Getting Started with Credit Card Processing for Small Businesses

Here's how the right card online payment gateway can mean the difference between high fees – and high profits – for small businesses expanding internationally.

Making the Right Small Business Credit Card Processing Choice is Key

It goes without saying that accepting credit cards is essential for small businesses selling online. But did you know that the credit card processor you use can mean the difference between high fees and high profits? Your processor can provide you with a variety of benefits, ranging from fraud protection to competitive pricing to global payment acceptance, which is why it's critical to choose wisely.

As you seek to expand your online business, you must first understand your customers' payment preferences and then find a payment system for small businesses that allows you to accept credit card payments.

How Credit Card Processing Works

Although credit cards are perceived as a quick and easy method of payment, when a customer uses their credit card to make an online payment, there are a number of steps that must be completed behind the scenes in order to transfer funds from the customer's account to your merchant account.

The card information of the customer is securely captured and transmitted to the associated card network for approval.

At the same time, information is requested from the card network and transmitted to the card issuer.

The payment is either approved or denied by the issuer.

If approved, the payment is accepted and the transaction is completed successfully.

Following approval, the issuing bank is directed to transfer funds to the merchant.

Although the process appears to be complicated, a payment gateway can handle it easily and securely for your company. The payment gateway is responsible for capturing and validating the customer's payment information. This payment information is also transferred to the acquirer by the gateway to ensure that funds are available and the merchant is paid.

The Five Features Your Small Business Payment Option Needs

Because your payment gateway processes your online credit card payments, it is critical that you select the right one to ensure that your online payments run smoothly and securely.

Understanding your customers and business's needs allows you to prioritise what you require from your payment gateway. When looking for credit card processing companies for a small business, here are five key features to consider.

Easy Integration – As a small business, you'll want a solution that integrates with your e-commerce platform. If you sell in-person as well, you'll need a solution that can support both your eCommerce and POS systems.

Included Fraud Protection – With an integrated fraud protection solution, you can reduce your fraud risks and increase your approval rates. The best processors use AI and machine learning to improve fraud detection, allowing legitimate transactions while blocking fraudulent ones.

Compliance Made Simple – PCI DSS standards safeguard cardholder data against misuse and fraud. Any business that accepts credit cards must comply. This entails handling and storing cardholder information, including card details, in a secure manner.

Global Acceptance Plus Local Payment Methods – To provide a positive experience for international customers, your best online payment gateway should support fast and secure payment processing in every country where you do business. Allow your customers to choose local payment methods in addition to credit cards for increased sales.

Reliable Customer Service – As an online retailer, your transactions can take place at any time of day (or night)! It is critical to be able to process credit card payments at all times, just as it is to have a payment solution provider with local payments and small business expertise to take your solution to the next level.

What are the Different Payment Processing Pricing Models?

The cost of online payment processing for small businesses varies according to the payment processor and the pricing model employed. Understanding these models allows small businesses to find the one that offers them the best deal.

Each model differs not only in terms of the complexity of the business, but also in terms of the profit for the business. The volume, risk, and value of transactions will all influence which model is best for the business.

Flat-Fee Credit Card Processing 

The simplicity and consistency of being charged a fixed percentage of sales allow businesses to budget and plan ahead. However, depending on your business type, processing volume, and customer type, it may not be the cheapest option and should be weighed against other pricing models.

Interchange-Plus Pricing 

Each transaction incurs a different fee when using interchange-plus pricing. The interchange fee is determined by the type of card (credit or debit), the brand, and the risk level of each transaction. While knowing your total cost is more difficult with this pricing model, interchange-plus pricing can be less expensive for some businesses than fixed pricing. This is especially true for businesses that rely heavily on debit card payments from their customers.

​Tiered Pricing

This model categorises transactions based on their risk level and charges a lower mark-up to those at the lower end of the scale. These tiers are usually qualified, semi-qualified, and unqualified. Many merchants avoid tiered pricing because it is less transparent and can be more expensive. This model, however, may be cost-effective for merchants with a high volume of low-risk transactions.

Understanding and managing your credit card processing costs can provide you with significant savings. However, before choosing a credit card processor, merchants should be aware of any additional service fees. Statement fees, PCI fees, annual fees, and surcharges are examples of these.

Processing Credit Cards to Grow Successfully 

To expand internationally and quickly, you must select the right pricing model and credit card processing for a small business. By keeping these five key factors in mind, you will be able to better manage online card processing. And, by selecting the right payment pricing model for your business, you'll be able to scale it globally in the long run.