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There has been a wave moving across the country which is pushing many businesses to transition solely to cashless transactions. While this has caused a lot of hardship for people that don’t have accounts with banks, there’s no denying that, as a business owner, you’re going to be dealing with a lot more swiping in the years to come.
With that, you must be up and running with payment processing if you’re not already.
Payment processing is a broad term that describes the ability to take credit and debit card transactions as a means of payment. Below, our team walks you through basic things to keep in mind as you get your processing workflows up and running.
Understanding the Process
Put simply, when a consumer swipes a debit card at your business, the card brand (example: visa) contacts the associated bank (example: Wells Fargo) for permission to validate the transaction. Once permission is received, Visa lets you know that your customer is free to walk out the door with their merchandise.
At the end of the day, Wells Fargo will close out its transactions and will initiate the process of depositing funds int your account, less fees (more on that in a moment).
Credit card transactions are instantaneous and serviced directly by card brands.
Means of Collecting Payments
In order for people to swipe their cards at your business and for the payment processing workflow to work its magic, you need a way to accept cards. This is done through a point of sale (POS) system which can be issued by any number of different companies.
Pick a company you’re familiar with and that provides low-cost/free hardware to furnish your POS system. Whether it be a mobile phone compatible “card swipe” or a more robust terminal, you’ll be relying on the tool your receive to manage your point of sale payments.
What to Watch Out For
The big difference you’ll see when collecting payments via card versus cash is the amount of money you’ll lose to fees. This is a necessary evil that you’ll have to account for in your pricing.
If you’re using a branded point of sale (POS) system, that system will usually account for all fees on your behalf. That way, you don’t have to worry about paying a fee to a card brand on top of paying a fee to your POS system.
Payment processing companies lay out their fees very clearly on their websites. Fees vary from POS to POS so shop around for a provider that’s reliable and affordable before picking one to integrate into your business.
Payment Processing Systems Are No Longer Optional
Your company may have been able to coast by on cash transactions for years. Hear us when we tell you though that the window on that era is closing.
The time is now to get fluent in payment processing technology so you can continue to conduct business confidently with consumers that are making the transition to a plastic-only lifestyle.
Are you still fuzzy on how you can get up and running with payment processing or what it is? If you are, check out more related content on our blog to dive deeper into the topics that mean most to you.