Mobile Credit Card Processing Explained: What Business Owners Need to Know

According to Forbes, “mobile payments are increasingly being used by U.S. shoppers as customers become more comfortable with the technology.” Not only are there a number of ways your customers could be using their mobile devices to give payments, but you as a business owner could be leveraging mobile devices to accept them as well.

As stated by countless resources, mobile is the direction the payment technology space is heading. It pays to know exactly how mobile technologies will be impacting your business, or potentially already are.

This blog will walk you through how your customers are using mobile credit card processing, how you can accept payments using mobile technology, what sorts of features to look for in a mobile solution, and some exciting statistics about the future of payment technology.

TLDR

  • Mobile credit card processing first hit the market 15 years ago and in that time it has risen to become one of the most popular methods for processing in-person payments, both with businesses and consumers.
  • Choosing and setting up your mobile payment processing system should be research-intensive, but is a straightforward process, meaning once you know what you want, you can get set up fairly easily and quickly.
  • Understanding what you want is the hardest part. You need to understand what features are most important in a mobile processor and the extent to which you need those features. You should also consider what features you may want as your business grows.

What is mobile credit card processing?

Mobile credit card processing refers to the capability of accepting credit card payments using a mobile device equipped with a card reader and specialized software. Mobile devices you can use include iPhones, iPads, and Android devices like Galaxy smartphones.

This technology enables merchants to conduct transactions on the go, typically with both mobile wallet solutions like iOS’ Apple Pay, as well as tap-to-pay, magstripe, and chip cards like American Express, Visa, and Mastercard. This provides flexibility and convenience for businesses that operate in various locations or need to accept card transactions outside of traditional brick-and-mortar settings.

Mobile credit card processing first came on the scene when Square released its original mobile credit card reader in 2009 and by the early 2010s, it had become a common method of accepting payments for small businesses. As the decade progressed, bigger businesses began to implement mobile credit card processing, too, and as of 2024, it’s an extremely popular method of accepting in-person payments.

What types of merchants need mobile credit card processing?

A mobile credit card processor offers a many benefits that appeal to a wide variety of businesses:

  • The most obvious benefit of mobile credit card processing is its portability and flexibility. Merchants can accept payments anywhere with mobile credit card processing, eliminating the need for a fixed point-of-sale terminal. 
  • Convenience to your customers is another benefit. Customers enjoy the convenience of paying with their credit or debit cards anywhere and everywhere. That doesn’t just include food trucks, either. That can mean paying the plumber by credit card in their own house or paying for a sweater with the sales associate who helped them pick it out, rather than going to find the POS desk.
  • Finally, mobile credit card processing solutions often have lower upfront costs compared to traditional POS systems, making them accessible to small businesses and startups.

So with that said, let’s take a look at what specific types of merchants need mobile credit card processing capabilities.

Food Trucks and Street Vendors 

Picture the bustling streets of a food festival or the local farmer’s market. These vibrant scenes are teeming with eager customers craving delicious treats. For food trucks, street vendors, and mobile caterers, the ability to accept credit card payments on the spot is invaluable. With mobile credit card processing, they can serve customers swiftly and efficiently without being tethered to a fixed location.

Pop-Up Shops and Event Vendors 

Pop-up shops, temporary retail spaces, and event vendors thrive on flexibility and spontaneity. Whether it’s a seasonal holiday market, a music festival, or a craft fair, these businesses need a payment solution that matches their dynamic nature. Mobile credit card processing allows them to set up shop anywhere, quickly process transactions, and capitalize on opportunities in diverse locations.

Service Professionals

From plumbers and electricians to tutors and personal trainers, service professionals often find themselves working on-site at clients’ homes or businesses. Mobile credit card processing enables them to collect same-day payments on the spot, eliminating the hassle of invoicing or waiting for checks. This not only improves cash flow but also enhances customer satisfaction by offering convenient payment options.

Freelancers and Small Businesses

Freelancers and small businesses across various industries can benefit from the versatility of mobile credit card processing. Whether it’s a photographer booking a photoshoot, a consultant delivering a presentation, or a hairstylist providing services at a client’s home, the ability to accept credit card payments on a mobile device streamlines the transaction process and fosters professionalism.

Tour Guides and Travel Services

Mobile credit card processing is indispensable for tour guides, transportation providers, and excursion operators. Whether leading guided tours, arranging airport transfers, or selling tickets for attractions, these businesses need a convenient way to accept payments from travelers on the go.

How to implement mobile credit card processing

Implementing mobile credit card processing involves several key steps, from selecting the right hardware and software to ensuring security and compliance. Overall, it’s a fairly straightforward process that any merchant should be able to accomplish.

1. Assess Your Needs and Goals

Before diving into the implementation process, it’s essential to assess your business’s specific needs and goals. Consider factors such as the volume of transactions, the mobility of your operations, and the types of payment methods you wish to accept. Understanding your requirements will help you choose the most suitable mobile credit card processing solution for your business.

2. Choose the Right Hardware and Software

Mobile payment processing is entirely dependent on hardware and software, so selecting the right tech stack is crucial for success. Begin by researching mobile card readers and terminals compatible with your mobile devices, such as smartphones or tablets. Consider factors such as connectivity options (e.g., Bluetooth, headphone jack), compatibility with your operating system, and security features.

Next, explore payment processing software or mobile applications that integrate seamlessly with your chosen hardware. Look for features such as real-time transaction processing, inventory management, reporting capabilities, and support for multiple payment methods. Popular mobile payment solutions include Square, PayPal Here, and Shopify POS.

3. Set Up a Merchant Account

To accept credit card payments, you’ll need to establish a merchant services account with a payment processor or acquiring bank. Research different merchant account providers and compare their fees, processing rates, contract terms, and customer support options. Choose a provider that offers transparent pricing and meets your business’s needs. Stax, for instance, offers fully transparent pricing and a wide range of capabilities able to accommodate your business’s needs now and as it grows.

During the application process, be prepared to provide detailed information about your business, including your legal entity type, industry, processing volume, and anticipated transaction volume to the payment processing company. The provider will review your application and may require additional documentation, such as business licenses, tax ID numbers, and financial statements.

4. Ensure Security and Compliance

Security is paramount when implementing mobile credit card processing to protect sensitive cardholder data and prevent fraud. Ensure that your chosen payment processing solution complies with industry standards and regulations, such as the Payment Card Industry Data Security Standard (PCI DSS) and takes EMV chip cards.

Implement security measures such as encryption, tokenization, and secure authentication protocols to safeguard payment transactions and customer information. 

Bonus security tip: Train your staff on best practices for handling payment data securely and regularly update your software and hardware to address any security vulnerabilities.

5. Test and Train Staff

Before launching mobile credit card processing in your business, conduct thorough testing to ensure that your hardware and software function correctly. Test various scenarios, such as processing transactions, issuing refunds, and generating receipts, to identify and address any issues or discrepancies.

Additionally, provide comprehensive training to your staff on how to use the mobile credit card processing system effectively. Train them on processing payments, troubleshooting common issues, and adhering to security protocols. Empower your staff to answer customer questions confidently and provide assistance during the payment process.

6. Integrate with Your Business Operations

Ensure that your mobile payment solution integrates smoothly with other systems and processes, such as inventory management, customer relationship management (CRM), and accounting software.

Customize your mobile payment solution to reflect your brand identity and provide a seamless experience for customers. Consider implementing features such as digital receipts, loyalty programs, and customer engagement tools to enhance the overall customer experience and drive repeat business.

And with that, you’re up and running. Be prepared to adapt and evolve your mobile payment strategy as your business grows and customer preferences evolve. Explore new features, enhancements, and integrations offered by your payment processor or software provider to stay competitive and meet the evolving needs of your customers.

Mobile Credit Card Processing Solutions to Consider

Apple Pay/Google Wallet

Apple Pay and Google Wallet (sometimes called Google Pay) are applications on mobile phones that allow users to upload their credit card information to a virtual wallet. Users can either link their cards to apps (like Uber or Etsy) or tap the phone against NFC-enabled credit card terminals to make in-store payments.

NFC, or near field communication, is a technology present in most smartphones that allows contactless communication between devices. Certain countertop credit card terminals are equipped to accept contactless payments, which means customers can simply hold their phone close to the machine and authorize a transaction.

This technology is also available for Apple Watch users. The same concept applies, except instead of using their smartphones, customers must simply enable their Apple Wallet on their Apple Watch and hold their wrist in close proximity to the machine until the transaction is complete.

These types of payments have become very popular with consumers, with BI Intelligence predicting a swell in mobile credit card processing to $503 billion by the end of 2020. Keep in mind, Apple isn’t the only technology giant offering this service. In fact, in order to meet consumer demand, brands like Kohls, Walmart, Microsoft, Android, and others have released their own virtual wallet applications.

So if you own a brick-and-mortar location, make sure your credit card terminal is NFC enabled.

Mobile Browser Purchases

If your business has an eCommerce component, you understand the importance of a seamless online experience for your customers. Just as they can browse your shop from their desktops, your customers can shop from their mobile devices as well. Statistics show that more and more people are using their mobile internet browsers for everyday activities, including browsing the web and making purchases.

Not only is mobile internet browsing on the rise, but in-app purchases are an ever-increasing industry.

What does this mean for your business? Consumers love apps. You already know your website should be mobile responsive, but building an app to help customers along the buying process quickly and easily will give you that competitive edge.

Learn More

Mobile Card Readers

Mobile card readers are great for business owners who don’t want to be tethered to a checkout counter. If you frequent trade shows, farmer’s markets, or festivals with your goods, having a way to accept credit cards on the go is essential. Your customers are starting to carry less and less cash, with 58% say even after the coronavirus pandemic is over, they still won’t go back to using cash. Losing a sale because of your cash-only policy is simply unacceptable in this day and age.

Typically, mobile card readers plug into your mobile device and connect with an application. Stax’ mobile app has the ability to type in payment information as well, giving business owners the option of swiping (or dipping) with a card reader or keying in payment information manually, giving you multiple ways to include mobile credit card processing in your business.

Mobile Optimized Online Shopping Carts

Online shopping carts are payment gateways that allow for the purchase of goods on a website. Consumers are using their mobile devices to browse the web more than ever, and this goes for eCommerce websites as well. Not only should your website be optimized for mobile viewing, but your payment experience should also be as well.

What does this mean? It means designing your website in such a way that forms are easy to navigate and use:

  • Responsiveness: When users access your website from different-sized devices, the layout should respond and change to fit the size of the screen. If users need to pinch and pull the screen around to see all of your content, they are less likely to engage with your page the way you want them to.
  • Simplicity: Often, all of the content you have on your website isn’t necessarily needed on your mobile version. Condensing sections down to tappable images or collapsed menus enhance the design and make it easier for your mobile users to quickly scan your site and find what they need. This is also true for payment forms. Make sure you are only asking for the information you critically need – reducing the number of field entries required to complete the transaction.
  • User Experience: Overall, the user experience should be fast and seamless. Mobile users are on the go, meaning they don’t have time to battle with finicky forms and enter in multiple pages worth of information. Keep your customer in mind at all phases of the design process.

Mobile Invoicing Tools

When most people think “invoicing,” they think it’s time-consuming, administrative, boring, and complicated. This doesn’t have to be the case. The right mobile invoicing and billing tool can make your billing more interesting. Not only do these mobile softwares allow you to create invoices and send them from your mobile device, but you can check up on the status of your payments and even track sales data in most cases.

Top 5 Most Important Features for Mobile Payment Technology

In-Person Payments

You might assume that only retail businesses benefit from the ability to take mobile payments in person, but that isn’t always the case. The ability to swipe a card in person or key in payment information on the spot is valuable for not just retail and restaurant locations, but professional and vocational services as well. Think about an electrician in the field or a lawyer at a client meeting. Getting billing out of the way quickly and easily reduces stress and gets you paid faster.

Invoice Payments

Invoicing is a key feature function for payment software. If you’re paying for a mobile payments application and you don’t have the ability to draft, save, send, and receive payments from an invoice, you might want to start exploring better options.

Data Analytics

As you continue to take payments with your mobile device, you’re going to want the ability to track that data. Different solutions range in sophistication, but at the very least you’re going to want to be able to track sales volume, payment status, number of unique customers. These basic data points will help you gain a better understanding of your business and make more informed decisions.

Inventory Management

Not only is a cloud-based system more secure and reliable, but the ability to link your inventory with your payment system also automates your inventory tracking process. Some systems even have the ability to snap pictures of your products, making it easier than ever for your staff to find items and add them to orders.

Branding Capabilities

Your brand is your company’s identity. Make sure people remember it by having your branding elements – logo, colors, social media pages – featured at all stages of the buyer’s journey. Your mobile payment solution should give you the option to upload your logo, at the very least, but some allow you to customize your receipts and invoices even further.

When it comes to choosing the best mobile credit card solution for your business, you’ll have to evaluate all the factors above. You may want a whole mobile POS system or just a mobile card reader. You should also consider whether you currently or are planning on selling via eCommerce and therefore accepting online payments.

To learn more about Stax’ mobile payment solutions, request a custom quote today. We will be glad to answer any questions you may have and help you make use of our powerful all-in-one payments platform.

Request a Quote

FAQs About Mobile Credit Card Processing

Q: What is mobile credit card processing?

Mobile credit card processing allows businesses to accept credit card payments using mobile devices such as smartphones or tablets. This is facilitated through mobile apps or attachments that can accept credit card swipes, taps, or chip inserts. It’s particularly useful for businesses on the go, such as food trucks, pop-up shops, or service providers who work at different locations.

Q: What is a mobile credit card processor?

A mobile credit card processor refers to the hardware and software that work together to enable mobile devices to accept credit card payments. The hardware might be a card reader that connects to a mobile phone or tablet, while the software is typically an app installed on the device that manages the transaction process.

Q: How does mobile payment processing work?

Mobile payment processing works by using a mobile device connected to a card reader or directly through an app that reads credit card information. The process involves connecting  the card reader to a mobile device. Then, the  customer either swipes, inserts, or taps their card on the reader. From there, the mobile app communicates with the payment processor to authorize the transaction.

Q: Can you take card payments without a card reader?

Yes, you can take card payments without a card reader by manually entering the card details into a mobile payment app. You can also use virtual terminal, which allows you to process payments over the phone or online by entering the customer’s credit card details into a secure web interface.

 

Understanding Credit Card Processing Fees for Merchants: How Much Does Processing Credit Cards Cost?

Accepting credit card transactions is no longer a decision of whether to but rather how to. With cashless now BEING king, credit and debit cards are the primary method for your customers to make payments.

Pre-pandemic, 62.3% of consumer payments came through card payments. And electronic payments were at 14.2%, closing in on cash at 15.5%. While the figures aren’t from the COVID-affected spending period, it’s fair to assume that cash is down while cards and electronic payments are way up. Credit card and debit card payment processing fees apply to them all.

