How to Find the Right POS System Retail: A Step by Step Guide

Running your retail operation is no mean feat. From taking care of your inventory to paying attention to merchandising, marketing your business to delivering exceptional customer service, you have your work cut out for you.

This is why, whenever you can get a chance to make your job easier, you are more than likely to take advantage of the opportunity. Following this approach, most retail business owners try to find a Point-of-Sale (POS) system for retail businesses that can make their operations (especially in-store) more efficient, manageable, and cost-effective.

If you are looking for a modern or integrated payment platform for your retail store that can do all this and more, then you need to keep a few essential points in mind. By being aware of these factors, you can make sure that your payment services platform can fulfill all your expectations without any issues.

TL;DR

  • When shopping around for a modern POS system for retail businesses, you should consider a few critical requirements. This will help you avoid the issues that come with legacy POS systems and maximize your new POS solution.
  • Don’t just look at where your business is today; also think about where you want to go. What’s on the roadmap for your retail store? Make sure to choose solutions that can scale with you.
  • Payment integrations are key, so set your sights on POS systems that can connect with leading credit card solutions like Stax. 

Overview of What to Look for When Choosing POS Systems for Retail

The best POS system on the market is, of course, something you’ll have to determine for your own business. That being said, there are a number of key features to keep an eye on if you’re shopping around for a retail POS. These include:

  • Checkout features, including integration with a physical cash register and cash drawer and POS terminals
  • Sales reporting – preferably in real-time
  • Light inventory management to track inventory
  • Light employee management
  • Light customer relationship management (CRM), including customer profiles
  • Mobile app (or completely mobile POS) that can be run on a countertop touchscreen device like an Apple iPad
  • At least some basic integrations with credit card processing solutions like Stax so you can accept contactless payments, and credit and debit cards. 

Understand the Problems of Conventional POS Systems

One of the most significant issues with accepting retail payments is the end-of-day processing. No matter the kind of business you run, you have to go through grueling and redundant data-entry tasks to manage your payments.

This gets all the more applicable if you process your credit card payments through a conventional POS system for retail businesses. Reconciling your receipts can take a lot out of you. Allocating employee resources for manual data entry, accounting for additional time at the end of every day, and looking for human errors all become a part of the equation.

Who wants to go through the same process again and again, especially after your customers have made their transactions? Not you. Not your employees.

If you use a traditional POS solution, you have no choice but to go through these grueling activities to receive your earnings in your merchant account. That’s just how the old process is designed.

These services can also bring about the following issues:

  • Longer processing times
  • Haphazard management
  • Unnecessary procedures
  • Erratic cash flow
  • Higher costs

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Here’s How Modern Payment Systems Can Help

By using modern services for POS, you can finally steer clear of tiresome processes.

As a direct answer to common issues found in a traditional POS system, you need modern POS system solutions that can resolve them, as well as provide additional benefits such as:

  • The flexibility to add on a variety of payment solutions. A modern solution should not limit you to a set number of payment types due to an inability to add a new capability. This opens more doors for less bulky systems like tablets, and smaller touch-ready devices to accept payments from customers on-the-go.
  • The ability to integrate with other platforms to build a better payment structure between the card/no card payment option.
  • Seamless management of Catalog and Inventory Items.

An integrated payment platform also lets you reconcile batched payments with your deposits.

As a result, you can ensure no transactions have been dropped or were missing from the batch.

You’ll not only benefit from seamless cash flow, but you’ll also reduce the costs that come with redundant data entry.

Keeping this in mind, make sure that you look for modern merchant services that follow the same approach in their payment processes.

What to Look for in a Modern POS System?

When shopping around for a modern POS system for retail businesses, you should be mindful of a few critical requirements. This helps you steer clear of the issues that come with legacy POS systems and lets you make the most out of your new POS solution.

Reduced Processing Times

Your first and foremost requirement with modern POS is to find reduced processing times.

An integrated payment platform automatically meets this need and saves you from redundant data entry as well as erratic cash flow problems. But you should still take your time to study through the offerings of each merchant services provider to understand what kind of processes they offer to manage your payments.

This helps you pick the best option for your business in terms of efficiency, and lets you claim your payments in a reduced timeframe.

Easy to Use Interface

Not every modern POS system for retail businesses can improve efficiency. In fact, if it utilizes a difficult-to-use interface, then it doesn’t do much for improving your payment management.

Make sure to look for a modern POS system that comes with an intuitive user interface. Utilizing an easy-to-use payment system helps you cut training times, improves your process flow, and reduces the chance of errors.

This helps you and your employees process your payment more efficiently, and lets you negate unnecessary payment processing issues.

Hardware and Software Compatibility

See to it that your point of sale software works well with your payment equipment, including your credit card terminals, barcode scanners, and receipt printers.

Effectively ringing up sales requires the different components of your POS and payments systems to “play nice” with each other. A disjointed setup can lead to technical errors and a poor checkout experience.

The best way to ensure hardware and software compatibility is to consult your POS vendor and ask about their preferred hardware partners. Some companies offer “all-in-one” point of sale solutions that bundle up hardware and software.

Clover, for example, enables retailers to purchase their hardware along with their POS subscriptions. Clover also provides payment processing services, although its fees are slightly higher than processors like Stax.

As such, if you’re leaning towards an all-in-one POS provider like Clover, see if you’re able to choose a payment processor that offers more favorable rates.

Manageable Costs

In addition to looking for an integrated payment platform, you should also go for a POS system for retail businesses that has the promise of reduced payment processing costs.

