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4 Things You Need To Know Before Taking Credit Card Payments In Your Business
Most businesses are eager to begin accepting credit card payments. After all, by offering this type of payment, you can make sales worldwide and embrace customers that would rather not pay in cash. However, before you decide to take credit card payments in your business, there are some issues you must consider. Could you keep reading to find out what they are?
Credit card payments aren’t free
To be eligible to take credit card payments, you must pay the fees associated with this service. At a bare minimum, this will be known as the transaction fee, and many credit card companies charge a percentage of the sale made.
However, some also make charges for using and hiring the equipment needed to take credit card payments in the first place. To that end, be sure to do your sums carefully and make sure that taking credit card payments makes financial sense.
You will need a rolling reserve
Another issue that you need to be aware of before you begin taking credit card payments is that you may require a rolling reserve. A rolling reserve is an amount of 5-10% of your credit card sales you pay to your providing bank. They then hold for you if you need to cover the costs of a credit card payment dispute.
However, if your business is deemed as high risk, perhaps because you accept international payments or have a poor credit history, you may be asked to provide a minimum fund instead, which can be significantly more than the percentage amount mentioned above.
Credit cards can help boost your business’s cash flow
Of course, many businesses see these issues as more than a fair trade for the many advantages that credit card payments provide. In particular, providing customers with the option of paying by credit card means a better cash flow because such payments hit your company’s bank account much quicker than most others.
Credit card payments in your business: there is a risk of fraud
Last of all, before committing to taking credit card payments, it is vital that you understand there is a risk that fraud could be perpetrated against your business. Primarily this happens when a criminal gets hold of the details of another person’s credit card or account and uses them to purchase something while pretending that they are the person associated with that account.
Of course, what tends to happen here is that when the victim discovers that a fraud has been committed, they will notify the credit card company, who will, under the right circumstances, refund the customer’s money at their loss. Unfortunately, in an attempt to reclaim some of that loss, the credit card company is likely to pass some of the costs onto your business.
Usually, these costs are in the form of processing and chargeback fees, which can leave your company out of pocket. However, it is worth noting that some very sophisticated security measures are used both IRL and online these days that help to minimize this risk.