With the number of debit and credit card purchases increasing, it’s important you’re able to calculate credit card processing fees. To help you do that, we’ve put together the ultimate guide.

TL;DR

  • Credit card processing is a complex process that involves several parties in addition to the merchant and consumer – and quite a few steps more than a simple swipe, tap, or dip.
  • For a merchant to accept credit cards, they need to pay both credit card processing fees to the banks involved and for the soft and hardware required to process cards. Typically, the merchant’s payment processing software will build the credit card processing rates into their fee.
  • Choosing the payment processor and other items in your credit card processing tech stack will depend entirely upon your business model.

Processing Credit Cards How It Works

Paying for something with a credit card is deceptively simple. Physically, it appears to be a quick insertion, swipe, or other entry of numbers. But digitally – there are many more steps and parties involved in the transfer of money. 

The parties involved in processing a credit card transaction:

  • Cardholder: The individual or entity holding the credit card and initiating the transaction.
  • Merchant: The business or entity selling goods or services and accepting credit card payments.
  • Acquiring Bank (Merchant Bank): The financial institution that establishes and maintains the merchant’s account, enabling them to accept credit card payments.
  • Issuing Bank: The bank or financial institution that issued the credit card to the cardholder.
  • Card Network (e.g., Visa, Mastercard): The intermediary networks facilitating transactions between acquiring and issuing banks.
  • Payment Gateway: A service provider that facilitates communication between the merchant’s POS system and the acquiring bank’s payment processing system.
  • Processor: An entity responsible for handling transaction data between the merchant, acquiring bank, and card networks. They often provide services such as authorization, clearing, and settlement.

The steps to process a credit card transaction

Step 1: Authorization Request

The process initiates when a customer presents their credit card for payment. The merchant’s point-of-sale (POS) system sends an authorization request to the acquiring bank (also known as the merchant bank) via a payment gateway. This request contains crucial information such as the card number, transaction amount, and merchant details.

Step 2: Authorization Approval

Upon receiving the authorization request, the acquiring bank forwards it to the card network (Visa, Mastercard, etc.) which then routes it to the cardholder’s issuing bank. The issuing bank evaluates the request, checking factors like available credit, fraud risk, and account status. If approved, the issuing bank sends an authorization code back through the same channels.

Step 3: Settlement

With the authorization code in hand, the merchant proceeds with the transaction. At the end of the business day, the merchant batches all authorized transactions and submits them to the acquiring bank for settlement. The acquiring bank debits the funds from the cardholder’s account and credits the merchant’s account, minus interchange fees.

Step 4: Clearing

After settlement, the card network facilitates the clearing process. During clearing, transactions are sorted, and funds are transferred between the issuing and acquiring banks. This ensures proper reconciliation and transfer of funds to the merchant’s account.

Step 5: Payment

Once clearing is complete, the issuing bank transfers the funds to the acquiring bank. The acquiring bank then deposits the funds into the merchant’s account, typically within a couple of business days. This marks the completion of the credit card payment process.

Who Sets the Credit Card Processing Fees?

Contrary to popular belief, it’s not just the credit card companies setting the credit card processing fees. There are three parties that influence what makes up the average credit card processing fees you pay every month:

  • Credit Card Networks – Companies, such as Visa, Mastercard, American Express, and others, that partner with the banks
  • Banks – Financial institutions that issue the above cards to consumers, such as Capital One, Chase, Bank of America, and others
  • Payment Processors – Companies responsible for securing the payments and processing the credit card transaction.

To make fee predictability extra tricky, each of these parties determines their own credit card processing fees independently. Understanding how they each function helps to figure out the math behind the final fee.

How Merchant Fees Are Made Up

The unavoidable basics of credit card processing fees are interchange rates and assessment fees.

Interchange Fees

Although interchange fees go toward paying the issuing banks, the major credit card networks — Visa, Mastercard, and the likes — control the interchange rates. This is the largest chunk of the merchant fees that need to be paid for payment processing, amounting to between 70% and 90% of the average credit card processing fees.

Typically, Visa and Mastercard would adjust these fees twice each year. However, 2020 and 2021 have been exempt from these changes, which are paused until April 2022, giving merchants some respite from the financial stress of the pandemic.

While the pause on adjustments is welcome, interchange fees are still tricky to calculate.

These fees are charged whenever a credit card or debit card transaction is made, whether they checkout in-person, online or through digital payment. The basis for these fees is the credit risk that these financial institutions take on when handling credit card transactions.

As risk-based fees, these institutions have calculated different rates for different classifications of transactions. Visa, for example, currently has more than 150 different classifications. Each network has its own. Amex and Visa, as a result, will have different interchange fees.

Considered in the fees are the types of credit card, processing type, and type of business — e.g., the merchant category code (MCC).

The credit card type reflects whether the payment is made with a credit or debit card. Then, there are also different rates for business credit cards and cards tied to rewards programs.

The processing type factors in whether it’s a card-present transaction (taken at a point of sale system) or a card-not-present transaction. Card present transactions tend to be the cheapest option as they are the lowest risk. Payments made via e-commerce platforms and through mobile devices can also have different rates.

Finally, the merchant category code (MCC) is a four-digit number that credit card companies use to classify consumers’ transactions. This looks at the use of particular cards as well as the category of your business. Restaurants, for example, will be charged differently to hotels, which will then be charged differently to utility companies.

Learn More

Assessment fees

Assessment fees are paid to card networks, i.e., Mastercard, Visa, and Discover. They are determined and adjusted by the credit card networks — not the payment processors — and they cover the operating costs of credit card networks. These are also known as pass-through fees.

These fees are determined by a range of factors:

  • The type of card used by the cardholder
  • The transaction amount
  • Incidental fees (such as processing foreign transactions).

Each network sets and charges its own assessment fees. As of January 2021, according to Wells Fargo, those fees are as follows:

Network Assessment Fee Description

Network Assessment Fee Assessment Fee Description
Visa 0.14% Applies to credit card transactions
Visa 0.13% Applies to debit and prepaid card transactions
Mastercard 0.1375% Applies to all Mastercard sale transactions
Discover 0.13% Applies to all Discover sale transactions
American Express 0.16% Applies to all Amex sale transactions

Additional Network and Card Issuer Fees

In some cases, you may have to pay the fees below, which come from the card brands (Amex, Discover, Mastercard, and Visa):

  • Fixed Acquirer Network Fees (FANF): Charged based on whether the transaction is card-present or card not present, number of locations, and sales volume.
  • Kilobyte Access Fee (KB): Charged for each authorization transaction that is submitted to the card network for settlement.
  • Network Access and Brand Usage Fee (NABU): Charged by MasterCard on all settled or refunded credit/debit card transactions.
  • Acquirer Processing Fee (APF): Charged by Visa on all US-based businesses Visa credit card authorizations.
  • Chargeback fees are applied when a customer files a chargeback against you.
  • Credit card processing company fees like early termination fees or fees to adhere to security standards.

Your merchant account provider is the organization you’ll deal with most. While interchange and assessment fees are unavoidable, the power to impact your fees the most comes with which payment processor you choose to work with.

Payment Processor Pricing Models

Payment processors work under four different pricing models:

1. Flat-rate pricing

Flat-rate pricing blends all of the fees into one, easy to predict flat-rate fee. This is a great relief for many merchants that want to avoid the surprises that can come with other pricing models. However, flat fee structures factor in a buffer to ensure that the merchant services provider covers the fees they have to pay to the issuing banks and credit card networks. This can work out a little more costly than other options.

Square and PayPal are two that have popularized this model.

The benefit of flat-rate pricing is its predictability. No matter the transaction type – credit card, debit card, reward card – the fees are the same. These are typically charged with a percentage as well as a per-transaction rate — e.g., 3% + $0.10.

2. Interchange plus pricing

Interchange plus pricing is a pricing model that charges based on whatever the interchange rates are at that particular moment, “plus” a markup fee that pays your processors processing costs — e.g., 2.1% + $0.10 per transaction.

The benefit of the interchange-plus pricing model is transparency. When your transactions are in lower interchange fee categories, you get to benefit from those lower rates. The same is true for higher interchange rates, also. So it’s important to be mindful of whether your transactions are mostly in high or low categories.

The challenge with interchange plus can be the math behind it. Forecasting can be tricky when you have to predict the interchange rate, plus the transaction fee. These can add up.

Helcim and Stripe are the more popular payment processors offering interchange plus pricing models.

3. Tiered pricing

Tiered pricing is structured into three tiers, qualified, mid-qualified, and non-qualified. Essentially passing on the risk costs from the credit card networks, the tiered model offers the lowest rates for qualified transactions and the highest for non-qualified transactions.

Qualified rates typically apply for debit cards and non-reward credit card transactions, while the transactions that attract higher rates are the “fancier” cards, such as business cards and rewards cards. Standard credit cards can fall in the mid-qualified range.

Additional factors that can impact tiered pricing are: 

  • Card-present or swiped cards (qualified)
  • Keyed-in transactions (mid or non-qualified)
  • Card-not-present transactions (non-qualified).

With tiered pricing, merchants typically pay 1.5% to 2.9% for card-present transactions, while keyed-in transactions attract a rate of around 3.5%. Card-not-present transactions also attract higher fees.

4. Membership-based pricing

Unlike all of the other models, membership pricing does not take a cut out of your sales. E.g., that $0.10 fee for every transaction. Membership pricing instead is a subscription model where you pay a monthly fee and then whatever the interchange rates are at the time of transaction.

The membership model has one of the most transparent credit card processor account fees. The predictability of your bank account fees makes membership/subscription pricing models ideal for small businesses looking to set up credit card processing.

Membership-based processors, such as Stax make their money through the annual or monthly fees, rather than taking a cut of your sales.

Average Credit Card Processing Fees

Based on 2021 data from Visa, Mastercard and Discover, and American Express, the average credit card processing fees are currently:

Payment network average credit card processing fees

  • Visa:  1.29% + $0.05 to 2.54% + $0.10
  • Mastercard:  1.29% + $0.05 to 2.64% + $0.10
  • Discover:  1.48% + $0.05 to 2.53% + $0.10
  • American Express:  1.58% + $0.10 to 3.45% + $0.10

What Do You Need When Processing Credit Cards?

When it comes to processing credit cards either in-person or online, merchants require a mix of hardware and software. What that exact mix will vary merchant to merchant, based on their specific needs.

Credit Card Processing Hardware

Hardware options are most notably different between in-person and online credit card processing. For in-person payment processing you’ll need:

  • A point-of-sale (POS) system that serves as the central hub for in-person transactions. It typically includes hardware components such as a touchscreen monitor, barcode scanner, cash drawer, and receipt printer. Modern POS systems often come with built-in card readers capable of accepting various payment methods, including EMV chip cards, magnetic stripe cards, and contactless payments (NFC).
  • A credit card reader or terminal for swiping or dipping physical credit cards or accepting or other mobile payment options  like Apple Pay or Google Pay. EMV-compliant terminals are essential to process chip card transactions securely, reducing the risk of fraudulent activities. Additionally, NFC-enabled terminals support contactless payments, allowing customers to tap their cards or mobile devices for swift transactions.
  • Seamless internet connectivity for real-time authorization and transaction processing. Merchants should ensure they have stable internet access, either through Wi-Fi, ethernet, or mobile data, to avoid disruptions during peak business hours.

While eCommerce merchants will need:

  • A computer or mobile device with internet access to facilitate online credit card transactions. Whether it’s a desktop computer, laptop, tablet, or smartphone, the device should be equipped with a web browser and compatible with the selected payment gateway and eCommerce platform.
  • Optional: While physical card readers are not required for online transactions, some merchants may opt for virtual terminals to process card-not-present transactions securely. Virtual terminals allow merchants to manually enter card information obtained over the phone or via mail order, facilitating remote payments.

Credit Card Processing Software

When it comes to software, there’s one system both online and in-person merchants will want: payment processing software.

Integrated payment processing software is essential for managing transactions, authorizations, and settlements seamlessly. This software interfaces with the POS or eCommerce system and facilitates communication with the acquiring bank and payment gateway. It should support various payment methods, encryption standards, and compliance requirements to ensure data security and regulatory compliance. This software needs to be EMV compliant to handle chip card transactions securely. 

Online merchants will need a far more robust stack of software systems:

  • An eCommerce platform to serve as the foundation for online sales, providing merchants with a digital storefront to showcase products, manage inventory, and process transactions. Popular eCommerce platforms such as Shopify, WooCommerce, and Magento offer built-in payment processing capabilities or integrate with third-party payment gateways for seamless transactions.
  • A payment gateway is essential for securely transmitting payment data between the merchant’s website and the acquiring bank. It encrypts sensitive information such as credit card numbers, validates transactions in real-time, and facilitates authorization and settlement. Merchants should choose a payment gateway compatible with their eCommerce platform and capable of supporting their preferred payment methods.
  • Secure Socket Layer (SSL) certificates to encrypt data transmitted between the customer’s web browser and the merchant’s website, ensuring privacy and data integrity. SSL certificates are particularly crucial for online transactions to protect sensitive information from interception by malicious actors.

Finding the Right Credit Card Processing Company

With so much to consider and myriad different fee structures to navigate, the best way to find the right provider for your small business is to shop around. Put merchant account providers through tough scrutiny and see which is going to cover all of your needs without any hidden fees.

The best providers are those that can grow with you. If you expect to expand, ensure that you research which provider suits your business at its level now as well as when your transaction volume increases. Stax can ensure that while you grow, your credit card processing fees don’t.

Request a custom quote to see how the Stax can reduce your credit card processing fees.

Request a Quote


FAQs about Credit Card Processing Fees

Q: What are credit card processing fees for merchants?

Credit card processing fees are the costs associated with accepting credit and debit card payments. These fees are set by three parties: Credit Card Networks, Banks, and Payment Processors. They can vary depending on factors like the type of card used, the transaction amount, and the type of business.

Q: Who sets the credit card processing fees?

Credit card processing fees are set by three entities Credit Card Networks (such as Visa, Mastercard, American Express), Banks (that issue the credit cards), and Payment Processors (companies responsible for securing the payments and processing the transactions).

Q: What are Interchange Fees and Assessment Fees?

Interchange fees are a part of the credit card processing fees that go toward paying the issuing banks. They are controlled by the major credit card networks and make up the largest chunk of the merchant fees. Assessment fees, on the other hand, are paid to card networks and cover the operating costs of credit card networks. They are determined and adjusted by the credit card networks and also known as pass-through fees.

Q: What factors determine the Interchange Fees?

Interchange fees are determined by the credit risk that financial institutions take on when handling credit card transactions. They are influenced by the types of credit card, processing type, and type of business.

Q: What are the different pricing models used by Payment Processors?

