Why Should Your Business Accept Credit Card Payments?

What’s the most compelling reason for any business to accept credit card payments?

Because everyone else is doing it!

Yes… you probably can hear the echo of your Mother saying, “Just because everyone else is jumping off the bridge, should you do it too?” Well, in this case Mom, the answer is YES!

Accepting credit cards certainly has some negatives. When your customer pays in cash, you take in 100% of the sale. For your business to be able to accept credit cards, you’ll have to establish a merchant account with a credit card processing company and pay their processing fees. Most business owners consider these fees as a part of the cost of doing business. These fees vary widely, and depending on which credit card processor you choose, your fees could run anywhere from 1% to 4% per transaction, plus monthly fees, batch fees, terminal rental fees, and more. Businesses with medium- to high-ticket sales are better able to absorb these costs and continue to make a profit. But what if you own a high volume business selling a small ticket item? Each transaction fee eats into your profits. Will the benefits of accepting credit cards outweigh the cost?

But consider the pros of accepting credit cards.

Research shows that as many as 80% of Americans own at least one credit card and prefer to use it for some of their monthly purchases. The benefits of using a credit card to make a purchase are simple:

  1. Convenience. There’s no need to carry cash when you’re out shopping, and it’s just about the only way to make on-line purchases.
  2. Flexibility. You can take advantage of a great sale going on now and make payments over time.
  3. Security. As a benefit of paying by credit card, you now get a number of different consumer protections. For example, if you drop that package with your new crystal vase while putting it into the car, your credit card company may pay to replace it.
  4. Rewards. Why pay cash for a purchase when you can pay for it with your credit card and get points towards your next vacation?

As a merchant, you need to leverage these advantages for your business. When you accept credit cards in addition to cash and checks, you’re offering your customers the option to choose their preferred payment method. Why is that so important? Because the shoe store, or the grocery store, or the clothing store, or the furniture store, or the restaurant down the street that carries the same items or offers the same services as you is accepting credit card payments. In the final analysis, if you want to stay competitive, that’s the real reason why you should too.

What is PCI Compliance?

What is PCI Compliance?

Many businesses who accept credit card payments have asked What is PCI Compliance?  “PCI” stands for Payment Card Industry. The PCI security standards council is comprised of representatives from the major international credit card associations including AMEX, Discover, JCB, MasterCard and Visa. In 2006, this council established the DSS, Data Security Standard, to facilitate uniformity in the credit card industry and enhance security standards to better protect card issuers, merchant processors and cardholders as well as businesses that accept cards.

PCI compliance is when a merchant complies with the standards set forth in an effort to provide improved security for the cardholder. There are various requirements that must be met in order for a merchant to be compliant. By taking the steps involved in making your business PCI Compliant, you reduce the risk of fraudulent transactions happening at your business. Regardless of what type of payment processing service you use you want to assure that your business is up to the highest security standards of processing payments. Not only will this help protect you from fraud and thievery, but it’s also a requirement by the credit card associations in most regions around the world.

Am I Compliant or Non-Compliant?

Prior to 2006, it was not a requirement for your business to be PCI compliant. However, with increases in online fraud and credit card fraud overall, the tables have turned to better fight fraud. While PCI today is not, in itself, a law, this standard was created by all the major card associations. Merchants that do not comply with PCI DSS may be subject to non-compliance fines, card replacement costs, forensic damage and other problems in the event of a data breach.
There are plenty of benefits that come with being PCI Compliant. With the continuing rise in identity theft and credit card fraud, the system used by merchants must be up to the task to protecting the number one asset, the customer. With these standards in place, it can be deterred and outright prevented, saving businesses and card issuers billions of dollars per year. By following the standards, you establish credibility with your customers while maintaining a positive reputation to help bring repeat business and new clientele.

The difficulty, especially with smaller business, is the consistency needed to maintain compliance. Much like anti-virus software, the standards are always being checked, double-checked, and changed as the need arises.

The Different Levels of PCI Compliance

The PCI/DSS has a set of levels to address different business types. Each level is dependent on how many transactions occur within a 12 month period of time. For each level, different security practices are implemented. Why the differences? If a local book store without an online presence is going to be compliant, why make a requirement for them to establish a particular level of security encryption on their online payment gateway? This multi-level system produces the best results for the different business types.

• Level 1 is associated with businesses and processors that produce more than 6 million card transactions annually.
• Level 2 is associated with businesses that produce 1-6 million card transactions annually.
• Level 3 is associated with E-commerce businesses that transact between 20k and 1 million card transactions annually.
• Level 4 is associated with E-commerce businesses that transact less than 20k card transactions annually.

A Few Examples of the DSS

• Changing the Password for equipment used in processing card payments. This reduces the risk of having vendor passwords compromised.
• Maintaining a strict and easy to understand company policy regarding customer privacy and card data security.
• Maintaining and update anti-virus software regularly.
• Assigning individual logins for each employee accessing the computer or register.

(Source – Better Business Bureau)

Why Pay for PCI compliance?

You are going to pay for PCI Compliance for the same reason you pay for the ability to process card payments. You make the effort and become PCI compliant for the same reason you pay for advertising. You have invested time and money in building your business. Paying for PCI Compliance is like paying for insurance.

PCI performs annual compliance checks on businesses. For larger volume businesses, they may have an externally-qualified security advisor conduct a Validation of Compliance. In smaller volume businesses, they may request a self-assessment questionnaire be performed. No federal law has been passed that requires these practices to be followed. Some state laws, however, have been passed to ensure practices similar to the PCI/DSS.

