Accepting credit cards is no longer optional for small businesses. Customers expect to pay with their cards, and businesses that do not offer this option are leaving money on the table. Here is everything you need to know about getting started.
Online vs. In-Store Processing
The type of processing you need depends on how you do business:
- Online businesses use a merchant gateway to accept payments through their website or online invoices
- In-store businesses use a POS (Point of Sale) system to accept payments in person
- Hybrid businesses can combine both for maximum flexibility
In-Store POS Recommendations
For in-store payment processing, we recommend Clover systems. Clover offers a complete POS solution with a dashboard that allows you to manage your business remotely. You can track sales, manage inventory, and monitor performance from anywhere using the Clover dashboard.
Watch Out for High Fees
Popular platforms like Stripe and PayPal may seem convenient, but their fees can be as high as 7% when you factor in all the charges. For small businesses processing significant volume, those fees add up quickly and eat into your margins.
Understanding the Fee Structure
Credit card processing fees have three main components:
- Interchange Rates: These are set by the card networks (Visa, Mastercard, American Express) and change twice per year. These are non-negotiable and every processor pays the same interchange rates.
- Bank Processing Fees: The bank that processes your transactions charges a fee for their services. These vary by processor.
- Merchant Provider Charges: Your merchant services provider adds their markup on top of interchange and bank fees. This is where transparent pricing matters most.
DuoPricing (Cash Discount)
DuoPricing, also known as a cash discount program, passes the processing fees to customers at checkout. When a customer pays with cash, they pay the base price. When they pay with a credit card, the processing fee is added. This approach can eliminate your processing costs entirely.
Note that surcharging is prohibited in the following states:
- Colorado
- Connecticut
- Kansas
- Massachusetts
- Puerto Rico
However, cash discount programs structured properly are legal in all 50 states.
Recurring Billing
If your business has repeat customers or subscription-based services, recurring billing is essential. Online payment platforms and virtual terminals support automatic recurring charges, making it easy to bill customers on a regular schedule without manual intervention. This improves cash flow and reduces the time you spend chasing payments.
Getting Started
The best way to get started is with a free rate analysis from The Merchant Way. We will review your current processing setup, identify where you are overpaying, and recommend a solution tailored to your specific business needs.