Payment Processors work under four different pricing models: Flat-rate pricing, Interchange plus pricing, Tiered pricing, and Membership-based pricing. These models differ in their fee structures, transparency, and how they impact the total processing fees.

Q: What is the average credit card processing fee for merchants?

Based on 2021 data, the average credit card processing fees typically range between 1.29% + $0.05 and 3.45% + $0.10 per transaction. However, these fees can vary widely depending on several factors, including the credit card network, the type of credit card used, and the merchant’s industry.

Q: How can merchants find the right credit card processing company?

Merchants can find the right credit card processing company by comparing different providers, understanding their fee structures, and assessing their growth potential. It’s important to choose a provider that can grow with the business and doesn’t have hidden fees.

Q: What are some additional network and card issuer fees?

In addition to interchange and assessment fees, merchants may have to pay Fixed Acquirer Network Fees (FANF), Kilobyte Access Fees (KB), Network Access and Brand Usage Fees (NABU), and Acquirer Processing Fees (APF). These fees are set by the card brands and vary depending on factors like transaction type and sales volume.

Q: What is the impact of credit card processing fees on small businesses?

Credit card processing fees can significantly impact a small business’s bottom line. It’s essential for businesses to understand these fees and choose a credit card processing provider that offers competitive rates and transparent pricing.

Q: Can credit card processing fees change over time?

Yes, credit card processing fees can change over time. For instance, major credit card networks like Visa and Mastercard typically adjust their fees twice a year. However, changes have been paused until April 2022 due to the pandemic.


 

What is a Payment Management System?

SMB owners wear many hats, managing everything from staff to sales. Adding to the already tough job of managing a small or medium business is the complex task of understanding how payment processing works, including managing the fees, equipment, accounts payable and more. 

Here’s where a Payment Management System (PMS) can swoop in as your financial hero to understand your business better.

TL;DR

  • Payment Management Systems manage payment processing so you can accept payments, send invoices, track transactions, and view financial data.
  • Look for a PMS that can serve as an all-in-one platform for payment processing, integrates with other technologies, offers appropriate POS equipment, and prioritizes security compliance.
  • Government agencies have a payment management system to manage grant award payments, making the search for payment management system information more complicated.

Learn More

What is a Payment Management System?

Think of a PMS as your financial command center. It consolidates all your payment processing needs into one user-friendly platform. A PMS accepts payments, sends invoices, tracks transactions, and analyzes your financial data—all in one place. 

You may also hear the term Cash Management System (CMS) in your research. A cash management system focuses on the big-picture health of your cash flow, while a payment management system handles the processing of individual transactions. Imagine cash flow as a river—cash management oversees the whole flow, while payment management ensures water gets in and out smoothly. 

Your PMS is a central hub to manage payment requests and store banking information (like your routing and bank account number for ACH payments). A comprehensive PMS is especially useful for SMBs, where efficiency is key and understanding financial performance in your business shouldn’t be overcomplicated. 

Key Features of a Supercharged PMS

So, what exactly should a payment management system provide to your business? Key features of a well-built PMS include:

  • Efficient transaction processing: Speed and accuracy are key, and a good PMS should process payments quickly and with a user-friendly interface, keeping your cash flow smooth and customers happy.
  • Robust security measures: Any PMS worth its salt needs to have standard security features like encryption, fraud detection and compliance with industry standards, including the PCI DSS.
  • Helpful integration capabilities: You don’t want a PMS siloed from other technology. Integration with your accounting software, CRM, or inventory system saves you time and effort when analyzing financial performance.
  • User interface and experience: Your PMS should be intuitive and easy to navigate, allowing you to focus on running your business, not wrestling with technology.
  • Reporting and analytics: A good PMS provides you with reporting and analytics tools, giving you valuable insights into your cash flow, customer trends, and spending patterns.

The Diverse World of Payment Management Systems

If you’re seeking to understand what payment management systems are, a quick internet search will yield some information worth explaining before we get too far into the various PMS options for SMBs.

The U.S. Department of Health and Human Services (HHS) also has a Payment Management System, which is a centralized grant payment system managed by the federal government. The Program Support Center for Payment Management Services (pms.psc.gov) serves as “a fiscal intermediary between federal awarding agencies and award recipients.” Also available through the HHS is the Federal Financial Report (FFR), which provides information about grant award spending, grantee information, and various disclosures.

Essentially, these federal agencies have a specific PMS to track grant award payments and payee information, ensuring federal cash disbursements are securely managed, and grant recipients can receive their awards in an auditable way.

Now, let’s break down various other terminology related to payment management systems you’ll encounter in your small or medium business:

  • Merchant account providers act as a middleman between your business and the bank, allowing you to accept credit and debit cards.
  • Payment gateways securely process online payments, acting as a bridge between your website and the payment processor.
  • Payment processors handle the nitty-gritty of authorization, settlement, and transfer of funds between your business and your customer’s bank.
  • Point-of-sale (POS) systems are the all-in-one systems you see at retail stores, handling in-person transactions and often integrating with inventory management software.
  • Mobile payment systems let your customers use different payment methods like their digital wallets, contactless card payments and more, offering a convenient and secure way to accept payments on the go.

What Are the Benefits of a PMS?

A payment management system that handles incoming revenue and purchase expenditures effectively, is one of the many tools at your disposal to optimize your business operations. Not only should your PMS help simplify payments and reduce manual time spent, but it should also help you make more money. In fact, 72% of SMBs believe automating accounts payable tasks would improve their cash flow. Here are a few benefits at the top of our list:

  • Boost efficiency: Automate tasks like sending invoices and reconciling accounts, freeing up your time to focus on growing your business.
  • Enhance security: Gain peace of mind with secure transactions, trusted fraud protection, and industry-standard compliance features—all essential components of a good PMS.
  • Streamline checkout: Move beyond clunky POS systems and give your customers a better experience. Modern POS tools are user-friendly, simple, and speedy.
  • Empower decisions: You’ll gain valuable insights from financial data, helping you make informed business decisions with a well-built PMS.

Choosing the Right Payment Management System

With so many options, choosing the perfect PMS can feel overwhelming. Here’s what to consider:

  • Assessing your business needs: Look at factors like the volume of transactions in your business and the most common payment methods used by your customers to determine the best PMS capabilities for your business.
  • Cost and fees: Subscription fees, transaction costs, and miscellaneous charges vary depending on your payment processor. Use actual or projected data to price out the true cost of your payment provider before signing a contract to ensure you’re not overpaying.
  • Integration with other business tools: Does your PMS integrate seamlessly with existing software? Data silos are never good for business, especially when we’re talking about your finances, and integrations make your life easier.
  • Secure payment comes standard: Make sure your PMS meets Payment Card Industry compliance standards—this is a non-negotiable.
  • Customer service on your terms: When things don’t run smoothly, having customer support 24/7/365, means you can spend time on what matters most.

Conquering Implementation Challenges

Implementing new technology like a PMS is not without its challenges. To avoid long calls with the help desk, make sure your PMS integrates well with other systems and opt for a partner that can support you with implementation. 

You’ll also want to make sure to assign appropriate user access to your staff and work with any new user so they know how to use the technology, including both hardware and software training to help avoid errors and ensure a better user experience.

Ready to Tame Your Financial Chaos?

At Stax, we understand the juggling act all small and medium businesses contend with. That’s why all of our solutions are designed to simplify your life—from our subscription-based pricing to top-of-the-line POS equipment. 

With Stax, you get all the features mentioned above, plus exceptional customer service as your payment management system.

Ready to get started? Get in touch!

Request a Quote

FAQs about Payment Management Systems

Q: What is a payment management system?

A Payment Management System (PMS) is a software solution designed to handle all aspects of payments within an organization or between businesses and their customers. This type of system typically automates processes such as payment processing, invoicing, billing, and tracking of payments.

Q: What is the PMS system for federal grants?

The PMS system for federal grants refers to the Payment Management System operated by the U.S. Department of Health and Human Services (HHS). This system is designed to manage the disbursement of funds for federal grants and cooperative agreements. It provides a centralized platform for grant recipients to draw down funds, and for federal agencies to monitor and manage the distribution of these funds.

Q: What are the benefits of having a payment management system?

One of the key benefits of a PMS is efficiency. It automates payment processes and reduces manual effort and speeds up transactions. Beyond that, having a robust PMS could improve your cash flow. Real-time tracking of payments and receivables helps businesses manage your funds flow more effectively. PMS can also  ensure compliance with financial regulations and standards by providing accurate records and reports.

Q: How do you select the right payment management system?

Start by assessing your needs and specific payment processing needs, including types of payments, volume, and any industry-specific requirements. From there, look for systems that offer the features you need, such as multiple payment methods, integration capabilities, reporting tools, and compliance support. Be sure to compare  pricing, including setup fees, monthly fees, and transaction fees, to find a solution that offers good value.

Everything You Need to Know About Secure Payment Processing Systems

Data protection and security are crucial not just for safeguarding customer information, but for protecting business owners as well. Having and maintaining secure payment systems is integral for protecting yourself and your customers.

Because more credit card-oriented purchases take place online, security and fraud protection are top priorities. Making sure there are secure payment technology policies and procedures within your company will guarantee the integrity of present and future transactions.

Businesses are converting to digital and online platforms to stabilize their profitability at this time. The need for security is at an all-time high and business owners need to enhance protection for their customers and secure their sites to maintain trust.

Sure, you might know about ensuring to have an SSL certificate for your site URL and may have other fundamental factors in place, but secure payment policies require more coordination, effort, and awareness.

If you currently run an online business or you’re interested in adding an online shopping cart to your business, protecting your customers is priority number one.

Security threats can come from anywhere, and that is why you must institute checks and specific credit card processing policies that secure sensitive client details.

Enter secure payment systems (SPS).

TL;DR

  • Secure payment systems are crucial for eCommerce stores and companies to utilize because they protect both consumers and businesses from theft and fraud.
  • Secure payment systems are easy to implement, as you use your payment processor to create a secure payment gateway.
  • By combining a secure payment system with secure payment habits like not collecting excess data from customers, you’ll go a long way in safeguarding your business against fraud.

Learn More

Related Content: What is a Payment Gateway?

What Are Secure Payment Systems?

A secure payment system pertains to payment processing solutions and information technology that help protect people’s financial and personal data from fraud and unauthorized activities. Secure payment systems are essentially the digital guardians of online shopping, keeping the customer’s money safe throughout the transaction.

Secure payment systems comply with strict security standards and regulations set forth by governing bodies and industry organizations. Compliance with these standards ensures that merchants and payment processors implement robust security measures to safeguard financial data. 

The primary security standards that payment systems typically adhere to include:

  • Payment Card Industry Data Security Standard (PCI DSS): PCI DSS sets forth requirements for securing payment card data, including encryption, access control, network monitoring, and regular security testing. Compliance with PCI DSS is mandatory for businesses that handle credit card transactions.
  • EMV Standards: EMV (Europay, Mastercard, and Visa) standards govern the technology used in chip-enabled payment credit and debit cards and terminals. These standards help prevent card-present fraud by authenticating transactions through dynamic data authentication and cryptographic processes.
  • Payment Application Data Security Standard (PA-DSS): PA-DSS applies to software vendors and developers of payment applications. It outlines security requirements for ensuring the secure storage and transmission of cardholder data within payment applications.
  • ISO/IEC 27001: This international standard provides a framework for establishing, implementing, maintaining, and continually improving an information security management system (ISMS). Adherence to ISO/IEC 27001 helps ensure the confidentiality, integrity, and availability of sensitive data, including payment information.
  • Regulatory Compliance: Payment systems may also need to comply with specific regulations and laws related to financial transactions and data protection, depending on the region and industry. Examples include the General Data Protection Regulation (GDPR) in the European Union and the Gramm-Leach-Bliley Act (GLBA) in the United States.

How Do Secure Payment Systems Work?

Secure payment systems employ various technologies to protect sensitive information and prevent unauthorized access or fraudulent activities. 

1. Encryption

The fundamental component of secure payment systems is encryption. Credit card encryption is a process where sensitive information, such as a credit card number, is encoded into a secure format to prevent unauthorized access or interception during transmission over the internet. 

Encryption works by scrambling plain, readable data (plaintext) into an unreadable format (ciphertext) using an algorithm and a key. The algorithm is a set of mathematical instructions that dictate how the encryption and decryption processes occur, while the key is a unique piece of information that controls the encryption and decryption operations.

When encrypting data, the algorithm takes the plaintext and combines it with the key to produce ciphertext. This ciphertext appears as a random sequence of characters and is meaningless without the corresponding key.

To decrypt the ciphertext and retrieve the original plaintext, the recipient uses the same algorithm but with the decryption key. The algorithm applies the key to the ciphertext, reversing the encryption process and transforming the ciphertext back into plaintext.

Encryption ensures that even if intercepted, the encrypted data remains unintelligible to unauthorized parties, providing confidentiality and security for sensitive information transmitted over networks.

2. Authentication Methods

Secure payment systems also implement a variety of authentication methods to verify the identities of both parties involved in the transaction. These include:

  • Passwords. Users create unique passwords that they must enter to access their accounts or complete transactions. This method is widely used but can be vulnerable to password guessing or theft if not properly managed.
  • Two-Factor Authentication (2FA). 2FA requires users to provide two different forms of verification before accessing their accounts or making transactions.
  • Digital Certificates. Digital certificates are electronic documents that verify the identity of a user or website. They are issued by trusted Certificate Authorities and are used to establish secure connections between parties in online transactions.

3. Tokenization

Tokenization is the act of replacing the full credit card number with a unique token that is meaningless on its own and cannot be reverse-engineered to obtain the original data.

Tokenization occurs before encryption, adding an additional layer of security to credit card transactions. Tokenization ensures that even if the encryption is intercepted and decrypted, the most sensitive information of the transaction is still hidden.

A payment processor that implements SPS can protect your business and customer data in the following ways.

Protect Your Customers and Your Business from Chargebacks

When a fraudulent purchase occurs at your online store, it could lead to a credit card chargeback. A chargeback is when a credit card transaction is reversed by the card issuer, usually initiated by the cardholder, due to a dispute with the merchant over the quality of goods or services received, unauthorized use of the card, or other reasons.These chargebacks mean directly issuing a refund to the customer whose credit card was used in the fraudulent transaction.

If your business is subject to a chargeback, you and your company can end up paying extra fees to your credit card processor as well.

There are steps businesses can take to respond to a credit card chargeback if the business owner would like to dispute it. But in the case of fraud, securing your payment systems (SPS) is the best protection, as it’s the best way to prevent fraud from happening in the first place. When you secure your payment systems, your customers can shop and use credit card payments at your online store with confidence.

Aspects such as chargebacks are a part of payment processing that many businesses may not spend as much time thinking about when observing and instituting secure payment processing (SPS) habits.

