How to Take Card Payments

In 2015, card transactions overtook bank notes and coins as the number one means of payment. So it’s not surprising that customers expect to be able to pay by credit and debit card. As a small business owner, you may be feeling unsure about how you start taking payments of this kind. In this blog, we’ll explain:

• The benefits of accepting card payments
• The different types of card payments
• How card payments work
• Getting started with card payments

What Are The Benefits of Accepting Card Payments?

When it comes to card acceptance, there are plenty of misconceptions, especially amongst small business owners. Some business owners are hesitant to invest in card acceptance for the following reasons:

• It is an extra cost to the business
• Accepting card payments creates additional administrative responsibilities and requires extra security

The truth is, the benefits of investing in a card machine outweigh any perceived drawbacks. While it does cost money for card acceptance, offering this payment method is likely to encourage more customers. Plus, while cash payments are free to accept, there are additional bank charges for making cash deposits into a business account. 

Reconciling card payments aren’t much different from cash payments. It’s a common misconception that accepting card payments creates more admin when really, your card machine does most of the work for you. 

The security measures for accepting credit and debit card payments include an internet connection or a phone line. These days, most small businesses have those as standard. Investing in a card machine will mean that you don’t have to keep as much physical cash on the premises, making you less likely to fall victim to burglary. 

The Different Types of Card Payments

Card payments are not just chip and pin transactions. Processing card transactions also include contactless payments using an e-wallet via a smartphone, tablet or wearable device. Card payments can also be processed online or over the phone. Different types of card payments require different types of card terminals. 

A Card Machine: Accept card payments in person at a brick and mortar store

A Virtual Terminal: Accept card payments over the phone or via email

A Payment Gateway: Accept card payments online through an eCommerce website

The type of card payments you choose to accept should depend on the type of business you currently run and your long term objectives. For example, if you run a small corner shop, a standard card machine may fit your business requirements. However, if you’re a cafe offering dine-in and takeaway options, and are planning to sell your new coffee blend via your website, you will benefit from all three card payment processing options. 

How Do Card Payments Work?

There are five parties involved when it comes to accepting card payments:

The Customer: The ‘cardholder’ who is making the purchase.

The Business: The ‘merchant’ or the business that is selling the product/service.

The Payments Company: The ‘acquirer’ who provides merchant services, supplies the card machine and processes the payment into your bank account.

The Payment Network: A customer’s bank card is linked to a payment network. Popular providers include Visa, Mastercard and American Express. The payment network links the acquirer to the customer’s issuing bank.

The Customer’s Bank Account: The bank that issues the customer’s debit or credit card.

What happens if a customer chooses to purchase by card? Here’s a simple step by step overview of the process:

1. The customer enters their pin or makes a contactless payment.
2. This prompts the payments company or the ‘acquirer’, to send a payment request to the card’s payment network (e.g. Visa, Mastercard, American Express). The payment network will then connect with the customer’s missing bank to check the customer has enough funds and that the card hasn’t been reported lost or stolen.
3. Once the authorisation stage is complete, the sale is processed, and the money is taken from the customer’s bank account and held by the payments company in a merchant account.
4. At the end of each day, the payments company ‘settles up,’ and sends the money from any sales to the business’s bank account. It takes between 1-3 days to show in the account. 
5. Transaction fees for each sale processed by the payments company or ‘acquirer’ are calculated and then sent to the merchant. Fees are billed at the end of the month and can be paid via Direct Debit.

Getting Started With Card Payments

If you want to accept payment by card, we can help you set it all up through our third-party supplier. 

Whether you choose to set up a standard card terminal, virtual terminal or payment gateway, you will first have to apply and set up a merchant account. A merchant account is simply a type of business bank account which accepts credit and debit card payments. When you choose card acceptance through our third party supplier, we help you set up a merchant account as part of the application process. 

Once accepted for a merchant account, it is time to decide what type of card payment solutions you want to offer your customers. The type of requirements you have will help you decide what equipment you need. When you choose Payzone together with our card payments partner, there are lots of options. For example:

• Countertop card machine
• Mobile card reader
• Portable card machine
• Contactless card machine
• Virtual terminal

Payzone can help you choose the right card payment solution for your business through a third party supplier. Get in contact and call 0800 0566 015.