Some modern solutions come with sky-high costs for their solutions. But they are often not justified and use a higher markup for their services than necessary. At the same time, other merchants price their offerings in a way that makes them affordable for business owners without compromising on the quality of their solutions.

By shopping around and comparing the prices offered by different solutions, you can ensure to find the best value without having to let go of crucial features. This is an essential step in finding the right POS system for your needs.

Step By Step Guide to Choosing the Right POS System

Now that we’ve covered the importance of POS systems in retail environments let’s talk about the steps you can take to find the right one for your business. 

Step 1: Determine your needs

First things first. Before going “out there” to find solutions, take a step back into your business and figure out what you need in a point-of-sale system. Some of the factors you should consider:

Your hardware needs: This largely depends on your checkout process and the flow of your retail store. Large retail spaces with a dedicated checkout counter typically use a laptop or mounted tablet so cashiers can quickly ring up sales. 

On the other hand, if you have a small shop or prefer to ring up sales on the floor, a mobile POS system may be a better fit.

You should also consider payment terminals. If you have existing credit card equipment, see that the POS you choose can integrate with your credit card machines

Supported workflows: Consider the various workflows in your business. How do you order and receive inventory? Do you conduct partial and full stock counts? How are products managed and tracked in your business? These are just some of the questions you should be asking when evaluating the features of a retail POS.

Ensure that your system has the capabilities to carry out your business processes. Let’s say you’re an apparel retailer whose inventory comes in different shapes and colors. In this case, you should choose a POS that supports product variants. 

Do you conduct physical inventory counts every month or quarter? If so, select a system that has built-in counting features. 

Sales channels: If you sell on different channels—e.g., brick-and-mortar, pop-ups, eCommerce, social media, etc.—choose a point-of-sale system that supports these platforms. That way, you can manage all your sales in one place. An integrated system helps you maintain a unified view of your inventory, sales, and customer data across all channels, ensuring a seamless and efficient operation.

Integrations: Using other business apps? Then, look into solutions that can “play nice” with the software you’re already using. In doing so, you can streamline your operations and avoid the hassle of manual data entry. Integration with other business apps, such as accounting software, customer relationship management (CRM) systems, and eCommerce platforms, allows for seamless data flow and improved efficiency. This ensures that all your business processes are connected and working together harmoniously.

Your business roadmap: Don’t just look at where your business is today; also think about where you want to go. What’s on the roadmap for your retail store? Are you planning to expand to other locations, markets, or sales channels? Whatever the case, choose solutions that can scale with you. 

Your budget: A POS system can be quite an investment, so you want to make sure that it aligns with your budget. 

So, conduct a thorough cost analysis, including both upfront costs and ongoing expenses. Look beyond the initial purchase price to consider costs such as hardware, software subscriptions, transaction fees, maintenance, and any additional features or integrations you may need. 

This should give you an idea of your budget, which can then help guide your vendor decisions. 

Step 2: Research providers

Once you clearly understand your needs, the next step is to research potential POS providers. Aside from checking out their website and documentation, here are a few actions to make this step easier:

Read software reviews: Websites like GetApp, TrustPilot, Merchant Maverick, and Capterra contain POS software reviews from experts and users alike. These websites can serve as excellent resources for gathering unbiased opinions and learning about the pros and cons of different systems from real users.

Look up the provider on YouTube: Video reviews allow you to see and hear about other people’s experiences with the software. You might even find video demos of different POS systems, which can help you visualize how the system works in real-life scenarios and assess its user interface and ease of use.

Talk to other merchants: Browsing the web and YouTube only takes you so far. That’s why you should also reach out to fellow business owners or industry peers who use POS systems. Their firsthand insights and experiences can provide valuable information and help you make a more informed decision.

Step 3: Compare features, capabilities, and offerings

Create a detailed comparison chart to evaluate the features and capabilities of each POS system you’re considering.

List out key features such as:

  • inventory management 
  • sales reporting
  • customer management
  • payment processing options
  • any industry-specific functionalities you need. 

Assess how each system handles these features and note any unique offerings or advantages. As mentioned earlier, you should also consider the user interface, ease of use, and customization options available. 

Organizing this information in a structured way makes it easier to identify which POS system aligns best with your business requirements.

When you complete this step, you should have a shortlist of 1-3 providers to really dig into. 

Step 4: Demo or trial the software

Once you’ve narrowed down your point-of-sale software choices, the next step is to see it in action firsthand. At this stage, you should get in touch with potential POS software vendors and either watch a live demo or take a free trial of the platform. 

To ensure you select the right system, you must evaluate how the software performs in real-life scenarios specific to your business. 

Create a checklist of tasks and processes you want to test—such as processing sales, managing inventory, and generating reports. Involve your staff in the trial to get their feedback on the user experience and functionality. This hands-on evaluation will help determine if the POS system meets your operational needs and integrates well with your existing workflows.

Final Words

At Stax, we make sure to provide retail businesses the kind of payment solutions they need to improve their processes and grow their business. No matter the size of your operation, our Stax integrated payment platform, mobile payment solutions, and virtual terminals for payment card processing can all fit your needs perfectly.

To learn more about our services at Stax, reach out to us today and discover how much you could save with an estimate from one of our payment consultants.

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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.

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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.


 

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.

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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 Implement Self Checkout for Small Business

With the constant demand for greater efficiency and convenience in the retail experience, it’s not surprising that self-checkouts have entered the mainstream.

Once a relatively niche offering, the COVID-19 pandemic saw retailers accelerate the rollout of self-checkout systems, their contactless nature making them a lot more appealing than traditional checkouts for many consumers.

