How to Accept Payments in a Post-Pandemic World

Yes, the pandemic is still lurking, but its impact has already left a permanent mark on how consumers shop and pay for almost everything. The big shift began with many businesses going cashless to minimize the exchange of bills from one germy hand to another. Soon after, the surge of online shopping, delivery, and curb-side pickup accelerated the adoption of digital payments.

What’s Changed?

According to a May 2020 Payments Canada report, 62% of Canadians use less cash, 42% rely on cheques less frequently, and 42% avoid shopping at places that don’t accept contactless payments. Needless to say, if a customer can’t pay for your goods and services based on their preferences, they will not hesitate to take their business elsewhere.  Thanks, Coronavirus.

Here’s the bottom line: accepting credit card payments in Canada (and around the world) is now crucial to the success of your business. But even as more consumers go cashless, even more are opting for card-less. With digital wallets on smartphones and watches, plus, credit, debit, chip, tap, and gift cards – there is no shortage of payment options. Today’s consumer has individual needs when it comes to payment methods, and they want the convenience of paying inside, outside, online or on-the-go. 

How to Accept Credit Card Payments 

Currently (and post-pandemic), the centralization of payments and flexible payment processing is essential for operating any business.  So, whether you want to take payments over the phone, online, or offer contactless options, setting up a merchant account is the first step to accepting debit and credit cards.

It doesn't matter if you're an independent retailer or a multi-chain restaurant franchise, a merchant account is a requirement, and here's why. Whenever a customer pays with a debit or credit card, the money is first deposited into a merchant account before being transferred to your business’ bank account. 

Opening a Merchant Account

The process to open a merchant account depends on the payment processor. With Square or Stripe, for example, the merchant account process entails answering a few online questions, and within minutes, you can start accepting credit card payments.  

While the quick setup process is convenient, it comes with flat transaction fees and a hardware purchase. Fingers crossed that the hardware never breaks and remains compatible with your long-term business goals because it's yours for life! 

Here at Paystone, we take a different approach. The application to open a merchant account is detailed, and the approval process takes one to two business days. We work directly with acquiring banks so, setting up a merchant account with us includes a financial partnership that legitimizes your business and builds business credit. 

There are plenty of other bonuses for putting in the extra effort upfront, including:

• Hardware rentals that we service, and you can upgrade to fit evolving needs
• 24/7 customer support
• Next-day funds
• Access to customer engagement software 
• An easy-to-use hub to track all your business metrics
• Free online resources with tips to grow your business
  
  

Let’s Talk Fees

There are various transaction fees associated with accepting credit card payments. It doesn’t matter which payment processor you utilize or if the transaction is done in-store, over the phone, or through your e-commerce website. Transaction fees come with the territory, and there are several different types.

There is an interchange rate from your customer’s bank. Then the credit card company charges an assessment fee that fluctuates based on the type of card your customer uses. For example, Visa Infinite will have a higher assessment fee compared to Visa Classic. Your bank charges an authorization fee, and your payment processor will charge a fee for executing the entire process. 

These fees are tied to EVERY credit card transaction. And yes, the fees can add up, especially if you're a high-volume business. The art of dissecting every fee for every transaction to determine how much you pocketed from every sale can be confusing. Check out this visual representation of the fees associated with a $100 credit card transaction. 

Enhanced Interchange Plus Pricing

To simplify transactional fee management, the payment processing experts at Paystone designed Enhanced Interchange Plus Pricing. This means you don't pay the banks and credit card companies directly.  We pass the total amount of fees processed each month directly to you plus, a small mark-up.  

As a quick comparison, Square charges a flat 2.65% transaction fee no matter what type of credit card is used at checkout. The flat fee is easier to calculate and makes budgeting simple, but in reality, a $1,000 credit card purchase on Square costs you $26 in fees versus $19 with Paystone. 

The moral of the story is this: transaction fees are unavoidable if you want to accept credit card payments, and it's in your best interest to fully understand how they affect your revenue stream. The right payment processor enables you to accept credit card payments without eating into your profits, so you have more opportunities to grow your business.  You may find it helpful to read this article outlining some red flags that signal it’s time to break up with your payment processor. 

What About Hardware?

With the pandemic still looming, investing in versatile equipment is the best way to accept credit card payments. As mentioned at the beginning of this blog, customers want more ways to pay for your goods and services. Let's investigate the different hardware options to accommodate taking credit card payments over the phone, offering customers contactless payments, and accepting payments online.

Taking Credit Card Payments In-store

After you open a merchant account you need a credit card payment terminal. There are many options and models, but you definitely want your hardware to include a chip reader (EMV is the official term) as well as tap technology, otherwise known as NFC.  With that, your credit card paying customer can swipe, insert a chip or use a digital wallet via smartphone. 

