When it comes to building your business, there are thousands of payment processing options, from things as secure and top-of-the-line as ACH processing to affordable and quick options like Square, PayPal, and more.
And while cash-only businesses still exist, in all likelihood, your business (especially if it’s online) completes most transactions with debit, credit, or digital payments. There is a lot to be said about having diverse payment options, but today we wanted to focus on credit cards.
With increased inflation, more consumers – and businesses – are using their credit card balances to bear the weight of the higher prices. And because of that, credit card use is increasing in 2022, for better or worse.
Here are some dos and don’ts as you are weighing your payment options and selecting a credit card processor.
There are several factors to account for when it comes to determining the best payment methods and credit card processor for your business.
You should first research the most popular payment types and expectations when it comes to your specific industry (B2B, retail, e-commerce, etc.). For example, a small-town mom-and-pop establishment will likely have a higher percentage of cash customers than a large department store, but some of the insights you find might surprise you.
Similarly, many retail businesses do not accept American Express cards, but if you are a B2B seller, AmEx will likely make up more than half of your payments and transactions.
You should also do some research on how payment services work. Credit card processing often comes with nominal fees, making the revenue from credit card purchases slightly less than other forms of payment.
Consider whether you are a business that would benefit from offering recurring payment options. This includes businesses that provide recurring products and services, which could be anything from grocery delivery to retail subscription boxes and more.
Don’t: Rush into the Newest Payment Trend
It is important to stay on top of the popular payment trends that you see in your industry across brick-and-mortar, online, and mobile transactions. But that doesn’t necessarily mean you have to include every new payment option that crops up.
If your customers aren’t regularly using Smart Cards or contactless payment options, you don’t need to rush out and pay to update your payment technology to include “tap to pay” capabilities. Digital wallets and other payment trends can be slow to start, and some of them never gain enough momentum in your geographic area or industry to warrant the extra cost for your business.
Credit card processing is almost always a surefire way to capture many payments. Focusing on the big methods and monitoring your transactions month over month and year over year can help you establish a well-rounded payment system.
Do: Determine Your Payment Risk Level
Calculating your payment risk level can help you choose the best type of credit card processor for your business.
Your business’s risk level is going to be determined by things like the probability of customer chargebacks, customer fraud, poorly run business operations, and the regulatory and compliance parameters your company must meet or exceed.
If these probabilities are likely to be rare, because you offer a cheaper product or service, or your business is not one that must meet highly-regulation compliance standards, your business is at a low payment risk level.
However, if you offer extended trials and warranties for your products, your products and services are expensive or complex (like a Smart mattress, computer, or medical devices), your payment risk level will be classified as “high.”
If your business has a high payment risk level, a credit card processor may not be your best option. ACH processing is a perfect solution for handling high-value transactions with a high level of security.
Don’t: Rely Solely on Credit or Debit Cards
The rise of cryptocurrency, third-party payment providers, and fintech has created many new ways for people to trade money and assets. Your credit card processor choice should include considerations for the dozens of other ways your clients and customers may prefer to pay your business.
That doesn’t mean you have to accept all credit and debit cards, PayPal, CashApp, Venmo, cash, personal checks, and crypto. But you do have to assess your business and its transactions to determine which payment methods your customers will be using most often.
Streamline Your Payments with ReliaFund
What if your credit card processor was part of an integrated payment system that could also allow you to offer your clients, consumers, and vendors payment options like eChecks, ACH, recurring and online payments, and more.
ReliaFund offers payments, simplified. You can process your payments, create reports, reconcile accounts, and more in our one-stop electronic payment processing solution.