If there is one indisputable fact of running a small business, it is this: Credit cards drive sales. You do not have to be a trendsetting entrepreneur to know that credit cards are what pay the bills, and then some. From increasing the average amount of purchase to providing your customers with a little extra financial wriggle room, credit cards represent the standard for how you do business. With that out of the way, a more important issue emerges for many small business owners. How do you optimize your credit card processing strategy?
Integrating your credit card processing system with every financial transaction completed by your business goes a long way towards establishing a powerful business model.
Benefits of an Integrated Credit Card Processing System
Adding an integrated credit card processing system ensures you connect financial data to the operation of your business.
That sounds like a sound operational goal, but is it worth the time and money to integrate your credit card transactions with the rest of your business?
The answer is yes for several reasons.
Reduce the Number of Human Errors
Ever since the introduction of the abacus, humans have made it a point to make mistakes when it comes to processing customer transactions.
With an automatic and integrated credit card processing system, you remove human error from every transaction.
Just a simple math mistake like forgetting to subtract a sales tax can turn your financial books into a business owner’s worst nightmare.
Less Humans, Lower Labor Costs
Credit card payments that automatically process means you do not have to pay someone to post financial data to paper ledgers.
Automation also eliminates the need to train one or more employees about how to process credit card transactions manually.
More Cash for You
It might seem counterintuitive for an integrated credit card processing system to improve your cash flow.
However, the most effective systems quickly turn a sale into cash to help you pay vendors, employees, and Uncle Sam.
Adding a credit card processing system provides you with the latest financial reports that tell you how much cash your business has on hand.
More Secure Financial Data
The best credit card processing systems utilize a process called tokenization to deliver the highest standards of financial security.
Tokenization replaces the sensitive data provided by your customers with a highly secured set of unique characters (tokens).
Only the financial institution that issued the credit card has the technology to encrypt the tokens that are associated with credit card transactions.
Less Time, More Money
Real-time credit card processing streamlines your business operations, which gives you more time to find ways to drive sales.
You will benefit from more accurate financial reporting, as well as control how you spend money.
The time has come to learn how to optimize your credit card processing strategy.
Research, Research, Research
You cannot choose the right credit card processing system for your business until you learn the types of options available for small and medium-sized businesses.
There are two primary types of credit card processing systems for small and medium-size business operators.
Payment Aggregators
As typically large companies that handle the credit card transactions for many businesses, payment aggregators process credit card transactions through the same interface, such as an app or a website.
Examples of payment aggregators include Stripe, Square, and PayPal.
The companies share merchant accounts to process payments for their clients.
Dedicated Payment Processors
Dedicated payment processors meet the unique credit card processing needs of each business that signs up for their services.
As opposed to sharing a common merchant account among many businesses, a dedicated payment processor establishes individual accounts for each business.
You will have your own merchant account to process credit card transactions.
Both credit card processing systems present several benefits and a few drawbacks.
You can expect to pay more for the specialized attention you receive from a dedicated payment processor, but if your business processes a high level of sales, the extra money is probably worth it.
Know Credit Card Fraud When You See It
You work hard to build the level of trust with your customers that lead to repeat business.
You cannot afford to tear down the wall of trust by exposing sensitive credit card information to online criminals.
The partner you select to process the credit card information for your customers must be able to prevent three popular credit card fraud schemes.
Identity Theft
As the most common type of credit card fraud, identity theft can financially ruin a customer for years to come.
Not only will you lose a valued customer, but you will also lose out to customer prospects that heard about the identity theft issues.
Your credit card processing system must have standards in place to prevent the theft of valuable personal and financial information.
Refund Scams
With a refund scam, a criminal uses a stolen credit card to make a purchase from your business.
Then, the scam artist cancels the payment by contacting the financial institution that issued the credit card.
The fraudster receives a refund from the victim’s credit card account, which means your business can expect to take a financial hit in the form of bank fees.
Tumbling
Credit card tumbling is a long-standing illegal practice used by fraudsters to generate random credit card numbers to make online purchases.
It might take a while for a series of numbers to register a sale, but criminals know no boundaries when it comes to stealing from businesses.
Your business might be at risk of losing money on hundreds of credit card transactions.
Learn How to Prevent Credit Card Fraud
Now you know about the three most commonly used credit card scams.
Let’s learn how to prevent your business from succumbing to illegal credit card activities.
Credit Card Verification Codes
On the back of every credit card is a CVV, which stands for credit card verification code.
Make sure you ask for it every time someone tries to pay with a credit card, especially if you do a lot of business online.
Acquiring a CVV will reduce the chances of your business having to deal with an identity theft scam.
Two Factors of Authentication
You have answered credit card validation questions like “What is your mother’s maiden name?”
Two-factor authentication creates a second barrier for criminals to hurdle.
It works particularly well for preventing purchases made with stolen credit cards.
Minimum Purchase Amount
By establishing a minimum amount for every purchase, you reduce the likelihood of your business experiencing the illegal tactic called credit card tumbling.
EMV Chip
As a highly effective tool to prevent on-site credit card fraud, adding an EMV chip reader will give your customers the peace of mind knowing that their sensitive personal and financial data is secure.
Variety is the Spice of Credit Card Transactions
We are not talking about expanding the number of different credit cards you accept.
Yes, having the capability to process different credit cards will help you attract more customers.
In an era where technology rapidly changes, you have to adapt to the rapid changes by including more payment methods into your credit card processing system.
Here are a few examples of popular credit card processing methods:
- Credit
- Debit
- EMV chip
- Split Checks
Make sure to offer your customers secured user accounts to make credit card processing safe for future credit card transactions.
Choosing the Right Credit Card Processing System
Preventing fraud should not be the only consideration for selecting the right credit card processing system for your business.
Your new credit card processing system must include three features that are popular with small and medium-size business owners.
Highly Intuitive
The fewer whistles and bells added to your credit card processing system, the easier it will be for your team to master the transaction system.
You want a system to be intuitive to minimize employee interactions and hence, reduce the number of technological problems.
Portability
We do not mean being able to carry your credit card processing system to your accountant located across the street.
By portability, we mean choosing a credit card processing system that allows your customers to buy your products online, as well as in person.
Easy to Customize
Installing a customizable credit card processing system gives you the power to make changes, without having to enlist the help of support professionals.
You can customize the types of payment methods and change the way your system engages with customers.
Timely and Efficient Service
Whether you run a restaurant or operate multiple personal finance consulting offices, the level of customer service that you provide determines how well you retain customers.
Use the same customer service first philosophy when shopping for a credit card processing system vendor.
Read online reviews and ask for a reference from other businesses operating in your niche.
Be proactive with your credit card processing system by following a few strategic tips to find the right system for your business.