But these are the details that matter when processing payments online.

How to Secure Your Online Store with a Payment Gateway

A secure payment gateway is the best tool for protecting your payment systems. A secure payment gateway is a technology platform that facilitates the secure transmission of payment information between a merchant’s website or point-of-sale system and the payment processor or acquiring bank. It acts as a bridge between the customer, the merchant, and the financial institutions involved in processing a transaction.

 A secure payment gateway plays a crucial role in ensuring the safety and integrity of online transactions because it does the encryption and tokenization of cardholder information. This means that the cardholder information is far less vulnerable to data thieves, protecting you and your customers from fraud.

The best payment gateway acts as a secure “checkpoint” for transactions from customers to you. Most merchant services providers will offer eCommerce solutions, including shopping cart integrations and secure payment (SPS) gateways, meaning you can easily set up a secure payment system by working with your payment processor or merchant services provider

Implement Security Measures

A secure site will reassure your customers that their information is safe and stays private. Using SSL is a common and necessary step to protect that information. A Secure Sockets Layer, or “SSL”, ensures that sensitive information, such as login credentials, payment details, and personal data, remains confidential and secure during transmission. 

SSL encrypts all that info, which helps prevent unauthorized access and interception by malicious third parties, safeguarding users’ privacy and protecting against potential cyberattacks, such as man-in-the-middle attacks. 

An SSL certificate will reassure your website’s visitors that their data is secure if they enter in their payment information. Browsers will even show if a website has an SSL certificate or not.

In some cases, the payment processor may be using Transport Layer Security (TLS). This is an updated version of SSL and it implements a cryptographic protocol that encrypts and secures data sent over the web.

85% of Internet users reported that they would stop using a website if it wasn’t secure. So a TLS or an SSL certificate offers peace of mind and tightens your online store’s security.

Don’t Collect Too Much Information

Another way to boost your site’s security is to collect only the information you need. You’ll be cutting down the risk of a data leak or a security breach if you only collect what you need and don’t require your customers to create an account to check out. At the same time, you’re improving the customer experience by streamlining your entire checkout process.

Research shows that 23% of customers abandon their shopping carts if they have to create an account, while 12% abandon their carts if checking out is too confusing. As such, a streamlined and secure checkout is the best way to protect your customers’ data and keep them happy.

The data points most merchants can cut down to are:

  • Payment information such as credit card numbers, expiration dates, and security codes (CVV/CVC) for processing the payment. In some cases, alternative payment methods such as bank account information or digital wallet details may also be collected.
  • Billing address is required for verification purposes and to ensure that the payment card information matches the address associated with the cardholder’s account.
  • Contact information, including the customer’s email address and/or phone number, is necessary for sending order confirmations, updates on the status of the order, and resolving any issues related to the purchase.
  • Shipping address is also required for any physical deliveries.
  • Finally, depending on applicable privacy regulations such as the General Data Protection Regulation (GDPR) in the European Union, merchants may need to obtain explicit consent from customers for collecting and processing their personal data.

Finding the Right Payment Processor

Ultimately, ensuring that you have a secure payment system starts with choosing the right credit card processor, since that’s who you’ll be running your secure payment gateway through. That’s why when shopping around for merchant services providers, you must choose a payment platform that makes security a top priority. Ask vendors questions on:

  1. How they keep card transactions secure
  2. The steps and tools they use to protect credit card information
  3. How they ensure compliance with Payment Card Industry Data Security Standards
  4. The financial institutions they work with
  5. Who has access to payment data

Remember that when it comes to protecting your business, securing sensitive data can be as simple as using the right tools. And a merchant services provider will have the resources you need to protect your business from fraud and data breaches. With the necessary precautions, you can avoid penalties and your customers can shop with confidence at your online store.

Related Content: PCI DSS Compliance: How Stax Protects Your Payments

Final Words

At Stax, we’re committed to securing sensitive cardholder data. As a Level 1 PCI Service Provider, we take the utmost care in protecting this data. We use a host of security measures to prevent fraud and ensure PCI compliance across all of our products.

Our team will always be available to assist you in staying within PCI standards. In the new digital age of payments and shopping, security is top of mind for businesses. With Stax, you can rest easy knowing your data is protected and secure.

To learn more about our online payment solutions and services or to have a free consultation, don’t hesitate to reach out to Stax today.

Request a Quote


FAQs about Secure Payment Systems

Q: What are Secure Payment Systems (SPS)?

Secure Payment Systems (SPS) refer to payment processing solutions and information technology that help safeguard people’s personal and financial data from unauthorized activities and fraud.

Q: How do Secure Payment Systems protect businesses and their customers?

Secure Payment Systems can protect businesses and their customers in various ways. They can prevent fraudulent purchases that may lead to credit chargebacks. By incorporating SPS, customers can confidently shop and use credit card payments on your online store, knowing their sensitive information is protected.

Q: What is a secure payment gateway?

A secure payment gateway is a PCI-compliant tool that encrypts and tokenizes cardholder information to protect against data thieves. This tool can serve as a secure “checkpoint” for transactions from customers, further protecting the integrity of your payment systems.

Q: What are some security measures for secure sites?

Common security measures include Secure Sockets Layer (SSL) certification, which encrypts the customer’s data as it moves between the website and the server. Other tools include Transport Layer Security (TLS), which implements a cryptographic protocol that encrypts and secures data sent over the internet.

Q: Why is limiting data collection important for security?

Collecting only the essential information reduces the risk of data leaks or security breaches. By streamlining your checkout process and not making account creation mandatory, you can further enhance your site’s security and improve the customer experience.

Q: What aspects should be considered in choosing the right payment processor?

When selecting a payment processor, ensure it prioritizes security and complies with Payment Card Industry Data Security Standards. Look into how they secure card transactions, protect credit card information, their associated financial institutions, and who has access to payment data.

Q: What role does a merchant services provider play in secure payment systems?

A merchant services provider can offer the necessary resources and tools to protect your business from fraud and data breaches. They can implement security measures to prevent fraud and ensure PCI compliance across all products, safeguarding the data and giving customers confidence to shop at your online store.


 

EMV Chip Cards: What You Need to Know About PIN or Signature Cards and How They Work

EMV (Europay, Mastercard, and Visa) chip card use has continued to expand in use since its tumultuous rollout in 2015. The EMV standard has now become a global standard for cards equipped with computer chips and the technology used to authenticate chip-card transactions. Yet, while time has provided customers and businesses with more education on the security benefits of EMV card chips, many businesses and consumers are still confused about key components.

One area that continues to cause confusion is the difference between ‘chip and PIN’ and ‘chip and signature’. 

TLDR

  • Chip and PIN vs chip and signature refers to the way the cardholder provides authorization for the purchase. Chip and PIN cards are authorized with the cardholder’s personal identification number (PIN), while chip and signature are authorized by the cardholder’s signature that is matched to the back of the card or to a signature on file in the credit card’s database.
  • Whether signature or PIN authorized, EMV chip cards are the new global standard for debit and credit cards due to the increased security of EMV technology over the classic magstripe.
  • The chip does not affect the price of processing payments. You will still be subject to the costs of debit vs. credit payments, etc.
  • During the EMV chip card rollout, consumers reported frustration with slower transaction times. However, there are very few problems associated with EMV cards as of now.

So what is the difference between these two EMV chip card payment formats?

What Types of EMV Chip Cards Are There?

There are two types of EMV chip cards – ‘chip and PIN’ cards, and ‘chip and signature’ cards. 

A consumer using a chip and PIN card will enter their PIN (Personal Identification Number) to authorize a purchase. The PIN adds an extra layer of security, as it verifies that the person using the card is the rightful owner. If the PIN entered matches the one associated with the card, the transaction is approved. If not, the transaction may be declined. PIN cards are commonly used in regions where PIN authentication is prevalent, such as Europe and many other parts of the world.

A consumer using a chip and signature card will sign for the purchase. The signature is compared with the one on the back of the card or with the signature stored in the card issuer’s system. If the signatures matches, the transaction is typically approved. Signature cards are more commonly used in regions where signature-based authentication is the norm, such as the United States. However, the adoption of signature cards has been decreasing in favor of PIN cards and other authentication methods.

EMV technology is designed to reduce credit card fraud, particularly counterfeit card fraud, by making it more difficult for criminals to create counterfeit cards. The chip in an EMV card generates a unique code for each transaction, making it nearly impossible for fraudsters to duplicate the card’s information for fraudulent purposes. 

However, the level of security provided can vary depending on whether the card is used with a PIN or a signature. Generally, PIN transactions are considered more secure because they rely on a secret code known only to the cardholder, whereas signatures can be forged or otherwise bypassed more easily.

Currently, in the United States, most credit cards are chip and signature, while most debit cards are chip and PIN. Like magnetic strip credit cards, you sign for a purchase when using a chip credit card. When using a chip debit card, you enter a PIN just as you did with your magnetic strip debit card.

It’s worth noting that credit card companies have begun to experiment with new, more secure forms of authentication, due to the insecurities both PIN and signatures face. The not-too-distant future may feature ‘chip and biometric’ cards.

Learn More

What Are the Costs to Accept EMV Chip Cards?

At the time of this writing, there is no difference in cost to accept chip cards as opposed to magnetic strip cards. For example, if your customer uses a chip rewards card, the cost will be the same if they use a magstripe rewards card.

There can be differences in costs to process chip and PIN cards in contrast to chip and signature cards. If a customer uses a chip and PIN debit card, it may be less expensive than if they use a chip and signature card. This is due to the fact that PIN debit processing costs are often lower than credit card processing costs.

Since chip and PIN are typically only available on debit cards in the United States, it is safe to assume that chip and PIN may be cheaper as a result.

Can I Run an EMV Debit Card “as credit”?

Just because there’s no difference in cost to accept chip cards vs. magstripe cards doesn’t mean there aren’t still fluctuations in costs. This is especially true when accepting debit cards, which can be authorized with either a PIN or a signature.

Many chip debit cards provide the option to skip PIN entry and run the card “as credit” instead. The cardholder will sign for the transaction instead of entering a PIN.

When running the debit card “as credit,” the transaction will be charged according to the debit rates noted in Visa and Mastercard’s interchange tables, not according to the debit network fee schedules. In some cases, it’s less expensive for a merchant to accept PIN debit cards than signature debit cards.

Related Post: The True Cost of Debit Card Transactions

When purchasing equipment or deciding on how you’ll accept cards, consider adding a PIN pad so customers can enter PINs for debit transactions.

It’s also worth noting that even though chip cards do not cost more to process by default, some processing companies impose “EMV Non-Enabled” fees for merchants that can’t or won’t accept chip cards. You’ll need to have and use EMV-capable equipment to avoid those fees.

What’s the Difference Between EMV and NFC technologies?

EMV and NFC (Near Field Communication) technologies both came out around the same time and both are involved in the payment process—which can make them easy to confuse. They are quite distinct technologies, though.

EMV

As mentioned, EMV technology focuses on securing card-present transactions through the use of chip cards. The goal of EMV is to reduce counterfeit card fraud and unauthorized use of lost or stolen cards and exclusively deals with payment cards.

NFC

On the other hand, NFC is a short-range wireless communication technology that enables devices, such as smartphones or contactless cards, to communicate with each other when brought into close proximity (usually within a few centimeters). This means that NFC technology is not limited to payment applications and can be used for a wide range of purposes beyond payments, such as data exchange and access control.

In the context of payments, NFC technology allows for contactless transactions where the payment device (e.g., smartphone or contactless card) is simply tapped or waved near a compatible payment terminal to complete a transaction.

NFC technology is commonly used in contactless payment systems, mobile payment apps (e.g., Apple Pay, Google Pay), and transit systems for fare payment.

Do I Need a Special Payment Processor for EMV Chips?

The short answer to this is yes, you need to have a payment processor with a chip reader either in addition to or instead of the classic magstripe reader. At this point, it’s unlikely you’ll be able to find a new card reader that doesn’t feature a chip reader, though, so it’s hard to go wrong. (Need some help choosing the right card reader for your business? Check out this guide!) 

How Does EMV Affect Card-Not-Present Transactions?

While EMV technology primarily aims to enhance security for card-present transactions, where the card is physically present in-person at the point of sale, its implementation has had implications for card-not-present (CNP) transactions. (Purchases where the cardholder is not physically present, such as eCommerce or over-the-phone purchases.) 

That said, EMV chip cards have had some effect on CNP transactions:

  • With the widespread adoption of EMV chip technology for card-present transactions, there’s been a liability shift for fraudulent transactions from the card issuer to the merchant if the merchant does not support EMV transactions. However, this shift in liability does not apply to CNP transactions. 
  • Tokenization, which replaces sensitive card data with a unique token, has become more prevalent in CNP transactions. Instead of transmitting actual card numbers, merchants and payment processors exchange tokens that are meaningless to fraudsters if intercepted. This helps mitigate the risk of data breaches and unauthorized access to cardholder information.
  • Some EMV card issuers offer dynamic authentication methods, such as one-time passwords or biometric authentication, for CNP transactions. These methods add an extra layer of security by ensuring that each transaction requires unique authentication credentials, making it more difficult for fraudsters to gain unauthorized access to cardholder accounts.

Are There Any Known Problems in Using EMV Chip Cards?

At the introduction of EMV chips, consumers frequently complained that the transaction speed was much slower than the standard magstripe card. This was the main problem associated with EMV chips and has largely been resolved with time. 

Some merchants do still report issues with chip cards, particularly EMV PIN debit cards. Problems include terminals not requiring PIN entry, lack of cashback options when using a debit card, and terminals not permitting a customer to skip PIN entry.

There are several possible reasons for the issues, including terminals not set up correctly and customers choosing the wrong option. If your machine isn’t prompting for PINs (or requires PIN entry and won’t allow signature authorization instead) it’s a good idea to contact your merchant services provider to troubleshoot the problem.

One other issue that EMV chip cards face is card cloning. 

Card cloning, also known as skimming, involves copying the information stored on the magnetic stripe or EMV chip of a legitimate payment card onto another card, typically a blank card or a card with a stolen or expired account number. 

Here’s a general overview of how card cloning works:

  1. Fraudsters use a device called a skimmer to illegally capture credit card information. Skimmers can be installed on legitimate card readers, such as ATMs or POS terminals. When a card is inserted into the compromised device, the skimmer reads and stores the card’s data, including the card number, expiration date, and sometimes the cardholder’s name. In addition to skimmers, fraudsters may also use hidden cameras or keypad overlays to capture PINs entered by cardholders during transactions. This information can be used in conjunction with the cloned card data to make unauthorized purchases or withdraw cash from ATMs.
  2. Once the card data has been captured, the fraudster typically transfers it to a blank magnetic stripe card or a counterfeit EMV chip card using a card writer or encoder. This creates a clone of the original card that contains all the stolen information.
  3. Before using the cloned card for fraudulent transactions, the fraudster may conduct small test transactions to ensure that the card works properly and that the stolen information is accurate. Once satisfied, they may proceed to make larger purchases or cash withdrawals, often in multiple locations to avoid detection. A fraudster may also sell the cloned card on the black market instead of using it directly themselves.

