As a business owner, you may have come across the term payment processing or payment acceptance. But – what is it exactly? Payment processing and acceptance is a service that allows companies to accept debit and credit payments from customers. Unfortunately, accepting these types of payments isn’t as simple as you might think, which is why most businesses, both small and large, choose to work with a payment processing service. Implementing this type of service into your business is by no means a requirement, but it can improve various aspects of your company.
To learn more about what payment processing is, how to select a service provider and what to consider before implementing a payment processing service, continue reading below.
What Is Payment Processing?
If you own a business, you’ll need to get paid somehow in order to continue to run your business. Of course, cash, cheque, e-transfers and money orders are one easy way to accept payments. However, when it comes to debit and credit payments, the process becomes more complex. This is where payment processing comes into place.
Businesses most commonly work with other businesses to set up their payment processing services. Generally, the relationship between both companies is seen to be a partnership. A payment processing service can be either a point of sale system, in a physical store or online. The system you choose depends on your business.
How Does A Payment Processor Work?
Payment processing refers to how a company processes a customer’s card information to complete a transaction. Part of the whole process involves encrypting the customer’s personal information and communicating that information from their bank to yours. Here’s what you can expect after you’ve installed your payment processor system:
- Your customer will pay for your service by inserting, swiping and tapping their debit or credit card. If the transaction is performed online, the customer will enter their card details instead.
- The transaction information is then sent to your payment processor provider who will then send the details to the customer’s financial institution.
- The customer’s financial institution will then authorize or decline the payment transaction by confirming whether the customer has the funds available (debit card) or whether the customer is within their credit limit (credit card).
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Does Your Business Need A Payment Processing Service?
In short, no, you do not need a payment processing service to operate a business. That being said, payment processing services can be a convenient way for customers to pay, especially in this day and age where people do not use cash or cheques commonly. Instead, cards are the dominant form of payment.
The last thing you want is for customers to turn away from your business because you don’t accept debit or credit purchases. Although, it all depends on the nature of your business and your clientele. If you don’t need to spend the money on this service, then don’t.
To help you determine whether a payment processing service is right for your business or not, below are some questions to ask yourself.
- What is the cost of the payment processing service you’re interested in? And does the cost fit into your budget?
- Does your business require debit, credit, and other digital payment methods (for example, online businesses) to operate?
- Will adding a payment processing service to your company expand your business?
- Have customers frequently requested debit and credit payments?
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How To Choose The Right Payment Processing Partner
They are called payment processing partners for a reason, you are meant to mutually benefit each other. Your relationship with this partner could be long-standing, so it’s worth your while to take some time to consider who is the best option for your business. Below are several factors to consider when determining who your payment processing partner should be.
Split Of Revenue
Every payment processing service will take a portion of the sales that go through the system. You want to ensure that you’re still making a fair amount of money with the payment processing system, otherwise, you’ll just be paying for a service to make less or no money.
Application Program Interface (API)
To keep things simple, API is what enables a software application to run. You want an API that will benefit your business and your clients as well as is easy to integrate.
Pricing
Payment processing is a service, which means there will be a fee. It’s worth gathering a few offers to ensure you get the best pricing on the market along with all the features you want.
Training and Support
Implementing new software into your business can have a lot of kinks. Employees need to be trained and the system needs to work well with your other systems. If the payment processing service provider trains your employees and supports you through the process, the transition will be much smoother.
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How Your Business Will Benefit From Customized Payment Processing
You may be thinking that adding a payment processing service to your business is quite the hassle and what will it do for you anyway? The fact of the matter is that a payment processing service can do more for your business than you think. Benefits you can expect to incur with a payment processing service are listed below.
- More Customers and More Sales. Most consumers tend to use debit and credit cards to complete their purchases thanks to banking technology improvements. If you implement a payment processing service into your business, you could access more customers and complete more sales.
- Convenience. Everyone loves when life goes smoothly. As you probably know, it is incredibly frustrating to be in a store or shopping online only to find they don’t accept the payment methods you have readily available to you. Making payment convenient for customers will ensure that they leave your business satisfied.
- Legitimize Your Business. Companies that offer debit and credit payment methods are often seen as more established in the public eye. Not only will you be more impressive in the eyes of consumers, but your business will also grow faster and gain a more positive image.
- Rapid Sales. Credit and debit payments are processed much faster than other payment methods, such as money orders and cheques. Because of the increased processing time, your cash flow will improve and you’ll save more time.
Payment Processing FAQs
How does payment processing work?
How many payment networks are available in Canada?
Are there any payment networks I can work directly with?
Bottom Line
At the end of the day, payment processing is not an absolute requirement to operate a business, but it can help improve various aspects of your business. Keep in mind that every business has its own unique goals and objectives, what’s right for your company might not be