Self-checkouts also provide a range of other benefits, including reduced wait times, increased efficiency during peak hours, and more flexibility for customers to manage transactions. And in a survey from Bizrate Insights, 47% of respondents said they used self-service checkouts often, while 31% had used it before.

However, self-checkouts aren’t a panacea for a seamless customer experience in retail. How self-checkout is implemented—in addition to the type of self-checkout system you use—will determine how successfully self-checkout performs at your storefront.

In this blog, we will cover what your small business needs to consider when implementing self-checkout.

TL;DR

  • Self-checkout systems are automated checkout solutions that allow customers to process purchases independently.
  • Self-checkouts offer benefits such as reduced wait times, increased efficiency during peak hours, and flexibility for customers.
  • Poor implementation of self-checkouts can add friction to the customer experience, so it’s important to design a tailored checkout strategy and smooth implementation.

Understanding Self-Checkout Systems

Self-checkout systems are automated hardware and software solutions that enable customers to process their purchases at retail stores, rather than needing the assistance of a cashier.

Self-checkouts are most common within retail stores that see a high volume of customers and multi-item purchases, such as grocery stores, convenience stores, and big-box stores like Walmart and Target.

The appeal of self-checkout stations is two-fold. It’s intended to offer customers a more convenient experience by reducing wait times. Self-checkout machines also reduce labor costs by cutting down on the number of personnel required in the checkout process.

Self-checkouts can take various forms within a storefront, including:

  • Self-checkout kiosks. These large standalone terminals are typically located within a designated self-checkout area at the front of a store. They allow customers to scan, bag, and pay for their items all in one place.
  • Handheld scanners. These mobile self-checkout terminals allow customers to scan items one by one as they navigate the store, then proceed to a cash register to finalize the payment.
  • App-based scanning and payment. Some retailers have mobile apps that convert smartphones into scanners and payment portals. Customers can scan item barcodes using the camera and make a payment within the app.
  • RFID readers. Some stores such as Amazon Go are experimenting with RFID tags so that customers don’t even have to scan items to pay for them. They simply fill their carts and pass through a gate that “reads” what is the cart before prompting them for payment.

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9 Steps for Implementing Self-Checkout

Step Summary
1. Assess Business Needs Understand your storefront and customer habits. Identify pain points, consider demographics, and balance labor costs with customer preferences.
2. Select the Right Solution Consider cost, compatibility with existing systems, scalability, and user-friendliness of the self-checkout technology.
3. Integrate with Existing Infrastructure Ensure chosen system integrates with POS, payment gateway, analytics tools, loyalty programs, and CRMs. Run test transactions for smooth implementation.
4. Set Up Payments Offer multiple payment options including cash, cards, and contactless. Ensure data protection and security. Manage cash and card-based kiosks efficiently.
5. Consider User Experience and Accessibility Design for ease of use, clear prompts, good screen layout, and different accessibility needs like height, auditory, and visual features, and multiple languages.
6. Beef Up Security and Loss Prevention Implement anti-theft measures like checkout supervisors, video surveillance, and AI systems. Balance security with customer convenience.
7. Test and Gather Feedback Pilot self-checkout in selected areas, gather customer feedback, and analyze checkout metrics to refine the system.
8. Implement Rollout and Marketing Plan Use a phased implementation strategy. Raise awareness and educate customers about benefits like quicker transactions and loyalty points.
9. Stay on Top of Maintenance and Upgrades Regularly maintain and upgrade the system, focusing on software/hardware updates, security audits, and new innovations for a better customer experience.

1. Assess Your Business Needs

Before you start investing in a self-checkout infrastructure, you need to understand what system is going to work best for your storefront and customer shopping habits.

Mapping your current pain points will help you to identify the self-checkout strategy that will most improve efficiency and reduce costs.

If long checkout lines and wait times are proving to be a problem at certain times of day, self-checkouts may provide a way to reduce congestion. If reducing labor costs is a key focus, then self-checkout could help alleviate your staffing issues. That said, you should also consider that team members are still required to monitor self-checkout areas to provide assistance or discourage shoplifting.

Looking at the demographics of your customer base will also help you understand how likely self-checkout is to be taken up. If you have an older customer base, you may find they prefer to use traditional checkout systems, making it important to offer a range of checkout options in your store. This means that only some of your floor needs to be converted into self-checkout lanes.

2. Select the Right Self-Checkout Solution

There’s a range of factors to consider when choosing self-checkout technology, particularly when you’re implementing a large-scale solution that means considerable changes to your storefront:

Cost. As stated above, self-checkout is not all about savings. It requires a pretty sizable investment in infrastructure before you can benefit from lower labor costs. The size of this investment will depend on whether you are developing scanning and checkout capabilities via a mobile app or purchasing multiple kiosks. Other costs to consider include staff training, maintenance, and customer education.

Compatibility. Self-service checkouts need to integrate seamlessly with your existing point-of-sale system, as well as your systems for inventory management and sales tracking.

Scalability. Your system needs to handle increasing transaction volumes as your business grows, in addition to busy sales events or periods like the holiday season. Make sure a self-checkout solution is robust enough to future-proof your business.

User-friendliness. Self-checkouts need to be easy and intuitive for customers and staff to navigate to ensure a seamless customer experience. Test out the interface to determine if it’s simple to use.

3. Integrate with Existing Infrastructure

When you select a self-checkout system, you don’t want to have to redesign your entire tech stack around it. Instead, your chosen self-checkout solution should integrate directly with the front-end and back-end of your POS system and payment gateway.