Final words

At Stax, we’re all about helping merchants implement robust payment security that go above and beyond security standards. To learn more, get in touch and learn how Stax integrated payment processing platform helps prevent fraud and safeguard payment data. 

Request a custom quote to see how the Stax integrated payment processing platform will work for you.

Request a Quote


FAQs about EMV chip cards

Q: What are the two types of EMV chip cards?

There are two types of EMV (Europay, Mastercard, and Visa) chip cards – ‘chip and PIN’ cards, and ‘chip and signature’ cards. The former requires a customer to enter their PIN to authorize a purchase while the latter necessitates a customer’s signature for the purchase.

Q: Which card type is more common in the United States, chip and PIN or chip and signature?

In the United States, most credit cards fall under the category of chip and signature, while most debit cards are chip and PIN.

Q: Are there cost differences when accepting chip and PIN vs. chip and signature cards?

Processing costs can vary when dealing with these two types of cards owing to the fact that PIN debit processing costs are often lower than credit card processing costs. Therefore, a chip and PIN debit card may be less expensive to process than a chip and signature card.

Q: Can an EMV debit card be run as credit?

Yes, many chip debit cards give the cardholder the option to skip PIN entry and run the card “as credit”. In this case, the cardholder signs for the transaction instead of entering a PIN.

Q: What are potential issues that can arise when using EMV chip cards?

Some merchants have reported problems related to EMV PIN debit cards, including terminals not requiring PIN entry, lack of cashback options with a debit card, and terminals not allowing a customer to skip PIN entry. Addressing these issues often involves contacting the merchant services provider or ensuring the terminals are correctly set up.

Q: Is there a difference in cost when accepting chip cards vs. magstripe cards?

As of present times, there is no cost difference when accepting chip cards as opposed to magstripe cards. However, fluctuations in costs may still occur, especially when accepting debit cards.

Q: Are there any additional fees for merchants who don’t accept chip cards?

Yes. Some processing companies impose “EMV Non-Enabled” fees for merchants who don’t have or don’t use EMV-capable equipment.

Q: What’s the significance of having a PIN pad in the transaction equipment?

A PIN pad allows customers to enter PINs for debit transactions. This can be a beneficial addition for merchants, especially given the cost benefits of processing PIN debit cards over signature debit cards.


 

Understanding the Payment Terminal: Integrated vs. Semi-Integrated vs. Non-Integrated Payment Terminals

With only 17% of U.S. consumers using cash for purchases, choosing the right payment terminal for your business is more important than ever. Businesses need to streamline the entire payment process by offering customers a payment setup that’s fast and convenient for credit card transactions. At the same time, you need to address security concerns since you’ll be handling sensitive client information.

To decide which credit card terminal is right for you, it’s useful to take a close look at the different types of payment terminal setups available.

In this article, we’ll be examining fully-integrated terminals, semi-integrated terminals, and non-integrated terminals. We’ll consider the pros and cons of each and we’ll look at what you should consider before choosing a terminal for your business.

  • A Comparison of Different Payment Terminal Setups?
  • What is a Fully Integrated Terminal?
  • What is a Semi-Integrated Terminal?
  • What is a Non-Integrated Terminal?
  • What Type of Terminal is Right for You?

TL;DR

  • A payment terminal enables a merchant to take chip card and contactless payments. In the modern economic landscape, it’s essentially a requirement to have a successful business.
  • There are a variety of payment terminal brands on the market, but the place to start is by looking at the payment terminals your payment processing provider supports.
  • Your payment terminal can be fully or semi-integrated with your POS system. It’s possible to have a non-integrated system, but this is becoming increasingly less common.

TL;DR—A Quick Comparison of Different Payment Terminal Setups

If you’re looking for an at-a-glance view that compares fully integrated, semi-integrated, and non-integrated terminals, the following table has got you covered.

Fully-Integrated Semi-Integrated Non-Integrated
POS Requirements The POS and terminal are one and the same. As such, there is a 2-way sync between the devices The POS system offers One-way communication to the physical terminal. A POS system isn’t required to process payments; just a physical terminal and Internet access. *Note: If you are planning to use a POS system, it must be purchased separately.
Payment Processing Rate Card-present rate. Card-present rate. Card-present rate.
Initiating Transactions Can start transactions from either the POS or payment terminal. Can start transactions in the POS system and send to the semi-integrated terminal. Can only start transactions using the payment terminal.
Access to Data and Reports Access to real-time transactional data and rich reports from one platform. Access to real-time reporting by sending data to the terminal. No real-time reporting. Reports are limited to customers, transaction dates, and totals. Only access the most recent batch and settlement data from that day.

Learn More

What are payment terminals?

In simplest terms, payment terminals are the machines used to pay for things using credit or debit cards when you make a purchase in-person. 

When you buy something at a store and insert your chip card into a machine that uses EMV technology, that’s a payment terminal. (Previously you would swipe your magstripe card in a payment terminal. However, magstripes are no longer PCI compliant.) These days, payment terminals can also conduct contactless payments and mobile payments, like Apple Pay, via Near Field Communication (NFC) technology. 

The payment terminal reads the information on your card or from your digital wallet and helps transfer money from your account to the store’s account. These terminals are often found at cash registers in stores, restaurants, and other places where you can make purchases. 

You will often find that payment terminals are hooked up to both a POS system and a receipt printer. It’s also growing more common for the payment terminals themselves to have receipt printers built in. 

Wireless terminals are becoming increasingly common as they provide a huge amount of flexibility to the merchant to improve the customer experience. For instance, wireless terminals in restaurants enable servers to take payments right at the table, increasing security and giving patrons the option of paying with a mobile device, like their Android phone. A wireless terminal will typically hook into your credit card processing system via wifi or bluetooth.

Why do merchants need a payment terminal?

Merchants need payment terminals to make it easier for customers to pay for goods and services using credit or debit cards, and increasingly contactless payments from mobile devices. 

Instead of dealing only with cash, which can be cumbersome and sometimes risky, payment terminals allow merchants to accept card payments securely and efficiently. 

This helps businesses attract more customers and manage transactions more smoothly and quickly. Especially as so few customers even carry cash, let alone pay with it these days.

Beyond providing convenience at the point of sale and improving the customer experience, payment terminals also store transaction information electronically, creating a record of sales. This record helps merchants track their income, understand spending patterns, and manage finances effectively. By accessing these transaction records, businesses can make informed decisions, such as adjusting inventory or analyzing customer preferences, to improve overall financial performance.

Overall, payment terminals are essential tools for modern businesses to accept various forms of payment and provide convenience to their customers.

What are the top brands of payment terminals in the market?

There are a lot of payment terminals on the market. That means when it comes time to pick one, there’s a lot of information to sift through. A good starting place, though, is by looking into the payment terminal brands that your payment processing provider supports. Those terminals will, of course, be the easiest to get up and running as they will be well integrated with your credit card processing system. 

The next thing to look at would be the top brands other merchants are using. To make that easier for you, some of the most popular brands currently in use are:

  • Clover (by First Data): Clover is a popular brand known for its sleek and user-friendly payment terminals, which integrate with a range of business management tools and software.
  • Dejavoo (by IPOS Systems): The Dejavoo payment terminal is a versatile and user-friendly device designed to securely process various forms of electronic payments, providing businesses with a reliable solution for managing transactions.
  • Verifone: Verifone is a leading provider of payment terminals and solutions worldwide, offering a wide range of products tailored to different business needs.
  • Ingenico: Ingenico is another prominent brand known for its innovative payment solutions, including terminals that support various payment methods and offer advanced security features.
  • PAX Technology: PAX is a global provider of electronic payment solutions, offering a diverse range of payment terminals designed for different industries and business sizes.
  • Square: Square offers a unique ecosystem of payment solutions, including its iconic Square Terminal, which is designed for small businesses and features built-in software for managing transactions and inventory. Square Terminals, while popular, do only work with Square systems.
  • Infinite Peripherals: Infinite Peripherals offers mobile payment solutions, including POS terminals and accessories designed for use with smartphones and tablets, ideal for businesses needing flexibility in accepting payments on the go.
  • SumUp: SumUp provides affordable and easy-to-use POS terminals for small businesses, offering features such as contactless payments and integration with smartphones via Bluetooth, making it a convenient option for entrepreneurs and small merchants.

Each of these brands offers a variety of payment terminal types, like countertop and wireless, at different pricing.

When it comes to evaluating which payment terminal brand is right for you, you should: 

  • Take a look at available user reviews of any payment terminal you’re considering to get a good idea of how they truly function versus the claims the brand makes.
  • Consider the features offered by different POS terminal brands, such as security features, ease of use, and compatibility with additional software or hardware (like a bar code scanner).
  • Evaluate the reliability and reputation of the brand, looking for established companies with a track record of providing quality products and customer support.

What is a Fully-Integrated Payment Terminal?

Fully Integrated Terminals_Body Image_Web Ready

A fully-integrated payment terminal often comes in the form of an all-in-one solution that combines your point-of-sale system and card terminal into one device.

This setup eliminates the need for a separate POS and credit card machine. A fully-integrated payment terminal has a 2-way sync capability between the POS and the terminal, enabling you to process and refund payments on either device.

Pros

A fully-integrated setup means the payment app or software is downloaded directly on the terminal,  offering a fast way to process payments.

The two-way sync between your POS and credit card machine (which happens in real-time) enables you to ring up sales using either your POS or payments terminal without worrying about data loss or inaccuracies. This seamless sync between the two systems also gives you access to rich and updated payment reports.

Payment information is transmitted automatically, so there’s no need to re-enter payment amounts at the checkout counter. As such, cashiers can process sales faster, and there’s no room for human error. Plus, you reap the benefits of card-present rates.

Cons

A fully-integrated payment terminal may limit your choices when it comes to which devices and payment processors to choose. If you have a preferred POS system and want to pair it with a separate payments terminal, then a fully-integrated setup won’t work for you.

What is a Semi-Integrated Payment Terminal?

With a semi-integrated solution, your POS system is separate from your payments terminal. However, the two systems are integrated in the sense that they can “talk” to each other. The credit card terminal sends payment data to the POS system, enabling you to process and record payments easily.

This means when a customer swipes, taps, or dips their credit card using your payment terminal, the purchase amount and payment data are automatically transmitted to your POS.

Pros

Like fully-integrated payment terminals, semi-integrated payment terminals offer customers quick ways to process their payments. Transaction data like payment amounts are automatically synced between the POS and payment terminal, which reduces human error. The systems can also associate transactions to customer records or profiles.

In addition, transactions made through these terminals are considered “card-present,” which come with lower fees.

Cons

Semi-integrated payment terminals require separate devices for payments and point of sale, so the setup can be a bit clunky. You may also encounter issues with processing payments if the connection between your terminals and POS system breaks down.

The biggest disadvantage of this setup is it offers a 1-way relationship from the POS to the terminal. As such, you can only initiate payments from the POS system. Unlike with fully-integrated terminals, you can’t use the terminal on its own to start a payment independently from the POS.

What is a Non-Integrated Payment Terminal?

With a non-integrated payment terminal, the POS system and terminals are not connected.

When it comes to ringing up sales, you only need the terminal and WiFi to process payments. Your customer inserts or swipes a credit card through the terminal, sending the information for processing directly from the card reader to the payment processor.

Once the card is authorized, you can manually record the transaction into the POS or record-keeping system while a receipt is printed from the card terminal.

You don’t necessarily need a point-of-sale system with a non-integrated setup. But if you do decide to use a POS, it would have to be purchased separately.

You can see non-integrated payment terminals still being used in smaller retail stores where cashiers calculate your total on a calculator before entering it on a PIN pad. However, most modern businesses tend to use fully-integrated or semi-integrated payment terminals.

Pros

Non-integrated payment terminals offer you a very basic way for your business to accept credit cards from your customers. While they don’t communicate with your software, they do allow you to service clients who prefer to pay by card instead of in cash. You’ll also get card-present rates when using this setup.

Cons

A major disadvantage of using a non-integrated terminal is the limited reporting that it offers. Data isn’t synced in real-time, so you won’t have access to live transactional data. Instead, you’ll get the data within the next business day, once the transaction has been processed.

Accessing reports can also be cumbersome because you have to manually print out long batch reports at end of the day to see what amount will be deposited.

Additionally, non-integrated payment terminals don’t keep all of the data. They can typically retain just the most recent batch and settlements from that day. This means it would be difficult to access historical information and track trends over time. You may also need to pay extra to access a point-of-sale solution since the POS isn’t part of your terminal.

What Type of Terminal is Right For You?

So, how should you decide which payment terminal is right for you? Ultimately, this depends on the size of your business, your company’s needs, and the type of customers you serve.

Fully-integrated payment terminals offer a much faster way to process credit card payments.

Customers will appreciate this efficiency during checkout. Fully-integrated terminals also offer real-time data sync between your POS and payment device, so you can access rich reporting and live transaction data.

Semi-integrated payment terminals offer better security when processing your customer’s credit cards.

Because their card information does not enter your POS software during the transaction, you’ll enjoy more peace of mind if you’re concerned about data breaches or hacker activity. This makes semi-integrated payment terminals a great choice if you value speed and security in your credit card transactions.

Non-integrated payment terminals are becoming outdated, with an increased possibility of human error from manually recording the transaction data (such as payment amounts) into your POS system.

Nevertheless, they do offer an affordable way to accept credit cards if you don’t have to deal with a large number of clients who insist on quick checkouts.

Knowing which payment terminal provides you with the most beneficial payment solutions is vital to running a successful business.

Contact Stax today to learn more about the credit card terminals we offer and how they help your needs. Whether you’re looking for fully-integrated or semi-integrated terminals, Stax can point you in the right direction.

Request a Quote

FAQs about Payment Terminals

Q: What is a payment terminal and how does it work?

A payment terminal  is a device that interfaces with payment cards to make electronic funds transfers. The terminal typically reads the chip on the card or the magnetic stripe to access the data necessary to process the transaction. It then communicates with the cardholder’s bank via a telephone network or internet connection to authorize the transaction. The transaction is approved if the account has sufficient funds or credit available. Modern payment terminals may also accept contactless payments using NFC technology.

Q: What is the difference between a POS system and a payment terminal?

A POS (Point of Sale) system and a payment terminal are related but distinct components of the checkout process. A payment terminal is a device that processes card payments, interfacing directly with the customer’s payment card. A POS system, on the other hand, encompasses a broader range of functionalities, including not just the payment processing but also sales reporting, inventory management, customer management, and more. While a payment terminal is focused on the transaction aspect, a POS system provides a comprehensive solution for managing sales operations.

