Choosing A Credit Card Machine
Because most new business owners have little to no experience with credit card machines, choosing the right one can be problematic. In fact, many new business owners place a low emphasis on getting a credit card machine early. But that can be a mistake as having this type of machine plays a powerful role in the processing of payments.
Accepting payments from credit cards is an essential part for almost all businesses that sell to consumers. So, you will need to better understand the function, features, and differences between the credit card machines that are on the market today. What follows is a general guide to help you know what is out there in terms of features, types, and pricing of credit card machines.
Fees Are A Major Concern For Merchants
It’s not just the purchase price, it is the processing fees that determine the affordability of the credit card machine. Because different types of machines use different types of processing, the fees can vary considerably depending on the device and the company that does the work.
Flat Fee or Blended: In other words, all transactions are charged a flat rate. Credit, debit, and gift cards get the same transaction fee.
Interchange Plus: This is a two-part fee process. The fee charged by the card networks such as Visa, Mastercard, and the like. And the plus is the processer receiving a markup.
Membership: This is based on the interchange rates set by the card networks. You pay a monthly or annual fee that is part of your membership.
Tiered: The fees which are charged with this system fall into three categories:
Qualified transactions have lower fees compared to mid-qualified and non-qualified. Most transactions do fall within the qualified realm.
The typical fees for wired and wireless credit card machines are roughly the same. The average ranges from $100 to $300 per month, although wireless machines may have a slightly higher charge. POS systems are far more expensive with typical fees reaching from $400 to $1000 or more. Virtual systems have no hardware cost, but they do have a percentage or subscription rate that varies from company to company.
Consider that the rates may be affected by the type of card which is used, such as business cards over consumer cards. Plus, credit cards that are swiped directly into the machine tend to have lower fees because of the lower security risk.
Types Of Credit Card Processing Equipment
POS: This is a combination of hardware and software systems that can process payments with credit cards. It generally comes as a package of services that provide for better oversight of the payment process itself.
- Integrated with your other digital systems
- Fast, safe payment processing
- Fewer errors
The downside is that integrated systems like the POS are somewhat limited and therefore more expensive compared to other processing options. Plus, a lot of the cost is in the payment processing rate which is different between companies. It may result in paying considerably more with one company compared to another.
Mobile Terminals: The main difference between mobile and wired terminals is that you do not need a phone or internet line with this device. Instead, they use a Wi-Fi connection that processes the payments being made.
- Can be placed where you need it
- Does not require being wired to phone or internet lines
However, the downside is that the Wi-Fi signal can be intercepted which does raise concerns for security. Using a private network with extra security clearances helps to lower the risk, but it is still easier for hackers to gain access to wireless compared to wired systems.
Wired Terminals: You have probably seen credit card terminals at retail stores in your community. The sit on the countertop, they have a direct wired connection to a phone line, and they process payments quickly. The terminal is popular because it is reliable, fast, and can handle traditional credit and debit to gift cards and the like.
- Process multiple types of payments using cards
- A higher level of security thanks to using PINs
However, the terminal tends to be larger and not mobile. Plus, the cost of the phone or internet line will add a monthly cost to your business.
Virtual Systems: A virtual terminal offers exceptional advantages because everything is done within the digital system. This makes them perfect for companies that primarily sell to other companies, called B2B.
- Web pages are quite secure
- The entire payment process is handled digitally
- No paper or additional hardware is required
You may also get lower processing rates when using virtual terminals. The downside is that for processing credit cards onsite, you will have to enter the information manually. This is because there is no scanner present. For retail businesses that primarily sell to consumers, this can be a huge drawback.
Tips On Choosing The Right Credit Card Machine
Here are a few tips that will help you make the best-informed decision about which credit card machine to get.
Buy Instead of Rent: Renting a credit card machine offers far greater expense and you do not own the machine itself. Unless you are in a temporary situation, it is far cheaper to buy the machine outright.
Combining Hardware: If you already have some hardware and software that may work with a specific type of credit card machine, it is generally best to go in that direction. Many providers will reprogram the hardware which allows it to work on your system. So, be sure to tell a provider what you have as it might work.
Payment Types: Not every credit card machine accepts all credit cards. Look over what payments you are accepting and find the machine that can do them all. This may include digital payments or using mobile wallets.
Everything starts with evaluating your needs and then finding the right credit card machine that fits them. You can save yourself from considerable grief by doing the research first, asking about the capabilities, and learning the fee structure. That way, you can make the best-informed decision about which credit card machine is right for you.
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About The Author
Mark Sands, co-founder of High Risk Merchant Account LLC, an authoritative expert in the high-risk merchant account space. Mark has decades of experience in the payment industry & enjoys writing on entrepreneurial-related topics.