It’s also important that the self-checkout system integrates with your analytics and reporting tools, as transaction data will play a big role in assessing the success of your implementation. Other integrations to consider that are easy to overlook include loyalty programs and CRMs that add value to the customer experience.

This process will require you to work closely with your chosen provider to ensure that implementation goes smoothly. For best results, run some test transactions to get staff familiar with the new set-up and ensure that all of the moving parts i.e. scanner, POS, and payment processor are all working correctly.

4. Set Up Payments in Your Self-Checkout Systems

In the same way that regular checkouts need to offer a range of payment options, your self-checkout solution needs to offer customers flexibility and convenience. Today’s customers expect to choose from payment methods including cash, debit/credit cards, and contactless payments.

Just like traditional checkouts, self-checkout systems must adhere to data protection regulations concerning payment and customer data. Security features such as encryption and tokenization ensure that sensitive data remains hidden while transactions are processed.

Businesses have a few choices for how to offer these payment options via self-checkout. Given that the majority of customers prefer card-based transactions, you could decide to only enable one or two kiosks to accept cash payments. This allows supervisors to keep a closer eye on these stations and ensure that transactions can move through more swiftly on card-based kiosks.

5. Consider User Experience and Accessibility

Ease of use is one of the most important considerations when it comes to choosing and implementing a self-checkout. If congestion and long queues are currently a problem at your storefront, it’s only going to worsen if your self-checkout process is confusing or difficult to follow.

Your system should clarify what your customer needs to do as they progress through the checkout experience. This includes clear prompts for scanning the next item or putting items into the bagging area, as well as a good screen layout with large icons and text so customers can identify how to seek assistance or make a payment.

Moreover, checkouts need to be designed for different types of accessibility. For example, kiosks should be at different heights and configurations for individuals with varying mobility. Consider auditory and visual accessibility needs with features like voiceover or high color contrast screens. If your store is in a diverse community, offering multiple language options is also an important consideration.

6. Beef Up Security and Loss Prevention

One of the big drawbacks of self-checkouts is that users can manipulate systems to shoplift items or pay less for items than they are worth, resulting in inventory shrink. While customers may do this by mistake (i.e. selecting the wrong Apple variety) this vulnerability can easily be exploited on purpose.

There are a range of anti-theft measures that storefronts can implement to discourage these behaviors. This includes checkout supervisors and video surveillance, as well as AI systems designed to detect suspicious behavior such as “skip scanning.” Some businesses such as Target have also introduced restrictions on the number of items per transaction in a bid to combat fraud.

However, introducing these measures comes at the expense of customer convenience. Some shoppers will be uncomfortable with high levels of surveillance at self-checkout, or become frustrated if their checkout experience is constantly interrupted by notifications or manual approvals.

In fact, some retailers including Dollar General and British chain Booths have decided to pause or roll back the expansion of self-checkouts, citing customer complaints about slow and unwieldy checkout processes.

The bottom line? You need to balance security with customer experience considerations. If security measures result in customers opting for traditional checkouts instead, this system may require a rethink.

7. Test and Gather Feedback

Before you commit to implementing a full self-checkout system, it’s a good idea to pilot it in selected areas of your storefront. By gathering data and feedback before full implementation, it’s much easier to introduce changes that will make everything run smoothly.

For example, you could set up one or two self-checkout kiosks and appoint a staff member to supervise and ask for customer feedback. This helps your business to gauge demand for self-checkouts, and engage in a productive dialogue with customers i.e. “Would you use a self-checkout service? Why/why not?”

This approach allows you to analyze key metrics about the checkout experience, such as average time per transaction, average number of items, and the average number of manual interventions required. If it’s taking longer for customers to complete the self-checkout experience than you expected, this may indicate that the system is not as intuitive as you hoped.

8. Implement a Rollout and Marketing Plan

Once you’ve chosen your self-checkout system, you need a careful strategy to ensure a smooth transition into offering self-checkout at your storefront. You also want to raise awareness about your new service and create interest among customers so they feel enticed to take it up.

It’s a good idea to launch a phased implementation of your new system. This means introducing a small number of self-checkout lanes to start, before expanding into the full set-up. This phased approach allows your storefront more time for testing, training, and identifying possible issues before committing to a full-scale rollout. As part of this process, you could also consider working with a small group of customers to test your self-checkout and offer feedback.

Your marketing approach should focus on educating customers on why self-checkout helps to improve their in-store experience. Talk up the benefits, such as smaller queues, quicker transactions, and easier redemption of loyalty points. In-store signage, social media posts, and word of mouth from store staff will also help to steer customers toward the self-checkout.

9. Stay on Top of Maintenance and Upgrades

The job isn’t finished once implementation is complete. You also need to budget time and resources to ensure that your self-checkout is being properly maintained. This includes software and hardware updates, security audits, and even an appropriate cleaning schedule (your customers will thank you!)

It’s a good idea to stay on the lookout for innovations that will make the self-checkout experience even more seamless for customers. This could be better accessibility features, loyalty program integrations, or paperless transactions for sustainability.

Final Words

Although initially gaining widespread popularity during the pandemic, self-checkouts continue to offer businesses and consumers a variety of benefits. In addition to reducing wait times and streamlining the checkout experience, it frees up valuable resources to reinvest in elsewhere in your business.

However, when implemented poorly, self-checkout can add considerable friction to the customer experience. This can contribute to a low uptake of self-checkout systems, taking the value out of your investment. By following the steps outlined above, you can ensure that your checkout strategy is tailored to the needs of your customers and that implementation goes smoothly.

