A Crash Course in Accepting Digital Payments

The year 2020 is prime time for businesses to begin accepting payments online, given that over 230 million U.S. consumers own smartphones, and 80% of those consumers have made a purchase online within the last 6 months.

From merchant accounts and processing fees to eCommerce platforms, the options to begin accepting payments online are endless for your business. To help get started, Double Helix Processing – a leader in the credit card processing industry – put together these tips as a crash course to get your business ready to accept digital payments in no time.

Setting up a merchant account.75% of customers prefer to pay with a debit or credit card, whether that is online or in person. Knowing the best way to accept these kinds of payments depends on the type of business you own.

If you own a physical store location, purchasing a card reader and setting up a merchant account is crucial. Accepting card payments requires a credit card merchant account, a business bank account and a means to process payments.

There are many merchant account providers (also referred to as “processors”), so it is important to understand what a merchant account is, how to choose the right one for your business, and what to expect when applying.

Because a merchant account is essentially a line of credit, each account comes with its own rates, processing limits, and other regulations. Similar to applying for a line of credit, a business owner’s credit score and other personal factors will likely play a role in whether a processor approves your application.

Before applying for a merchant account, do your research to find the best processor to meet your needs and take time to ensure you are in good financial standing to meet their requirements.

Some requirements include:

• Being the owner or operator of the business
• Providing proof of legal business affairs (meaning you sell legal goods or services)
• Opening and designating a bank account for funds to be deposited
• Providing an Employer Identification Number or business license
• Providing access to financial statements
• Having a trustworthy credit standing

Comparing Merchant Account Rates and Fees. Understanding a credit processing company’s approval requirements is an important piece of the puzzle, but it is not the only piece. All merchant accounts come at a cost, but set-up and processing fees vary. As the last piece of the merchant account puzzle, it is also important to research each merchant account provider’s rates and fees.

Merchant account start-up fees vary from $50 to $300, with additional per month and per-transaction processing fees. The average transaction fee falls between 1.95% to 2% for MasterCard, Visa, and Discover transactions in-store. If customers are paying online, processing fees elevate between 2% to 3% for each transaction.

These percentages are simply ballpark estimates, and the actual merchant account rate you receive will depend on specific details of your business – such as card sales volume, average transaction totals, the degree of risk in your industry, and the amount of in-person versus online transactions.

Although many businesses shy away from merchant accounts to avoid processing fees, the potential for business growth when accepting card payments far surpasses the cost of partnering with a credit processing company. One survey, sponsored by Intuit, found that 83% of small businesses that accept credit cards saw increased sales. Setting up a merchant account is not the only means of accepting digital payments, but the value it can bring to the growth of your business is undeniable.

Researching online payment systems. Traditionally, merchant accounts were the only way to accept card payments. In today’s nearly cashless society, however, you also have the choice of using payment service providers, which perform the same basic functions as a merchant account without as many fees and processing rates.

PayPal, Venmo, and CashApp are just three examples of popular online payment systems that allow consumers to send money to anyone, from anywhere. Customers simply link their personal bank account to the payment system and use the system’s corresponding app to process payments.

PayPal, for example, is the largest online payment system in the world and can be a cost-effective option for businesses selling goods or services online. PayPal charges approximately .5% to 3% per transaction, plus a flat fee (typically under 50 cents) per order.

Similar to merchant account providers, PayPal transaction and processing fees will vary based on the details of your business such as sales volume, average transaction price, and more. To use an online payment system, like PayPal, to its fullest extent – consider adding a PayPal button to your company’s website. A “Purchase Now” PayPal button allows customers to pay with their own PayPal accounts with one-click, returning them to your website after purchase. The payment is then processed directly by PayPal and sent to your merchant account.

Connecting payment services to an eCommerce platform. While merchant accounts and payment service providers provide the basis of accepting digital payments, connecting them to the right eCommerce platform can completely transform and enhance you and your customers’ shopping experience.

An online shopping cart, for example, allows customers to learn about your products or services, select from different options and quantities, and purchase directly from your company’s website. Shopify, WooCommerce, and Wix are popular examples of eCommerce platforms that integrate with a business’s payment gateway and merchant account.

Each eCommerce platform comes with its own set of features and fees, so make sure the platform you choose offers the features you need and integrates with the tools you already have in place (i.e. your merchant account provider and other payment service providers).

To provide a quick comparison, let us consider and compare the market’s two largest eCommerce platform providers: Shopify and WooCommerce.

Small businesses rely on getting paid to keep up with the costs of operating and growing the business. Even the slightest gap in payments can put a small business on the road to financial difficulty, so it is important that small business owners take the steps needed to provide customers a quick and seamless payment experience.

Setting up a merchant account, choosing the right payment service providers, and integrating these options on an eCommerce platform ensures you, your business, and your customers have the technology needed to facilitate faster payments in a secure environment.

The online shopping industry is flourishing, and now is the time for your business to use this trend to its advantage. Analysts predict that over 90% of all retail sales will be e-commerce transactions by 2040, so securing the ability to accept digital payments now may also secure your business’s future.