Q: Is a POS a terminal?

A POS is not just a terminal; it refers to the entire system used for conducting sales and processing payments. It can include hardware (such as a terminal, barcode scanner, receipt printer, and cash drawer) and software that manages the transaction process, inventory, reporting, and sometimes even customer relationships. A payment terminal can be part of a POS system as the device that handles the card payment processing.

Q: What is the difference between a terminal and a gateway?

A terminal is a physical device that allows for the swiping, dipping, or tapping of a payment card to process a transaction. It can be part of a larger POS system. A gateway, on the other hand, is a service that authorizes and processes online payments for e-commerce businesses and online retailers. It securely transmits transaction data to the payment processor or bank. While a terminal is used for in-person transactions, a gateway is used for online transactions.

Q: What is the difference between POS and virtual terminal?

The main difference between a POS system and a virtual terminal lies in their intended use and operation. A POS system is designed for in-person transactions, involving hardware for managing the entire sales process, including payment processing. It’s ideal for retail, hospitality, and restaurants where physical customer presence is typical.

A virtual terminal, on the other hand, is a software application that allows businesses to process card payments without the physical card being present. It’s typically used for telephone or mail-order transactions where the merchant manually enters payment details into an online interface. This setup is ideal for businesses that take orders over the phone or through mail order, providing flexibility for processing payments without needing the physical card or hardware terminal.

 

Would My Business Benefit From Using A Contactless Virtual Terminal?

Every business operates differently, but the one thing they all have in common is that every business accepts payments. New payment tools like NFC contactless payments that help your business grow and provide a high-quality customer experience are in high demand. And while solutions like POS systems are perfect for in-person payments, what about when you need to offer remote billing or refunds, or if you need to process a customer’s credit card over the phone?  With a virtual terminal, this functionality allows your business to accept credit and debit card payments with nothing more than a computer and an internet connection.

Although it’s not a necessary tool in every small business owner’s arsenal, the contactless virtual terminal is a smart solution for some types of businesses, like those that take payments online or over the phone. But what exactly  is a contactless virtual terminal and can your business benefit from adding it to your payment solutions? In this article, we’ll dive into everything you need to know about virtual terminals, and how to pick the best virtual terminal on the market. 

TL;DR

  • Basically, a virtual terminal is a web-based application that allows you to enter credit card details manually via the internet. This solution allows you to accept payments over the phone or in person from your computer, all without needing a physical card reader or point of sales terminal.
  • A virtual terminal is fit primarily for businesses such as food delivery services, professional services, freelancers, and healthcare providers. These businesses often conduct most of their business over the phone, submit electronic invoices, or have recurring monthly membership services fees.
  • Virtual credit card processing terminals provide several up-to-the-minute security features, keeping your customers’ financial information safe. Because the transaction takes place through a payment gateway that utilizes data encryption or tokenization to secure sensitive information during transmission, accepting payments using a virtual terminal from Stax (which is PCI compliant) is secure.

What Is a Contactless Virtual Terminal?

Basically, a virtual terminal is a web-based application that allows you to enter credit card details manually via the internet. It allows you to accept payments over the phone or in person from your computer, all without needing a physical card reader or point of sales terminal.

Built for recurring billing and online invoicing, a contactless virtual terminal is fit for (eCommerce) businesses that primarily operate over the phone and take mail orders, handle online invoicing, or have recurring monthly memberships. An added benefit of using a contactless virtual terminal is the increased flexibility in accepting payments over the phone, online, and in-person, all without ever having to use a physical card.

Still confused about how a virtual terminal works? Think of it as a digital credit card reader, which means you need no extra equipment besides a secure wifi connection to process card-not present transactions and payments.

How Does a Contactless Virtual Terminal Work?

Powered by a payment gateway, a contactless virtual terminal provides payment processing and authorization services through an online platform. Without any required hardware you can get paid faster and more conveniently while still offering you the flexibility to accepting credit cards, debit cards, and ACH payments. All you need to do is log into your virtual terminal through a computer or mobile device, enter payment information into a form, and with the click of a button, the system processes the payment.

Virtual terminals also verify the purchase, issue customer receipts, and report all transactions within the dashboard. The business dashboard shows sales trends in a simple view, making you aware of growth or areas of concern for your business.

A contactless virtual terminal can also serve as a backup to your point of sale (POS) system. Having a virtual credit card processing terminal on standby adds additional flexibility and simplicity to your business.

Can My Business Use a Contactless Virtual Terminal?

A virtual terminal is fit primarily for businesses such as food delivery services, professional services, freelancers, and healthcare providers. These businesses often conduct most of their business over the phone, submit electronic invoices, or have recurring monthly membership services fees.

Having the ability to take payments by phone or online by adding a virtual terminal to your payment offerings allows increased flexibility and accessibility. For example, if you’re a restaurant that requires a deposit when booking, a virtual terminal can be a great solution that’ll allow customers to quickly and securely book using their credit card info.

Plus, by providing a more seamless and streamlined payment option, you can easily improve your customer’s check-out experience. Faster, more secure, and effortless transactions provide opportunities for more sales in less time and less abandoned sales due to a hassle-free shopping experience.

RELATED: What to Look for When Choosing an In-Person Terminal For Your Bar

Learn More

Is the Contactless Virtual Terminal Secure?

As a business owner, you must safeguard your customers’ payment details. Not doing so could create distrust among your customers and seriously impact your business. Virtual credit card processing terminals provide several up-to-the-minute security features, keeping your customers’ financial information safe. That’s why all payment data submitted via the contactless virtual terminal has to go through PCI Compliant procedures, since it helps make sure that your customers’ sensitive information is always safe.

Because the transaction takes place through a payment gateway that utilizes data encryption or tokenization to secure sensitive information during transmission, accepting payments with the use of a virtual terminal is secure. Despite these built-in safeguards, it’s important to be cautious. After all, human error is still a factor. To help mitigate these risks, make sure your employees never write down credit card information on a piece of paper or store it in any way outside of your virtual terminal.

What Are the Benefits of Using Stax Contactless Solutions?

With Stax, not only will your business have access to the wholesale card-not-present rates, but you’ll also gain access to the contactless payments tool kit including the Stax Contactless Solutions. In addition to a full-featured invoicing and billing platform, you’ll have the option of creating an online shopping cart for your business and the ability to communicate with your customers quickly and efficiently through 2-way text messaging.

Here are just some of the perks of our  Contactless Virtual Terminal:

  • Instant Online Shopping Cart – Add items or services to your catalog, then publish them to your online shop in one click. No domain purchase needed!
  • Text2Pay – Text message requests have a 97% open rate with an average customer response within 90 seconds. With 2-way text messaging,merchants and customers can talk back and forth, make changes, and even make payments.
  • Customer & Catalog Management – Track relevant customer information, including tokenized cards. Store catalog items and keep track of inventory and sales against certain goods or services.
  • Quick Payment for Keyed-In Phone Payments – If a customer orders over the phone for curbside pickup, employees can securely key in sensitive payment information while on the phone.
  • Recurring & One-Time Invoicing – Send professional electronic invoices via email or text and allow customers to pay via email or text. Set up recurring payments or invoices for the customers as needed.

Stax Contactless Virtual Terminal Pricing

At Stax, we’re fully committed to offering transparent pricing and transaction fees, no matter which of our products or services you need. The same goes for our virtual terminal: with membership-based pricing, we guarantee access to our wholesale credit card processing rates. Plus, there are no hidden fees or lengthy contracts, meaning you can cancel your virtual merchant account whenever you want instead of being tied down to a long contract. (If you’re curious to learn more about our pricing for our virtual terminal services, click here.)

Would My Business Benefit From Using Contactless Virtual Terminals

Whether it’s invoicing, recurring billing, pay by phone, contactless or credit card payments, or a one-click shopping cart, Stax offers multiple virtual payment options that can help your business streamline payments and foster sustainable growth.. Start saving on payment processing fees with Stax. Contact us for a demo today.

You Might Also Like: How a Restaurant Supply Company Can Improve Sales With a Virtual Terminal

Learn More

FAQs about Virtual Terminal

Q: What is a virtual terminal?

A virtual terminal is a web-based application that allows merchants to process credit card transactions without the need for a physical card reader or point-of-sale (POS) system. It enables merchants to enter credit card details manually into an online interface to process transactions. Virtual terminals are typically used for phone or mail orders, or in situations where the physical card is not present.

Q: What does a virtual terminal do?

A virtual terminal serves as an online interface for payment processing. It allows merchants to input payment information received from customers via phone, mail, or in person without swiping the card. The terminal connects to a payment processor to handle the transaction, including authorization, settlement, and management of the payments. It can also store transaction records and provide reports.

Q: What is the difference between POS and virtual terminal?

A POS system is a combination of software and hardware designed to facilitate sales transactions at a physical location. It often includes a physical card reader, barcode scanner, cash register, and a computer or tablet to run the POS software. Unlike a POS system, a virtual terminal is software-based and does not require specific hardware. It is primarily used for transactions where the card is not physically present, such as over the phone or via mail.

Q: What is the difference between a physical terminal and virtual terminal?

A physical terminal is a device that allows for card-present transactions. Customers can swipe, dip, or tap their card to make a payment. These terminals can be standalone devices or part of a more extensive POS system. A virtual terminal, on the other hand, is software that processes card-not-present transactions. It requires manual entry of card details by the merchant. Virtual terminals do not require physical interaction with the customer’s card.

Q: Can I use a virtual card at the point of sale?

Yes, but indirectly. A virtual card is a digital version of a physical card that exists only in a digital wallet or app. At a physical point of sale, you can use a virtual card if the POS system accepts contactless payments (NFC technology), and your virtual card is stored on a device that supports this technology (like a smartphone or smartwatch). However, a virtual card itself cannot be used directly with a traditional card reader that requires swiping or dipping a physical card.

 

Q: Is a virtual terminal a gateway?

They’re closely related, but a virtual terminal isn’t the same as a payment gateway. A payment gateway is the service that authorizes and processes credit card transactions online, securely transmitting data between the merchant and the acquirer. A virtual terminal is a tool or interface that uses a payment gateway to process transactions.

Is Quickbooks Desktop Being Phased Out?

There’s been a lot of discussion in recent months about the apparent phase-out of QuickBooks Desktop software. Some coverage has not been entirely accurate, which has caused a lot of confusion for Desktop users and questions like: Is QuickBooks Desktop discontinued? Will I still be able to use my existing QuickBooks Desktop software? Do I need to transition to a new system altogether?

QuickBooks Desktop is something of a linchpin in the accounting software world, with the first version of the program launching in 1998. This makes the apparent new direction of Intuit, the developer of QuickBooks, symptomatic of the wider transition within the SaaS space towards cloud-based software solutions. When it’s become so easy for users to access and share data remotely and sync changes in real-time, desktop applications are appearing increasingly cumbersome.

We’re going to dive further into recent announcements about QuickBooks Desktop and what this means for users, and what businesses should consider as their next move.

TL;DR

  • Intuit has announced the discontinuation of QuickBooks Desktop 2021 by May 31, 2024, and will stop selling certain subscriptions of QuickBooks Desktop after July 31, 2024.
  • Existing QuickBooks Desktop users face the choice of upgrading to a newer version, switching to QuickBooks Online, or exploring alternative accounting software.
  • While QuickBooks Desktop won’t disappear immediately, Intuit’s shift focus on cloud-based applications signals a shift away from supporting local applications.
Learn More

Is QuickBooks Desktop Being Phased Out?

This question has been sparked by two recent announcements from Intuit. Firstly, QuickBooks Desktop 2021 is to be discontinued from May 31, 2024. This includes all 2021 versions of QuickBooks Desktop Pro, QuickBooks Desktop Premier, QuickBooks Desktop for Mac, and QuickBooks Enterprise Solutions v21.

Intuit also announced plans to stop selling several QuickBooks Desktop subscriptions to new U.S. subscribers after July 31, 2024. 

This change affects the following products: 

  • QuickBooks Desktop Pro Plus
  • QuickBooks Desktop Premier Plus 
  • QuickBooks Desktop Mac Plus
  • QuickBooks Desktop Enhanced Payroll subscription. 

QuickBooks Enterprise solutions for desktop will not be affected.

Note that this differs from the service discontinuation of the 2021 versions of QuickBooks desktop. Users of the above desktop services will continue to be supported past July 31, 2024 and can keep renewing their subscriptions—it’s simply a “stop sell” of any new subscriptions after that date.

Indications of a QuickBooks Desktop Phase-Out

Intuit’s announcements regarding the future of the QuickBooks Desktop version have been fairly sparse on information. However, it’s worth noting that Intuit has been steadily discontinuing versions of Desktop as far back as 2018 (QuickBooks Desktop 2020 was discontinued on May 31st, 2023). 

So, it’s a reasonable assumption that future versions of Desktop will also be phased out on a rolling basis (similarly to how Microsoft no longer supports old versions of Windows).

Not only that, but Intuit has made it clear that the future of the QuickBooks system lies with their online version. Intuit’s Firm of the Future blog post published in November 2023 states:

 “We encourage you to consider QuickBooks Online because we have continued to innovate and improve on it. There are products that meet the needs of every client, from the simplest to the most complex. Additionally, all future innovation will happen in QuickBooks Online.”

Given the growing ease and flexibility offered by cloud-based services, it’s not surprising that Intuit is pushing its users to transition away from local applications. Moreover, the current set-up requires Intuit to maintain development teams and operational support for two separate software platforms (desktop and online).

In Intuit’s own words, “Intuit built an integrated, online platform because that’s the way innovative companies have transformed productivity, and because it helps provide the best time- and money-saving benefits. Simply put, an online platform can deliver benefits that a desktop product cannot. What’s more, our online products now meet the needs of almost all QuickBooks Desktop users.” 

Impact on Current QuickBooks Desktop Users

Unsurprisingly, these announcements have caused concern for business owners who are currently using versions of QuickBooks Desktop. Does this mean that every company currently using QuickBooks Desktop will need to transition to a new system? Not necessarily.

Let’s start with the discontinuation of QuickBooks Desktop 2021.

Intuit references this “service discontinuation policy” on its support site. This means that if you don’t upgrade your software by May 31, 2024, access to services including QuickBooks Desktop Payroll, live technical support, payment processing, Online Backup, and Online Banking will be cut off. 

While you will still have access to the 2021 system past this date, it cannot be linked to the wider Quickbooks ecosystem and you won’t be eligible for further security updates. This practice is also referred to as “sunsetting.”

Technically speaking, this means businesses that don’t require add-on services can continue to use QuickBooks Desktop 2021 past the discontinuation date. However, the lack of customer support or further security patches leaves your business highly vulnerable to data breaches or system outages you would have to handle on your own. Instead, it’s highly recommended to switch to another QuickBooks solution.