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Quick FAQs about Self Checkout in retail

Q: What is self checkout in retail?

A self checkout or a self-service checkout allows the customer to handle the entire checkout process themselves. These are common in supermarkets, and can also be found in department and convenience stores.

Q: How do self checkout systems work?

In a self-service checkout, the customer is responsible for scanning product barcodes or weighing items, making the payment, and bagging their purchases, all guided by a recorded voice prompt and images on the touchscreen.

Q: What does the implementation of self checkout mean for businesses?

For businesses, self checkout could lead to a reduction in needed human resources, improved customer experience, and potentially greater revenue per customer. However, they will also face increased risks of theft and credit card fraud, higher initial investments, and the potential for low customer adoption.

Q: Who should implement self checkout technology?

Large supermarkets, malls, grocery stores, and many restaurants are prime candidates for implementing self-checkout technology. It is not recommended for high-value goods and products like tobacco and alcohol due to verification and theft risks.

Q: How can businesses prepare for self checkout implementation?

Know your customers, don’t rush the rollout, don’t rely solely on self-checkouts, and leverage self-checkouts for increasing sales are the top considerations.

Q: What forms can self checkout take?

Self checkout isn’t limited to self-service retail kiosks. It can also mean purchases through an online portal, payment through a link sent via text by a retailer, or payment through an online link sent by a service provider.

Q: How does self checkout affect the customer experience?

Self-checkouts generally improve customer experience by reducing waiting times. However, they may also reduce interactions with store employees, which some customers may prefer.

Q: What is the potential growth rate for self checkout technology?

Self checkout stations recorded a compound annual growth rate (CAGR) of 13.3% between 2020 and 2027.

Q: What are some examples of companies using self checkout?

Fast food companies like McDonald’s and Burger King have self-service kiosks installed at their outlets. Large supermarket chains such as Walmart, Kroger and Dollar General are also piloting exclusively self-checkout stores.

Q: How can self checkout be implemented in a less traditional manner?

One way is through a Text2Pay feature, which allows merchants to send invoices to customers over text, which can be paid with just a few taps. This can also schedule recurring payments and track invoices from within a dashboard.


 

How To Find the Best Credit Card Processor for Small Business in 2024

Although credit cards have been around since the 1950s, in recent years, they’ve started to dethrone cash from its position as king of payment methods. With a whopping 84% of American adults owning at least one credit card (the average is 3 credit card accounts per person), card payments reached $9.43 trillion in 2021. In fact, that’s the fastest growth rate for card payments…ever.

As a small business owner, it’s important to accept different payment methods like cash, credit card, and contactless or NFC mobile payments to ensure an easy shopping experience for your customers. But to do most of that, you need to have a credit card processor.

Since we’ve spoken a lot about credit card processing before, today we’ll take a look at how to find the best credit card processor for your SMB in 2024. Since the big players in the landscape generally all offer a robust set of services, data shows that most SMBs are satisfied with their payment processors and aren’t likely to switch. However, for lower transaction fees, over half of SMBs would be willing to switch to another provider—which means finding the best credit card processing rates is an important criteria to factor in. If you have no idea where to start with evaluating potential payment processing solutions, fret no more. Here are the top factors you need to look for when finding a credit card processor, as well as our ranking of the top players in the industry. 

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TL;DR

  • To understand what the best credit card processing rates for small businesses are, it is important to know what options you have, what’s included in the rate, and what’s negotiable. In order to ensure you have the best credit card processing rates possible for your merchant account, avoid providers who charge percentage markups and ensure that you always understand what fees to expect from your provider.
  • Other factors you should take into account are integration with existing systems, security and fraud protection, customer support, and ease of use.
  • When looking for a credit card processor, assess your business needs upfront: decide on your non-negotiables and must-haves, then work from there and look for providers that offer features that match your needs and goals.

Fees and Pricing Structure 

You’ve most likely agonized over your credit card processing rates and wondered whether or not you have the best ones possible. With the majority of processors relying on negotiations and tacking on hidden costs like exorbitant setup fees, dishonest monthly subscription fees, or unfavorable long-term contracts, it can be hard to know what the best rates really are. To understand what the best credit card processing rates for small businesses are, it is important to know what options you have, what’s included in the rate, and what’s negotiable.

Knowing your processing rate

Want to know if your rate is “good” or not? You first need to determine what exactly is included in the rate you are looking at. The most common fees you’ll see are percentage markup rates and effective rates.

Percentage markup rates

Percentage markup rates are the rates a payment processing provider charges in addition to interchange. These rates can vary from 0% to 3%; therefore when looking at a percentage markup rate, you want to be as close to 0% as possible. Stax, for example, charges 0% markups on top of interchange, giving you the lowest percentage per transaction rate. However, the percentage markup rate does not give you a full picture of your processing costs.

Effective rates

The effective rate is what you want to look at to truly understand how much you are paying for your credit card processing. The effective rate is calculated by adding up every cost related to processing credit cards, divided by total sales.

These processing costs include interchange, percentage markups, ancillary fees, transaction costs, etc. Thus, the effective rate is the best indicator of whether or not you are paying too much for your payment processing.

Understanding interchange rates

The one part of your effective rate that you can not negotiate or change by switching providers is interchange. Interchange rates are set by the credit card companies themselves and are the same for every single business owner. You can think of interchange rates as your base rate. Everything on top of the interchange will increase your effective rate and vary depending on the provider.

