When you set up a new business, along with many things that need to be sorted out you need to figure out how you would like to accept payment from your customers and this is one of the major obstacles, which most of the new business owner’s face. When you think about payment process, there are a few questions that need to be answered to find the solution. These questions are:
- Type of payments to be accepted
- Pros and cons of the chosen payment type
- Cost related to payment method.
When you are learning about payment processing, you should get knowledge about all the possible payment methods in detail. Out of various methods, Credit Card is the most popular as well as preferred payment method among customers.
4 Steps to Better Payment Processing
Let us discuss the basic steps you need to follow to get started with credit card processing
Setup a merchant account: To carry out an online financial transaction, we need to open a bank account to be able to accept payment online in multiple ways (credit card, debit card, net banking). This bank account is called merchant account. A merchant account is an account with a card merchant processor, who underwrites and settles transactions made online and payment processor is the company that underwrites or facilitates transactions.
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When you open a merchant account and start accepting payments, banks charge you a fee. This rate varies from bank to bank. This fee is discussed at the time of opening a merchant account and it also depends upon the type of transaction you have opted to process.
There are basically two categories of credit card rates and these are:
- The physical presence of card: It is a method in which customer swipes his/her card on POS to make a transaction. In simple words, it is a way of payment in which customer’s credit card is swiped physically through a credit card terminal/machine.
- No physical presence of card: In this method, a card is not physically present at the place where payment is being done, rather it is done online or on phone or credit card details are typed manually to a credit card terminal. This method is commonly known as MOTO or Mail Order/Telephone Order.
The rates for both the categories are not the same and different merchant processors will offer different rates. So it becomes very important to know the rate provided by various merchant processors as well as which type of transaction method will be beneficiary to use in most of the transactions.
After opening a merchant account and choosing the type of transaction, you must get started with the credit card processing. Once the account is opened and you start accepting the payment from the customer for the purchases they have made, it is necessary to manage the payment and for that you need proper tools. There is various software available in the market for payment processing, but you need to choose the one depending upon your business type and need, but before choosing any of the software to be sure that it is compatible with your merchant processing account. These tools/software be any of the below-specified tools:
- User-friendly software is better for online payment processing and order fulfillment.
- You can choose software which provides a better combination of receivable and payment processing. It allows you to manage both phone orders as well as recurring payments.
- POS or Point Of Sale is an easy-to-use and secure terminal for card reader processing.
- There are even software solutions that provide almost all of the above features.