QuickBooks Desktop 2021 users can consider upgrading to a newer version of QuickBooks Desktop, like QuickBooks Desktop 2023 or 2024. Since Intuit is discontinuing older versions of QuickBooks Desktop on a rolling basis, getting a new version of the desktop software will ensure you are supported for a while longer.

This brings us to the more recent announcement by Intuit that new subscriptions of several QuickBooks Desktop products will not be available to U.S. subscribers after July 31, 2024. The most important thing to note here is that this change does not impact existing subscribers. If you take out a new subscription before this date, Intuit will continue to provide security updates and support (although the announcement doesn’t state how long this support will last).

In both scenarios, QuickBooks Desktop users have another option—switching to QuickBooks Online (QBO).

QuickBooks Online vs QuickBooks Desktop

Traditionally, online-only software apps come with some limitations, namely that they struggle to boast the same breadth of features and workflows as desktop software. However, the evolution of cloud-based software development has made it possible for online applications to not only match the capabilities of offline systems – but surpass them.

Because cloud-based systems allow for easy, real-time integrations, QuickBooks Online now offers a range of easy add-ons within the QuickBooks ecosystem that have either limited functionality on desktop or require additional fees for implementation. This includes QuickBooks time tracking, payroll services, live bookkeeping support, and more.

QuickBooks ProAdvisors can help businesses transition to QuickBooks Online and optimize the setup for specific business needs. Depending on the size of your company file, transferring over to QBO can take as little as an hour.

So, how does QuickBooks Online compare with QuickBooks Desktop?

Anywhere access vs. local access. With QuickBooks Online, checking on your customers, invoices, paychecks, and more from any smart device is easy. This is highly convenient for business owners who are always on the go or operate from multiple business locations. Because QuickBooks Desktop is locally installed, you’ll only be able to use it on that one device. This can raise access issues if the device is not easily portable.

Automatic vs. manual updates. Because QBO is a cloud-based platform, product updates, and security patches are applied automatically and don’t require businesses to remember to implement updates onto their device to access new features.

One-off vs. ongoing cost. The key downside of QuickBooks Online—and the reason why many small businesses are reluctant to make the switch— is that it’s only available via annual subscription pricing as opposed to a one-time purchase of the software. This needs to be factored into ongoing operational expenses, which may require a rethink of budgets.

QuickBooks Desktop Alternatives

Zoho Books

Zoho Books is a cloud-based accounting software solution that’s part of the wider Zoho business ecosystem. It allows small to medium-sized businesses to manage accounting, expense tracking, and automation of data entry and invoicing. With standard plans starting at $12, it’s a cost-effective option for businesses that need a basic accounting system. It also offers multi-currency support, making it suitable for businesses that regularly handle international transactions.

FreshBooks

Freshbooks is predominantly designed with small businesses, freelancers, and non-profits in mind that require a simpler invoicing and bookkeeping solution. In addition to a strong range of accounting and invoicing tools, FreshBooks offers a very user-friendly platform and reporting features that make it easy to keep track of outstanding payments. At just $13.75 per month for the most expensive premium plan, it’s one of the most affordable accounting software options out there. However, it does come with fewer customization capabilities.

Xero

Xero is an easy-to-use cloud-based accounting solution that offers a full toolkit of accounting and business management features, as well as fully customizable business reports such as chart of accounts and inventory. Because it offers an unlimited number of user seats on all of its pricing plans, Xero is a much better option for larger businesses and businesses that have an in-house team of CPAs than QuickBooks, which charges a high cost for more than five user seats. However, it’s important to note that Xero doesn’t have such a robust customer support system, with no live chat function available.

Sage 50cloud

Sage 50cloud, formerly known as Peachtree Accounting, is an accounting software solution designed for small and medium-sized businesses. Like QuickBooks, it’s a desktop-based system that needs to be locally installed and run off a designated device, though it does have cloud connectivity. This makes Safe 50cloud a good option for businesses who prefer not to transition to a fully cloud-based system.

Final Words

While QuickBooks Desktop version is not going away completely any time soon, Intuit’s shift to primarily cloud-based applications is going to have an impact on some businesses. Fortunately, business owners have several options on what to do next; they can upgrade to a newer version of QuickBooks Desktop, transition to QuickBooks Online (QBO), or have a fresh start with different accounting software outside of the QuickBooks ecosystem. 

The best option will depend on your business’s specific needs and budget, but it’s safe to say that a cloud-based system offers numerous advantages including better accessibility, seamless integrations, and more room to scale.

Request a Quote


Quick FAQs about QuickBooks Desktop Ending

Q: What is happening to QuickBooks Desktop 2018?

Intuit has officially cancelled the QuickBooks Desktop 2018 software in 2021, and will discontinue critical security updates for the software starting from June 1, 2021. Intuit also plans to stop providing support services such as Online Banking, Desktop Payroll Services, Live Support, and Online Backup.

Q: How can users ensure their data is protected after the discontinuation of QuickBooks Desktop 2018?

To protect their data and maintain access to essential features, users will need to switch to a newer version of QuickBooks like QuickBooks Online. As part of the upgrade process, Intuit will help users protect their data by ensuring a smooth transition between the software versions.

Q: Should users switch to QuickBooks Online, and what advantages does it offer?

Yes, users should consider switching to QuickBooks Online since it provides increased functionality, efficiency, and convenience compared to QuickBooks Desktop. QuickBooks Online is a cloud-based platform accessible through a web browser, integrates with platforms like Stax, and offers unique features like smartphone access, uploading receipts through a phone, and faster reconciliation.

Q: What is the difference between QuickBooks Online and QuickBooks Desktop?

QuickBooks Online is cloud-based, meaning it can be accessed from any device with an internet connection. In contrast, QuickBooks Desktop is installed on a specific computer and can only be accessed from that machine. In terms of costs, QuickBooks Online operates on a subscription model with a monthly fee, while Desktop has a one-time purchase cost with an optional annual subscription for additional services like customer support.

Q: Which is better: QuickBooks Online or QuickBooks Desktop?

For smaller businesses or those needing anywhere-access, QuickBooks Online is often more suitable. For larger businesses with more complex accounting needs, Desktop might be better. That said, it all boils down to your needs and preferences. If regular access from various locations or integration with other cloud-based apps is important, QuickBooks Online is the better choice. Meanwhile, for those who prefer a one-time purchase, Desktop is more suitable.

 

You Might Also Like: Pro and Con Review of Quickbooks Online (QBO)

How to Find the Right Credit Card Terminal for Your Business

Many merchants face the trouble of sifting through numerous credit card machine options, looking for a terminal that fits with their business. There are many different types of payment terminals to choose from, and you need one that’s going to help your business operate the most efficiently.

Selecting the right payment processing terminal will not only help reduce your processing costs, but it’ll also increase your profits. Let’s take a look at some payment terminal options and the types of businesses that best match their features.

TL;DR

  • A credit card terminal is a device commonly used by businesses to handle credit and debit card transactions. 
  • There are many different types, including some that can take payments on the road.
  • Choosing the right type of terminal for your small business requires understanding your business needs and doing your own third-party research on providers you’re considering.

The Best Payment Terminal Companies For Your Business

Level Up Your Terminal with Stax Card Readers

What is a Credit Card Terminal?

A credit card terminal is a device commonly used by businesses to handle credit and debit card transactions. They can also take contactless payments from mobile wallets. It’s the tool customers use to swipe, insert, or tap their cards, transmitting the transaction details to the payment processor for approval. 

They’re essential for ensuring smooth and secure electronic payments at retail outlets, restaurants, and various businesses that accept card payments. Most importantly, they enable your business to offer a wide range of payment options to your customers.

Types of Credit Card Terminals

Credit card terminals are available in a few different types, each of which provides its own benefits.

Countertop terminals 

Countertop payment devices are stationary devices typically found at cashier counters in-store. They connect via phone lines, Ethernet, or Wi-Fi and are ideal for businesses with a fixed checkout location.

Mobile card readers 

These are portable devices that connect to smartphones or tablets. They’re great for businesses on the move, such as food trucks or delivery services, allowing transactions to happen anywhere with a cellular or Wi-Fi connection.

Wireless terminals 

Wireless terminals are similar to mobile card readers in that these terminals offer mobility. However, they operate independently without the need for a separate mobile device. They connect wirelessly to cellular networks or through Bluetooth, enabling transactions in various locations within a specific range.

Virtual terminals 

Virtual terminals are software-based interfaces that allow merchants to process payments via a computer or tablet. They’re often used for phone or online orders where the card isn’t physically present.

Integrated payment systems 

These are terminals that integrate with the POS systems (point-of-sale), combining payment processing capabilities directly into the business’s existing software, acting as an all-in-one system.

Your business may use only one type or multiples depending on your needs and business model.

Learn More

The Traditional Retail Payment Terminal

Businesses such as retail stores or restaurants involve face-to-face interactions with your customers, therefore your credit card transactions with them are exclusively in-person. These are referred to as “card-present” transactions, which basically just means the cardholder and credit card is physically present at the time of sale. For this type of transaction, your best payment terminal option would be a countertop point-of-sale (POS) model.

Countertop credit card terminals allow you to swipe your customers’ credit cards through a credit card reader to process the transaction. If you want to add a PIN pad, you’re enabling greater security, and in that case, you can also process debit cards and EBT cards as well.

You also have the option to add a receipt printer to a countertop terminal. You can then print out a credit card receipt that the customer signs (that you retain for your records), and a copy is printed for the customer as well.

While card-present transactions are standard, it’s also possible to use a countertop payment terminal in a “card-not-present” (CNP) situation. Merchants who accept mail, telephone/fax, or online orders can send the credit card information to the terminal (via keyed in transactions) in order to process the sale.

RELATED: Will a Stax Wireless Card Reader Improve Your Business?

Recommended Credit Card Terminals 

If your business needs traditional credit card terminals, consider the following:

Dejavoo Z11 The Z11 countertop terminal has EMV and NFC capabilities built-in, and can accept all modern payment methods, including mobile and contactless credit card payments (e.g., Apple Pay, Samsung Pay, Google Wallet, Visa payWave, MasterCard PayPass). It has a touchscreen display and PIN pad, making it easy for customers to enter their payment information at checkout.

Dejavoo Z8 The Z8 is similar to the Z11 in that it also supports EMV and NFC technology. Like the Z11, this credit card machine also lets you accept both mobile and contactless debit card and credit card payments. The key difference is that the Z8 isn’t a touchscreen device.

PAX A920 The A90 comes with a 5″ IPS touchscreen and 2″ thermal printer, making it a sleek and portable payment terminal that works both as a countertop card reader and mobile device. Powered by an Android operating system, the A90 lets you accept payments behind the counter or even on the sales floor.

Mobile and Wireless Payment Terminals

Outside of traditional retail are mobile and wireless terminals. These usually work best for merchants and service professionals who operate in the field and need payments collected at the customer’s home. Mobile and wireless credit card terminals work over an internet connection (either via WiFi or a cellular network), and are a great solution if you’re an on-the-spot merchant. These terminals also offer a better alternative if you’re tired of billing your customers and waiting for the payments to come through.

These devices are also gaining popularity in retail and hospitality. Thanks to their mobile functionality, retailers can ring up sales on the shop floor, while restaurant staff can bring the checkout experience to diners. Both instances help streamline payment processing and improve guests’ experiences.

Stax offers NPC mobile readers for small to mid-sized merchants looking to accept mobile payments anywhere they conduct business. With absolutely no additional equipment to purchase, all a merchant has to do is download the app on their mobile device, activate the application, and right then, they have a handheld terminal at their fingertips. This mobile payment processing solution is compatible with iPhone, Android, and RIM operating systems, and it’s supported by all major wireless providers.

Wireless terminals could also be the processing solution your business needs. These are compact and portable, and they allow you to keep up with sales in the field with more secure processing.

Mobile and wireless terminals enable merchants to go beyond traditional point-of-sale and cash-only operations. They both provide a new, updated, and innovative way to accept credit card payments from customers.

Recommended Payment Solutions

The following payment solutions are our top recommendations for businesses that need a mobile-friendly payment terminal.

Stax Pay

Stax Pay is a mobile app that’s available both on iOS and Android platforms. This powerful app enables you to accept payments using your mobile device. Just connect it with Stax’s Bluetooth mobile reader, and you can start swiping EMV chip cards effortlessly. Plus, with its PCI-compliant tokenization, you can rest assured knowing that your customers’ credit card information stays secure.

SwipeSimple: Mobile Chip Reader

The Mobile Chip Reader by SwipeSimple is a lightweight and compact device that has built in contactless technology, as well as a magstripe and EMV chip reader. The device connects to your phone via Bluetooth and is meant to be used with the SwipeSimple mobile app.

Virtual Credit Card Processing Terminals/eCommerce

Today’s customers rely heavily on the Internet to find services and shop for products. Merchants who accept “card-not-present” transactions, either online or over the phone, would benefit from a virtual terminal. Since there’s no need for a physical and traditional credit card terminal, a virtual terminal uses software to process online transactions.

At Stax, we use NPC Secure as a virtual terminal for our internet-based merchants who process and manage telephone, and even face-to-face transactions. As long as you have an internet connection, you can process payments directly through your website.

Restaurant Manager With Shipping Companies Processing Payment Via Payment Terminal Companies

Recommended Solution

At Stax, we have three different subscription-based pricing plans as well as access to direct cost processing with no contract, no markup, and no hidden fees. Learn more about how Stax can benefit your business and eliminate those higher processing fees.

You Might Also Like: Looking for an in-person Card Reader Terminal for Your Bar?

Selecting the Right Payment Terminals for Your Small Business

There are numerous credit card terminals, readers, and solutions in the market, so selecting the best one can feel overwhelming. You can simplify the process by following these tips:

1. Figure out your needs (and wants)

Take the time to figure out your payment terminals and processing needs. Do a bit of introspection for your business and ask yourself questions like:

  • What does your checkout process look like?
  • What payment types do you need to accept?
  • Will you need a mobile card reader?
  • Are you looking for a merchant account?

2. Understand fee structures

There are several ways that payment processors structure their fees. (You can learn more about them here.) At Stax, we offer a subscription-based pricing plan as well as access to direct cost processing with no contract, no markup, and no hidden fees. Rather than taking a cut out of your sales, we simply charge a flat membership fee and give you access to wholesale credit card processing costs. With Stax, businesses often save up to 40% in payment processing costs.

To choose the most cost-effective provider, you should start by looking at your credit card processing volumes. Most credit card and debit card processors charge a markup based on your transaction values, which means the more you process with your credit card processor, the more you pay.

3. Read customer reviews

Once you’ve got a shortlist of providers that fit your needs and are within your budget, you need to verify that the company is actually reliable and good to work with. These days, there are a lot of third-party sites that collect reviews on B2B software providers, like Capterra and G2. By reading through these reviews, you can verify the claims that the company makes during the sales process.