For example, Stax charges a flat monthly membership in exchange for a 0% markup rate, a transaction cost of just a few cents, and no ancillary fees. Since the only processing costs other than interchange are flat (the monthly membership and a few cents per transaction), effective rates with Stax are close to interchange and tend to decrease as transactional volume decreases.

Traditional providers who charge percentage markups and ancillary fees will have higher effective rates and those rates will stay the same or increase as transactional volume increases, ultimately costing your business more money.

Getting the best credit card processing rates

To ensure you have the best credit card processing rates for your merchant account, avoid providers who charge tiered percentage markups and ensure that you always understand what fees to expect from your provider. Asking questions and paying attention to your credit card processing statement will help you never be surprised by an increase in your effective rate.

With Stax’ all-in-one, reliable platform there are no hidden fees: our goal is to ensure that you’re spending less when you need to process payments and putting more money back into your business’s bottom line, to help guarantee maximum satisfaction from our customers.

Security and Fraud Protection

Fraud is rampant in the SMB sector for both brick-and-mortar or eCommerce companies. Whether it’s phishing, fraudulent chargebacks, or account breaches, your credit card processor needs to be properly secured to minimize the risk of security breaches for in-person transactions and online payments. That’s why you need to work with a payment provider that implements secure payment systems and a trustworthy payment gateway.

With Stax, we’re proud to ensure PCI compliance, which means we meet the Payment Card Industry Data Security Standards, created by card associations like Visa, Mastercard, and American Express to ensure sensitive payment data is securely processed, transmitted, and stored. In other words, you can rest easy knowing that we’ve prioritized the security of the cardholder and bank account data of you and your customers.

Integration with Existing Systems

While there will always be a learning curve when you work with a new payment processor, you want it to complement your way of working, not completely upend your small business. A good provider will have the functionality to allow you to easily connect their payment processing solution to popular applications or add-ons to speed up your workflow.

If they don’t offer ready-for-use integrations, ask if they at least allow access to their API so you can create web hooks to send the data to other online business tools or vice versa—but this does require having the technical expertise in your company, so this shouldn’t be the first option!

Customer Support and Service Quality

A top-notch payment processor will go above and beyond to provide a great working relationship with their customers, and excellent customer support is at the heart of that. That means short communication lines so it’s easy to get in touch with a real person, quick turnaround times, and an understanding customer success team.

When looking for a credit card processor, ask them what channels they can be contacted on and if they’re available 24/7. Then, look into reviews regarding their turnaround time on support requests. Remember, if it takes a few business days to resolve an issue with invoicing or processing your credit card transactions, not only could you lose out on valuable revenue, you could damage your customers’ trust in your business.

Accessibility and Ease of Use

This hopefully goes without saying, but the best credit card processing company is one that offers an intuitive solution. With proper customer onboarding, you should feel empowered and confident to use the different tools your solutions provider offers, like the POS system, credit card reader, virtual terminal, and any other unique features. To determine this, ask what sort of support resources are offered, what onboarding looks like, and if you can chat with an expert by phone, email, or live chat if you need additional information to get set up for success.

The Best Credit Card Processors for Small Businesses in 2024

Stax

Throughout this article, we’ve already touched on a lot of the features our all-in-one payment processor offers, but here’s a quick summary: Stax offers secure in-person and online payment processing designed to not only run, but grow your business. With flat-rate, transparent pricing; Level 1 PCI Compliance; and the ability to take all major forms of payments and online transactions, Stax has been consistently ranked as the (one of the) best credit card processing solutions for small businesses. Plus, we support card-not-present (CNP) transactions, offer no cancellation fees, and provide additional services like next-day funding and ACH processing if you want to get paid faster.

If you’re not sure if Stax is a great fit, our team will analyze your existing statements to give you free advice on if you should make the jump or not!

Payment Depot by Stax

Did you know we also offer an alternative to Stax Pay that takes on a cost-saving membership approach to credit card processing fees, which means instead of marking up the interchange rates, Payment Depot by Stax passes these rates on to its members, which lets startups and SMBs benefit from these lower rates (at an average of $400 a month in savings).

Beyond that, you get the same Stax benefits like no long-term contracts or hidden fees, subscription-style pricing, and PCI compliance. As with Stax, this isn’t the best solution for extremely low-volume businesses. If you’re a high-risk merchant account or regularly process recurring payments, this may also not be the right fit.

Choosing the Right Payment Processor for Your Business

While we’ve already looked at some tips on picking the right processor if looking at specific factors, there are a few other things you should keep in mind on a broader level while on the quest for the best payments solution for your small business.

Most importantly, you need to assess your business needs upfront: do you value a provider that offers its own hardware? One that provides invoicing features? Decide on your non-negotiables and must-haves, then work from there and look for providers that offer features that match your needs and goals. Of course, take pricing and credit card processing rates into consideration! Finally, think long-term. If your business scales, will your potential provider be able to support your growth? Armed with these questions, you should be able to make the right decision for the future growth of your business.

Stax’ all-in-one payment processing platform helps small businesses save on credit card processing. Discover how to run your entire business on Stax by contacting us today.

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FAQs about the Best Credit Card Processing For Small Business 

Q: How can small businesses get the best credit card processing rates?

Start by knowing the different pricing models, such as interchange-plus, flat-rate, and tiered pricing. Small businesses should shop around and compare rates from various providers, considering not just the rates but also any additional fees. Negotiating with providers can often lead to better rates, especially if you can demonstrate a steady volume of transactions or a growing business.

Q: How can merchants find the best credit card processing provider for their business?

