Businesses need to be able to accept payments. If your customers can't pay you, it won't be long before the business folds due to a lack of cash flow. So what are your options for taking payments?
Before the advent of credit cards, customers paid with cash or check. Taking cash and check was easy: you simply rang transactions through a till and then banked whatever cash and checks you had accumulated at the end of the day, before starting all over again the following day. Customers also had the option of posting a check to your office, which could be banked later.
Today, things are very different. Whilst it is possible to pay by cash (and check, too, although check will be phased out in some places over the next few years), there are a wealth of electronic payment collection options at your disposal now. However, not all of them are as convenient or as cheap as you might have hoped.
How Do You Do Business?
The first thing to look at is how you conduct your business. Do you typically accept payments in person or is your business predominantly online?
If you accept payments in person, you will need a point-of-sale system: i.e. a card-swiping machine or some other type of mobile device. If payments are taken online, then you will need a merchant account in order to process card payments. Each method is slightly different, so here is a quick guide to how they work.
Point-of-sale systems, also known as POS systems, are a complete checkout terminal. This is the type of payment collection system seen in grocery stores, food outlets, gas stations, etc. There might be a credit card swipe machine, a cash register, barcode scanner, touch screen device, and anything else required to scan or swipe a card, print a receipt, or accept cash.
These are ideal if your business has a physical location, such as a bricks and mortar store. They can also be used to connect multiple POS's in one store, or different locations, to make it easier to collect financial information.
Credit Card Terminals
Credit card terminals are great if you only accept credit card or debit cards. Collections credit card processing is usually offered by merchant account providers. This piece of hardware allows you to manually input or swipe card details. You can take payment in person or over the telephone.
Mobile Card Processing
Mobile card processors are useful if you do business on the go. A good example of this is if you work in sales, but mobile card processes can also be a good choice for smaller businesses that don't do many card transactions. Merchant account providers usually provide card readers as part of their package.
Online businesses will need to implement a shopping cart payment solution that includes a payment gateway and merchant account, although you won't need a merchant account if you do business via an e-commerce website such as eBay or Amazon.
Each payment collection system has its pros and cons, so make sure you choose the right one for your business.