Credit Card Processing

There are many benefits of using credit cards to process payments. The primary benefit is that credit card payment processing offers multiple ways for business owners to avoid the hassle of handling cash. Credit card processing also allows businesses to make more money due to fees, which helps reduce overall costs in the long run.

The following are benefits of credit card payment processing:

Electronic Payments: The most obvious benefit of credit card processing is that it allows business owners to accept payments electronically. Credit cards cut down on the need for cash and checks, which means businesses save money because they spend less on postage and printing costs. Essentially, the use of credit cards lets businesses manage their finances electronically, which saves time and money. Online payments can be made through a business's website or smartphone app, providing customers with more convenient options for making payment. Additionally, this option helps drive business due to its convenience for both customers and business owners alike. 

Lower Payment Fees: Businesses are often charged fees from accepting credit card payments, but these fees are much lower than the fees associated with checks. The average transaction fee associated with a credit card is two percent, whereas the average transaction fee for a check is three percent. This means that businesses stand to make more money when using credit card processing, which also helps reduce overall costs.

Reversible Payments: Credit card payment processing offers customers the option of reversing their payments if they decide they no longer want to buy the product or service. With cash purchases, once a customer pays for something, it's no longer possible to get their money back. This means that businesses are unable to recover losses, and therefore, they lose money even when a customer decides not to buy something. 

Competitive Advantage: Business owners who use credit card payment processing often get a competitive advantage. For example, customers will often perceive their businesses as modern and up-to-date when they provide the option of using credit cards to make purchases. Additionally, many consumers prefer using credit cards rather than cash or checks. This means that business owners who offer credit card payment options are more likely to attract new customers than those who only accept cash or checks.

Chargebacks: Transactions processed through credit card payment processors can be reversed if the customer feels like the product or service was defective or not as described. Chargebacks are eligible when a credit card customer can prove that the product or service was not received. For example, if a customer receives a product that does not work, does not match the description, or is not as described, they can petition their credit card company to reverse the transaction and get their money back.

Direct Checkout: Some online retailers are now allowing customers to use their payment method directly on their website. This means that customers don't need to register an account with the retailer or download an application from their webpage in order to make purchases. Instead, customers simply type in the payment information and click "pay now" and "checkout". Once this occurs, the payment information is sent directly to the business for processing.

While these benefits are certainly attractive, there are also risks associated with credit card payments. These include the possibility of fraud and the risk of chargebacks.

Fraud: Credit card customers can pay for products with stolen or invalid credit cards to make fraudulent purchases. This is a major concern because it significantly lowers the security on a business's credit card account. The best way to protect against this is by shopping online where electronic transactions are accepted and to use unique payment information each time you make a purchase. Additionally, businesses should ensure that they are using disposable email addresses and secure sites which have no connection to personal information or contact information which could be compromised. Always check emails that appear to be from the company or organization that you're ordering from and call customer service if you're unable to verify your order. 

Chargebacks: A chargeback is a request initiated by a credit card customer in order to get their money back after a purchase. Chargebacks are generally associated with defective or missing products, but they can also occur when the product received does not match the description provided by the business. Chargebacks are difficult for businesses to deal with and they often result in losses because of transaction fees, website costs and other associated costs associated with a chargeback. Chargebacks are much more common with online transactions than they are with regular transactions because it's easy for customers to file chargebacks when they don't receive their products.

The following steps can be taken to prevent fraudulent transactions and chargebacks:

Use a credit card payment processor that provides two-factor authentication. This feature helps to ensure that whoever is making payments is actually the cardholder who owns the credit card. The two-factor authentication process requires both a physical credit card, along with a randomly generated password, in order for a purchase to be completed. This makes it more difficult for someone other than the owner of the credit card to complete a transaction using stolen or stolen credit card information.

Purchase items with a credit card on websites of high-reputation companies. Reputation is the trustworthiness exhibited by a company or organization. Therefore, when purchasing from another business online, it's important to look for businesses that have a positive reputation online. This means looking for companies that have good reviews and customer satisfaction ratings on various review sites such as Google Plus and Yahoo Small Business. These websites are often recommended by other business owners and they provide an easy way to get recommendations from other SMB owners while also ensuring that you're getting quality products at good prices.

Use cash whenever possible when making purchases at large retailers such as Target, Wal-Mart and Sam's Club. These retailers tend to have higher return rates, and therefore, they're more likely to reverse credit card transactions.

Make sure your business is protected from fraudulent purchases by getting a merchant account with fraud protection. This will help to ensure that your business does not lose money on transactions that are later reversed by credit card companies due to missing products or service defects.

Deciding whether or not it's a good idea for your business to accept credit cards depends on your business goals and financial situation. The above list contains many of the benefits associated with accepting credit cards such as competitive advantages, the ability to make more sales and easier accounting. However, there are also risks associated with accepting these payments. It's important to determine whether or not your business can handle these risks and whether accepting credit cards helps with your business goals.

Remember that if you're deciding whether or not to accept credit cards, the most important element is often the financial situation of your business. If you don't have the capital on hand to cover potential losses and fees associated with credit card transactions, then it's probably best not to accept these payments until your financial situation improves.

Most small businesses will start off accepting payments with a basic merchant account. This is an account provided by a payment processor that allows small businesses to accept card payments online and over the phone.

Conclusion

Credit card payments are an attractive form of payment because they can help a business acquire new customers, generate additional revenue and improve cash flow. The best way to make sure that credit card processing is a positive experience for your business is to transition from a basic merchant account to a more advanced one.

We hope this article helped you understand how credit card processing works and gave you some tips on how to transition from a traditional merchant account to an advanced processor. If you have any questions about credit cards or want more information about advanced processors, please contact us at info@oceanprocessessolutions.com or call us at 1-866-663-2528.