To find the best credit card processing provider, merchants should assess their specific business needs, such as the volume of transactions, the average transaction value, and whether they need mobile or online processing capabilities. Researching and comparing different providers is crucial. Look for transparency in pricing, quality of customer service, and the range of services offered. Reading reviews and seeking recommendations from other business owners in similar industries can provide valuable insights.

Q: What are the credit card processing rates that merchants need to pay?

Credit card processing rates vary depending on the provider and the plan chosen by the merchant. These rates generally include a percentage of the transaction value plus a fixed fee per transaction.

That said, providers like Stax can give you access to the direct cost of interchange without the markup. We simply charge a subscription fee that you pay per month. 

Q: What factors should merchants consider when choosing a credit card processor?

Some of the key considerations  include: 

  • Pricing Structure
  • Contract Terms
  • Type of Transactions
  • Integration and Compatibility
  • Security and Compliance
  • Customer Support

Credit Card Processing for Small Business: 9 Tips for Accepting Payments Securely and Cost-Effectively

Just starting out with your small business? Finding great credit card processing rates may seem impossible, but there’s hope. By following these simple tips, you’ll be able to secure credit card processing rates that make big businesses jealous.

TL;DR

  • Not all credit card processing companies are created equal. To ensure that you’re able to take payments in a cost-effective way, be sure to carefully compare their fee structures, contract terms, and available features. Look for transparency in pricing, no hidden fees, and options that suit your specific business needs.
  • Make it a point to choose the right pricing models. Prefer interchange-plus pricing over tiered models for transparency and control over costs; avoid leasing terminals by purchasing affordable ones outright.
  • It’s best to avoid long-term contracts. Opt for flexible, month-to-month contracts without hidden fees for credit card processing to avoid being locked into unfavorable terms.

Here are Stax’ Top Credit Card Processing Tips.

In today’s world, knowing how credit card transactions work is super important for any business owner, given that card transactions make up the bulk of all payment transactions. No matter if you’re just starting out or you’ve been in business for a while, making your credit card system work better can really help your business grow—by saving you money, making your systems more efficient, or improving your customer experience.

Avoid Non-Mandatory Contracts

No one likes to be stuck in a contract, from cell phone contracts to credit card processing contracts. It’s common in the credit card processing industry to lock clients into multi-year contracts filled with hidden fees. Contracts are not mandatory, especially contracts with cancellation fees. Most processors will actually waive that fee if you tell them no, so don’t be afraid to speak up. If you can, find a company that doesn’t offer contracts—or offers rolling month-to-month contracts.

If you do opt for a contract, you should read the terms very carefully, looking for hidden fees, rate changes and other specifications that may end up costing you money. 

It’s also worth asking ahead of time what the renegotiation process would look like. It’s not unusual for companies of any type to raise rates quite a bit when starting a new contract, and it’s best to be prepared for what to expect. 

Be sure you know if there is a date you need to provide an opt-out by if you end up switching processors, as well. Some contracts will automatically renew (potentially at higher rates) if you pass a certain date without providing notice that you’re ending usage of the processor.

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Find Affordable Terminals and Avoid Leases

Credit cards and EMV terminals are cheaper than you think. A good terminal can cost around $250 these days, so don’t try and lease one if you have the money to buy one upfront. If your processing company offers to include one in a contract, always make sure to read the fine print to see how much they’re charging you for it. It’s usually better to buy one yourself and get a cheaper rate.

Avoid Tiered Pricing

If you’ve had a business before, then you’re probably used to tiered pricing. It’s expensive and unneeded with its lack of transparency, so stay away from it at all costs. 

Instead, go for interchange pricing. Interchange results in lower costs and doesn’t include any surcharges. Paying interchange rates instead of tiered rates is a common practice among big businesses and it’s the best option for you as it gives you the most control over costs of all the pricing types.

Always Know Where Your Money Goes

Before you start looking for a good credit card processing rate, you need to do your research. Learn where your money goes by looking up interchange and assessment fees. Interchange, as we mentioned earlier, is the best way to go when choosing a pricing option. They are a fixed credit card processing expense, and they’re the same for all processors. Here are the Mastercard and Visa interchange fees, for example.

Assessments are also a series of rates and fees charged by Visa and MasterCard, and they are the same across the board.

Just because you’re a small business doesn’t mean processing companies can treat you like one. Credit card processing rates are the same for all businesses, big or small, so don’t let them make you feel insignificant as a small business starting out. The bigger you think, the smaller your rates.

Secure your transactions

Ensuring your customers’ transactions are secure isn’t just in the customers’ best interests. It’s in yours too.

Secure transactions ensure you can maintain a trustworthy reputation with past and future customers, as well as reducing the financial losses that come from the fines and legal fees associated with compromising customer data. 

One of the most famous data breaches happened to Target in 2013. They were required to pay an $18M settlement, but losses are estimated to top $200M. A large part of that was simply lost customer revenue. Their earnings dropped 46% afterwards because people were afraid to shop there. It was a potent example for everyone of just how important your company’s reputation for security is with your customers. 

Optimize your credit card processing speeds

Slow transactions are, at best, an annoyance to customers, and at worst, result in lost sales, especially online. In order to improve processing speeds, you should make sure your POS equipment is up-to-date and that your internet connection is both stable and fast. Part of this includes performing regular maintenance on your hardware- and software, and ensuring that your settings are configured for reduced friction. 

For instance, you should reduce the amount of prompts that an employee or customer might have to click through in order to actually proceed with payment. 