Get the Right Credit Card Terminals for Your Business

Looking to level up your payment processing?

Get in touch with Stax today to learn more about the credit card terminals we offer and the payment solutions that would benefit your business the most.

Request a Quote


FAQs about Credit Card Terminals

Q: What are some of the best payment terminal companies for my business?

Some of the best payment terminal companies include Dejavoo, PAX, and Stax. Each of these companies offers different models of payment terminals, such as the Dejavoo Z11 and Z8, and the PAX A920, that cater to various types of businesses.

Q: What are the benefits of choosing the right payment terminal for my business?

The right payment terminal can help reduce your processing costs and increase your profits. It can also streamline your checkout process, improve security, and offer an enhanced experience to your customers by accepting different types of payment methods, including mobile and contactless payments.

Q: What is the difference between a traditional retail payment terminal and a mobile or wireless payment terminal?

Traditional retail payment terminals are primarily used for in-person transactions at retail shops or restaurants. On the other hand, mobile and wireless payment terminals are ideal for businesses that operate on the go and need to collect payments at the customer’s location. These terminals work over an internet connection and provide a convenient alternative to billing customers and waiting for payments.

Q: What are some recommended payment solutions for businesses that need a mobile-friendly payment terminal?

Mobile-friendly payment solutions include the Stax Pay mobile app and the Mobile Chip Reader by SwipeSimple. Stax Pay allows you to accept payments using your mobile device, while the Mobile Chip Reader is a lightweight and compact device that can connect to your phone via Bluetooth.

Q: What is a virtual credit card processing terminal?

A virtual credit card processing terminal is a software that enables merchants to process “card-not-present” transactions online or over the phone. This type of terminal is beneficial for businesses that operate online and require an efficient way to process payments directly through their website.

Q: How do I select the right payment terminal for my small business?

To select the right payment terminal for your business, consider your payment processing needs, the types of payments you need to accept, and whether you need a mobile card reader. You should also evaluate your credit card processing volumes as most processors charge a markup based on your transaction values.

Q: How can Stax benefit my business in terms of payment processing?

Stax offers subscription-based pricing plans and access to direct cost processing with no contract, markup, or hidden fees. Instead of taking a cut from your sales, Stax charges a flat membership fee and gives you access to wholesale credit card processing costs. This could result in savings of up to 40% in payment processing costs for your business.


 

How To Set Up A Merchant Account: A Step-by-Step Guide

As a business owner, you might already know that debit and credit card payments can be processed through merchant services. But the process of actually getting a merchant account is not that well known. This is primarily due to the various steps that are involved in setting up payment methods through merchant account providers.

Even if it might seem a little tricky at first, signing up with a conventional or online merchant account services provider is really quite simple. You’ll need to take your time to understand the underlying aspects. Once you have sufficient knowledge about merchant account services, you can move forward with signing up for traditional and mobile payment processing solutions with ease.

From a high-level view, once you’ve chosen your preferred account provider, you’ll need to submit an application with a variety of documentation, like your business license and credit history. Once the provider approves the application, you go through the underwriting process and then set up your new equipment and software. After that, you’re up and running.

Of course, that’s a bird’s-eye view. With this in mind, let’s dive into a detailed overview of how merchant services actually work, more about what goes into the process of opening a merchant account, as well as what to look for when searching for the right merchant account provider.

  1. How Merchant Accounts Work
  2. Identify the Kind of Merchant Services You Need
  3. Determine Merchant Account Costs
  4. Find the Best Merchant Account Provider for Your Business
  5. Submit Your Merchant Application
  6. Set Up the Merchant Equipment and Software
  7. Start Processing Payments

Understand Just How Merchant Accounts Work

Before you start the sign-up process with merchant account providers for your small business, let’s first look at how these services work.

Setting Up A Merchant Account_Your Business_Merchant Account Provider_Payment Processor_Body Image

Setting up your merchant account involves a relationship between three parties:

  1. The Merchant. This refers to you and your business.
  2. The Acquiring Bank or Merchant Account Providers. This is the entity you will sign up with to hold your merchant account and receive funds from customer payments.
  3. The Payment Processor. This refers to the entity that manages and authorizes the actual transactions from credit card companies such as Visa, Mastercard, and American Express that you will accept payments. They are responsible for ensuring funds are transferred so that businesses get paid on time.

The Merchant Account Process

The set-up process for a merchant account actually begins with the need to start accepting card payments from your customers.

To do that, you then need to enter a contract with an acquiring bank or a reliable payment solutions provider. These solution providers then let you select which credit card networks, such as Visa or Mastercard, you will accept payments from.

No matter the type of merchant account you want to set up—conventional, mobile, or online merchant account services—the involvement of the acquiring bank/payment provider, as well as the credit card network, remains a constant feature.

Whenever a customer submits their payment via a card reader or enters its details on your checkout page, the information is processed through your acquiring bank or payment solutions provider.

From there, it’s handled by the credit card networks such as Visa or Mastercard, which authorize the payment and transfer it to your merchant account.

The payment procedure goes through multiple steps to complete. But even then, the process is completed within a few seconds.

Learn What Kind of Merchant Services You Want

The first step in signing up for a merchant account comes in the form of deciding what kind of services your business needs.

Keep in mind that the primary goal of signing up with merchant account services is to accept credit and debit card payments and not depend on cash transactions.

However, the right merchant services provider will arm you with all the payment options and resources your business needs to go even further than that. It also supports the ability of your business to create a higher quality of service for your customer, while also saving your company money.

In-person Payments

If you run a brick-and-mortar store, then going with a conventional point of sale (POS) terminal is a good idea. POS terminals can process payments by syncing with the merchant software on your register.

Mobile Payments

If you require a mobile setup, then you can go with mobile payment processing solutions. These modern card readers are wireless and can attach to your iOS or Android devices to process card payments remotely. (A common example of a mobile card reader are Square readers. If you’ve been to a food truck, chances are you’ve seen a Square reader.)

In addition to simply accepting credit card payments on a mobile reader, you’ll also want to find out if you can take digital wallet payments like PayPal, Venmo, or Apple Pay. 

eCommerce Payments

Conversely, if you have an online business, sign up with a merchant account provider that provides you with an online payment gateway. This allows you to accept online transactions over the web and receive them directly in your bank account via your merchant services provider.

Over-the-phone Payments

Similarly, if you process payments over the phone, then you can sign up for a virtual terminal that will allow you to enter the customer’s card details manually into your system.

An Important Piece to Consider: Depending upon the type of merchant services you want to set up, you should ensure you also receive the proper payment processing equipment needed to accept your preferred credit card payment types.

This equipment comes directly from your acquiring bank or merchant services provider and has different costs associated with it. In the case of online payments, this comes in terms of software and payment gateway support and has a service fee associated with it.

Merchant Account Costs

Regardless of the type of payment solutions you end up choosing from your service provider, you will have to account for a variety of fees to be able to benefit from them.

These costs include but are not limited to:

  • Setup Fee
  • Monthly Maintenance Fee
  • Transaction Fee
  • Credit Card Processing Fees
  • Equipment Fee
  • Early Termination Fees
  • Chargeback Fees

In most cases, transaction fees represent the bulk of fees charged by merchant account providers. Most providers take a cut out of each sale plus a small transaction fee. This pricing model is known as flat-rate pricing, and the transaction fee percentage is based on your sales volume.

While this payment structure works well for businesses with low credit card transaction volumes, it can get pretty costly for high-volume merchants. Thus, they usually go for a pricing model commonly known as interchange-plus or interchange markup pricing. In this case, the provider will charge you the exact interchange rate for that transaction plus a set fee, often between $0.02 and $0.15. Because interchange rates vary depending on the banks and payment type involved, some transactions will end up much cheaper than flat rate. 

However, that method can end up still costing high-volume businesses a lot —and it makes it extremely difficult to predict how much you’ll owe in fees each month. 

This is where Stax can give businesses an advantage. Instead of taking a percentage of your sales, you’re simply charged a flat membership fee for access to wholesale interchange rates. Stax’s payment structure is often more cost-effective and can save businesses up to 40% in processing costs.

It’s also important to note that all merchant account providers work upon the same underlying process, but not all of them have equal services.

Some excel in terms of supporting mobile payments. Whereas, others take pride in delivering additional support with their services.

Depending upon their services, these vendors also charge different fees for the same payment services.

For example, some acquiring banks will charge you their service fee as well as the credit card network’s processing fee on each transaction. On the other hand, modern service providers often offer reduced costs that are included in their monthly fees. It’s factors like this that can help you differentiate between various merchant account providers and understand your potential expenses between processing rates, annual fees, and additional fees.

Paying close attention while comparing the costs of acquiring banks or service providers is key to finding the best merchant account provider for your business.

Compare Different Merchant Services

Since you can accept credit and debit card payments in a number of ways, it is essential to choose an acquiring bank or account provider that supports all your needs.

For instance, if you need a way to accept credit cards in the form of traditional, mobile, and online payment methods, then your selected payment processor must offer services that allow you to support them all.

Doing so helps you manage all your finances in one location.

In most cases, it also saves you from paying additional setup costs or higher equipment fees.

Additionally, when doing a comparison between each service provider, you should also look at the types of businesses they serve and their customer support.

Some payment processors also have different restrictions for what they consider high-risk businesses, as well as how they handle PCI compliance.

Submit Your Merchant Application

Up until a few years ago, getting a merchant account was a very complicated and grueling process. Submitting your business license, physically verifying your business location, and providing your credit score information were all part of obtaining a merchant account.

But thanks to the advancements in financial technology, the process is now super easy and can be completed in minutes. You just need to contact the right provider that uses modern solutions to process all applications.

Visit the Merchant Account Provider’s Website

When you have done your research in terms of payment services, costs, and overall reliability, simply visit the website of the acquiring bank or payment solutions provider to apply for a merchant account.

Select the Required Services

Sign up for the kind of merchant services you need for your small business. You’ll need to specify your needs for conventional and/or mobile payment processing solutions.

You will also need to move forward with choosing the necessary equipment for your solutions.

A great merchant account provider will have experts on hand to help you with the selection process and make sure you are making the best decision that fit your needs.

Submit the Required Details and Documents

Follow the process of filling out all the required details about your business. This will often require your personal information, business information, as well as any additional data that applies to your case.

Depending on the provider, this may feel like the most time-consuming step in the application process. But it is one of the most important as these extra steps really help in ensuring your business is protected and able to truly maximize all the merchant service providers can offer.

However, with a little bit of planning, this can be easily checked off the list. You simply need to put together the necessary information and documents, which the financial institution will then use to verify and underwrite your application.

Here are the most common documents and details required by merchant services providers during the application process:

  • General info and business documentation, including your contact information, and employer identification number (EIN). articles of incorporation, business license, credit history, etc.
  • Your business’ financial statements. This includes your business bank account statements, balance sheets, cash flow, income statements, records of credit card transactions, etc.
  • Other supporting documents, may include a business plan, voided checks, forecasts, marketing materials, etc.

Provide Additional Information if Necessary

Depending upon the efficiency of your chosen acquiring bank or payment provider, you will receive an update on your application status in just a few days. Your application may get approved, or the provider might require some additional information to put it through. Submit the details and move on.

Go Through the Underwriting Process

Once your information is submitted, the provider will review and analyze your application to ensure accuracy and evaluate risk. Known as the underwriting process, this step is necessary to determine your eligibility for a merchant account.

This step can take a few minutes to several business days depending on your provider, your industry, and the type of business you have. High-risk merchants may take longer to underwrite.

Setup the Merchant Equipment and Software

The next part of the process is receiving your equipment and setting up your software until you can start using the required merchant services. Upon approval, you may also need to make payments for equipment costs and service fees.

Most merchant account providers make this process easier by providing extensive onboarding support—often even a support person to walk you through set-up. By following the provided instructions and seeking help when you need it, setting up your merchant account is simple.

Enjoy a World of Efficiency and Superior Business Processes

By turning to physical or online merchant account services, you do not just welcome additional payment methods. You also improve and scale your business operations effectively.

Using traditional, conventional, or mobile payment processing solutions allows you to:

  • Increase your sales.
  • Improve your financial management.
  • Become more efficient in processing payments.
  • Expand your business operations to include more avenues of delivery.
  • Deliver a better customer experience through multiple payment methods.

If you are on the fence about signing up for merchant services, then this will be the time to make a decision. Move forward with easily integrating modern payment solutions in your day-to-day business operations.

At Stax, we take pride in offering easy-to-use yet highly efficient payment solutions to our clients. From conventional POS support to online merchant account services, we can fulfill all your merchant account needs and help you scale your operations to the next level.

Request a Quote


FAQs about Merchant Account

Q: What is a merchant account?

A merchant account is a service that enables businesses to accept debit and credit card payments by processing them through the merchant services. This process involves the merchant, the acquiring bank or merchant account providers, and the payment processor.

Q: How does a merchant account work?

Setting up a merchant account involves a relationship between three parties: the merchant (you), the acquiring bank or merchant account provider, and the payment processor. When a customer submits their payment, the information is processed through your acquiring bank or payment solutions provider, then handled by the credit card networks, which authorize the payment and transfer it to your merchant account.

Q: What is the process to set up a merchant account?

Setting up a merchant account involves first knowing the kind of services your business needs. Services can range from in-person payments, mobile payments, eCommerce payments, to over-the-phone payments. Next, the merchant should compare various service providers for support, costs, and reliability. Once a service provider is chosen, online applications can be filled out and documentation such as general info, business documentation, business’ financial statements, and other supporting documents can be submitted for review and underwriting. Lastly, set up the equipment and software provided by your acquiring bank or merchant services provider.

Q: What costs are associated with a merchant account?

The costs associated with a merchant account may include setup fee, monthly maintenance fee, transaction fee, credit card processing fees, equipment fee, and early termination fees.

Q: What are the benefits of using a merchant account for my business?

Having a merchant account helps a business increase its sales, improve financial management, become more efficient in processing payments, expand business operations, and deliver a better customer experience as it provides a wider variety of payment options. It also has the potential of saving up to 40% in processing costs for high-volume merchants by using payment structures like Stax’s that charge a flat membership fee instead of a cut from each sale.

Q: What are the key factors to consider when choosing a merchant account provider?

When choosing a merchant account provider, consider factors such as the types of payments they can handle (traditional, mobile, online, etc.), the types of businesses they serve, their customer support, PCI compliance, their pricing structure, and the associated fees for their services.

Q: What happens after the merchant account is set up?

After the merchant account is set up, merchants can start using the required services to process payments. This starts with setting up merchant equipment and software and making payments for hardware costs and service fees. The provider typically provides comprehensive onboarding support to simplify the setup process.