During the transaction, encrypted files are sent to the customer’s bank to authorize the funds. The entire process takes a split second! Perhaps more importantly, the funds should hit your bank account the very next day. Guaranteed next-day funds are a big deal and is just one service that makes Paystone stand apart from competitors. In fact, with some payment processors, it can take a few days to see your money! 

Taking Credit Card Payment by Phone

The credit card payment terminal discussed above can also accommodate any customer who wants to pay by phone. All you have to do is manually enter the credit card number using the keypad on your payment terminal. PCI compliance is a factor with every credit card transaction, but it really comes into play with phone transactions. If you wrote down the customer’s info, you have a legal obligation to destroy that sticky note! We’ll get into PCI compliance in more detail below.

A virtual terminal is another way to handle credit card transactions over the phone. Instead of using a physical credit card machine, you simply need the Internet and a computer or smartphone. A virtual terminal makes it easy to take credit card payments, and it allows you to store your customer’s payment information. This is a handy feature for any business that wants to execute automated billings related to subscriptions or payment installment plans. If you decide a virtual terminal works best for your needs, make sure your payment processor uses tokenization to protect your customer’s sensitive data. 

What is Tokenization?

Tokenization adds an extra layer of security to better protect credit card data. It replaces a cardholder’s data with a unique token ID. So, instead of storing sensitive credit card information in your system, you’re storing a token. If there was ever a data breach and the token was stolen by hackers, it would be useless because it can only be used in your merchant account.

Taking Credit Card Payments Online

To accept credit card payments online, you will need to connect a payment gateway to your e-commerce website or mobile app. Connecting a payment gateway like Bambora to your website ensures a smooth and secure online checkout experience. Your customer remains on your site for the entire payment process, all of their payment information stays on your servers, and tokenization is utilized. Plus, customers can pay for your goods and services using all major credit cards and gift cards.

"Card Present" vs "Card Not Present" Transactions

Here’s the thing about online payments. When you don’t physically witness a customer using your payment terminal to pay with a credit card, the transaction is considered high risk. The same is true for taking credit card payments over the phone. In the industry, they call these types of transactions “card not present.” 

Any “card not present” transaction comes with a higher interchange rate and will be monitored more closely. There is simply more room for fraud. When selecting a payment processor be sure to ask how they handle these types of credit card transactions.  

At Paystone, we ask businesses to determine a preset amount of monthly “card not present” transactions. If that number is ever exceeded, your merchant account is temporarily suspended to investigate fraudulent activity.  This is an added layer of security we implement to help you protect your business.

PCI Compliance 

In addition to security measures like card not present transactions and tokenization, there are legal standards related to accepting credit card payments. Payment Card Industry (PCI) compliance is mandated by the credit card companies.  There are four different levels of compliance and 12 requirements. If you’re PCI compliant, your business will benefit from up to $100,000 in data breach protection. When choosing a payment processor, it’s a good idea to research what products and services they offer to help you stay PCI compliant. 

8 Tips for Finding the Right Credit Card Processing Partner

Finding a payment processor with all the hardware, technology, and security features you need to accept credit card payments is a tall order.  So, here are eight helpful tips to keep in mind during your hunt for a credit card processing partner. 

1. You want a company with a proven track record, credibility, and a steadfast reputation. Ask for references, scour their website for resources and case studies, and read online reviews. 
   
2. The process of setting up your new hardware and software should be easy and not disruptive to your business operations.  There will be a bit of a learning curve to get your team acclimated, but a best-in-class payment processor will provide the necessary support and training. 
   
   
3. Speaking of support, pick a processor that offers 24/7 phone, email, and live chat support and has a reputation for solving technical issues efficiently and quickly.
   
   
4. Look elsewhere if you are told to purchase one payment terminal to accept a credit card swipe payment and a second product to manage contactless, chip, and mobile wallet payments such as Apple Pay.  Most providers offer one terminal that accepts all these payment types.
   
   
5. When it comes to contract commitments, be wary of any company that doesn't abide by the Code of Conduct. Per the Code of Conduct, in the event of any rate change that may affect your cost of processing payments, you are entitled to cancel your agreement free of cost, regardless of the time remaining on your contract.
   
   
6. Some providers offer payment terminals that automatically settle at the end of every night, while other terminals require manually settling your terminals every day. No matter the process, confirm that next-day deposits are guaranteed.
   
   
7. Your payment processor should help you maintain PCI compliance, not charge you a monthly non-compliance fee if your business fails the annual assessment. 
   
   
8. You don’t want to get lost in the world of processing fees and interchange rates. Your best bet is to choose a provider that charges one rate no matter the card type or payment method.

If you think Paystone might be the right fit for your business, contact us to start a conversation about how to start accepting credit card payments.