from adding a provision to your invoices that the amount billed reflects a 3 percent cash discount.

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