Cardholder information theft is a pathway to all things bad for businesses. It starts with a card number and a name. From there, a criminal can do anything from making fraudulent charges with the card to all-out identity theft. Security practices in place with merchants that accept card payments go a long way to help credit card fraud prevention. The PCI/DSS is an industry standard set up by a governing body of representatives from several card companies to help you provide secure payments for your customers.

Credit Card Processing: A Small Price to Pay for Piece of Mind

Credit card processing sucks. That’s probably a strange statement to make on the website of a credit card processing company, but we know it’s true because we talk to business owners every day. And every day, we see the same eye rolls and hear the same frustrated sighs that follow just about anything related to merchant processing.

Don’t worry… no offense taken. Credit card processing is frustrating. If feelings of rage and anger overwhelm you every time you think about it, you’re not alone. But before you hit the back button to avoid thinking about credit card processing, give us a chance to at least help you appreciate its benefits. Yes, the credit card processing industry is broken, and yes, some great companies (shameless plug alert: like Transparent!) are trying to fix it, but credit card processing itself is actually kind of amazing.

If “amazing” seems like too strong a word to describe something as seemingly mundane as credit card processing, maybe you need to look at your wallet again and consider, from a business perspective, your other options. In your wallet, wedged next to your credit cards and an old library card you haven’t used since two wallets ago, you probably have some pictures of famous dead people. You have to admit, compared to paper money, credit cards are… well… amazing. They’re slim rectangles of plastic that give consumers instant access to thousands of dollars in spending power without the kinds of problems that would come from carrying the same amount of dead presidents currency.

At first glance, business owners would prefer to accept paper because it doesn’t have any direct fees. No fees equals bigger profits, right? However, on closer examination, you can how spending money to accept credit cards ultimately dwarfs the money you’re at risk of losing when using an insecure payment mechanism like cash.

The savings from taking credit cards is rooted in costs of securing cash. If you own a public-facing storefront that accepts cash, chances are you have employees. Every one of them – even if it’s your favorite niece you hired for the summer – has had a thought that went something like this: “I wonder if anyone would notice a few missing dollars?” Sure, the vast majority of your employees would never act on that thought, but only one employee needs to act on it in order for you to lose more than credit card processing actually costs. Credit cards, whether you’ve given it much thought or not, are helping your business minimize the temptation of cash.

Before you start accusing all your employees of embezzlement, don’t forget the other employee-based cause of missing cash: human error. We’ve all made counting mistakes, and we’ve all put things in places we can’t remember. It happens from time to time, but when it happens with cash, there’s no 800-number to call to help you find the missing money. In comparison, not only is it harder to misplace an electronic deposit, we bet your credit card processor has an 800-number you can call if a deposit does happen to go missing. You can be sure Transparent does.

So the next time you see someone reach for a pile of paper presidents instead of a plastic rectangle, remember this: that cash might not come with any obvious fees, but it definitely doesn’t come with any guarantee to end up in your bank account.

Transparent: Credit Card Processing Made Clear

Despite its services being used millions of times a day, public knowledge of how the credit card processing industry is structured is… well… pretty much nonexistent. That’s not necessarily a bad thing. After all, most of us have no clue how cars are built, but that doesn’t mean we can’t drive them. However, in the case of credit card processing, usage isn’t just limited to swiping. Every business that accepts credit cards has to have some sort of merchant account, and having a merchant account requires business owners to learn more about how credit card processing works.

That’s probably why you’re reading this. Chances are you got to this article because you have to figure something out about credit card processing and a search engine told you the answer is in here. That’s unfortunate for you because this article isn’t intended to teach you anything practical about credit card processing. It won’t explain how to save money on credit card processing, and it won’t explain how to become PCI compliant. It won’t even tell you what the best credit card processing companies are (not that there’s any better than Transparent). Instead, this article is meant to teach you something about how the credit card industry is structured. And while, initially, that knowledge might not seem to have any practical value, understanding how the industry is structured should help you make more informed merchant processing decisions.

Whether you already have a merchant account and are looking for new credit card processing, or if you’re trying to get a merchant account for the first time, a simple Google search has surely shown you how many choices you have. What you probably don’t understand is why. The answer – at least in the United States – has a lot to do with federal regulations. While the regulations themselves are complex (and not necessarily worth detailing here), the result is a fractured industry with numerous different companies being responsible for different stages of each and every credit card transaction. That’s a big deal for you – the merchant who needs credit card processing – because, whether you realize it or not, it means every time you take a credit card you’re engaging with multiple “middlemen.” Each one of those middlemen are businesses that need to make money, which means they all have to charge for their services.

Are you starting to understand why credit card processing gets expensive? The process itself is supporting multiple industries on each and every swipe, which means the processing fees have to keep the proverbial lights on for multiple companies with multiple employees who all want paychecks and dental insurance and 401Ks, and you – the merchant accepting credit cards – have to foot that bill.

While having so many middlemen involved in every credit card transaction certainly isn’t ideal, it does have the benefit of competition, and, as hundreds of years of laissez-faire economics have taught us, competition is a good thing. Because each of the competitors are ultimately competing for your business, more competition means better services at better prices.

That’s where Transparent comes in. A company like Transparent is what happens when of a group of people who had been in the credit card processing industry for years recognize inefficiencies and see an opportunity to make a better product and offer it at a better price. Although we can’t get rid of all the middlemen (sorry – talk to your congressman), we can create a more efficient company that can offer more streamlined services at better prices. So that’s what we’ve done, and that’s what you get if you choose to process payments using Transparent. We won’t be another middleman who nickel-and-dimes you with fees you didn’t know about unless you read page 42 of an 86-page contract typed in a size eight font. We’re clear and open about our pricing, our product, and our services, and, as a result, our pricing, our product, and our services are clearly the best.