Use Address Verification Services (AVS)

AVS is a fraud prevention measure for online and card-not-present transactions. It’ll compare the billing address provided in the transaction to the billing address on file with the card issuer. The service can determine if the addresses are a perfect match, partial match, or not a match at all. 

AVS does not prevent all types of fraud, but it’s a good way to detect suspicious transactions. Generally, you’ll implement AVS directly through your credit card processor, and you’ll need to monitor its effectiveness over time to improve the system.

Train Your Staff To Handle Data Securely

For in-person transactions, it’s crucial your staff is able to take payments in an efficient and trustworthy manner. Customers need to feel that their data is secure and that transactions don’t take any longer than necessary. Furthermore, your staff is likely the weakest point in your security due to the factor of human error – among other things. Providing your staff with education on how to handle customer data can help prevent data breaches that even a well-intended employee might cause.

There are a few key areas to provide training on:

  • Recognizing what potential risks may look like (such as common phishing tactics).
  • The physical measures required to keep customer data protected, such as locking devices or safely stowing and securing any actual paperwork with customer data.
  • Require employees to create strong passwords for any systems they access (this includes implementing two-factor authentication wherever possible).

Leverage Your Data

Your credit card processing solution will ultimately gather a lot of unique data on customer behavior and preferences. Analyzing this data in the reports your processor provides can help tailor marketing efforts and improve overall business strategies. The data gathered by a credit card processor is particularly handy in identifying trends and patterns – and therefore forecasting what business will likely look like during a certain time period. 

At this point, most businesses do use systems other than the credit card processor as their central operating system (think an ERP or eCommerce site host). Because of that it’s crucial to ensure that any credit card processor you choose can integrate their data with your preferred central system. Otherwise, you’ll be unable to compare data in real time – and all data comparisons will result in a headache of manual effort.

Many of our tips apply to how Stax works, with no contracts, surcharges, and optimized terminals that pair perfectly with our subscription pricing plans.

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FAQs about Credit Card Processing For Small Business

Q: What is credit card processing for small business?

Credit card processing for small businesses involves enabling these businesses to accept payments through credit cards. This process requires a merchant account, which is a special type of bank account that allows businesses to receive payments in multiple forms, including credit and debit cards.

Q: What are credit card processing fees for small businesses?

Credit card processing fees for small businesses are various charges that businesses incur to accept credit card payments. These fees are typically a combination of percentage-based and flat fees and can vary based on the credit card processor, the type of card used (credit or debit), and whether the card is present during the transaction. 

The main types of fees include interchange fees (paid to the card-issuing bank), assessment fees (paid to the credit card network like Visa or MasterCard), and the payment processor’s markup.

Q: How do I accept a credit card payment for a small business?

To accept credit card payments for a small business, you first need to set up a merchant account with a bank or an independent payment processor. After this, you choose the appropriate hardware and software for processing transactions. This could be a traditional credit card terminal, a point-of-sale (POS) system, or a mobile card reader that works with smartphones or tablets. You also need to ensure you have a payment gateway if you’re accepting online payments.

Q: What’s the cheapest way to take card payments?

The cheapest way to take card payments often depends on the volume and nature of your transactions. That said, comparing different providers and negotiating for better rates can also help you in finding the most affordable solution.

It’s also important to choose a payment processor that offers a merchant-friendly pricing structure. As mentioned earlier, tiered pricing is NOT the best option because it often lacks transparency and can be more expensive in the long run. In tiered pricing, transactions are categorized into different tiers (qualified, mid-qualified, non-qualified) based on various criteria, and each tier has its own fee. This model can be confusing and unpredictable, making it hard for businesses to forecast expenses. 

Instead, opt for a transparent and cost-effective pricing method such as interchange-plus or subscription. 

Q: How can I start taking credit cards for my business?

First, choose a credit card processing service that aligns with your business needs. Once approved, you will need to acquire the necessary hardware (like credit card terminals or mobile card readers) and software for processing transactions. If you’re planning to accept online payments, setting up a payment gateway is essential. Finally, ensure your system is compliant with industry security standards (PCI DSS) to protect your customers’ card information.  

Demystifying Credit Card Interchange Fees: What You Need to Know [2024 Rates and Updates]

When you research payment solution providers, you’ll start hearing the term “interchange” used when talking about payments. Interchange is the fee that credit card companies like Visa and Mastercard charge businesses to accept their cards.

The interchange fee depends on a number of factors and isn’t always easy to understand. In this article, we will break down credit card interchange fees so you will know exactly how much you’re spending when running your business.

In this post:

  • What are interchange fees?
  • How much does interchange cost?
    • Visa interchange fees
    • Mastercard interchange fees
    • Discover interchange fees
    • American Express interchange (OptBlue)
  • What is the total cost of accepting credit cards?
    • Set rate processing
    • Subscription rate processing

TL;DR

  • Interchange fees are not collected by your payment processor or bank; they go directly to the card-issuing banks.
  • Interchange fees vary significantly depending on the card issuer, the issuing bank, type of transaction and/or merchant type. Memorizing all of the nuances is impossible, but understanding the interchange rate range most common for your business is a good best practice.
  • While interchange fees are unavoidable, there are strategies to help minimize their impact, including choosing a cost-effective payment processor, implementing surcharging, and more.

What Are Interchange Fees?

Interchange is the fee credit card companies charge businesses to accept their cards. Essentially, the merchant pays the card brand for the convenience of accepting this payment method since that is the way your customers want to pay.

Interchange fees help cover the risks associated with accepting electronic payments while ensuring your company has access to guaranteed payment when a customer makes a purchase. Interchange fees are simply a cost of doing business.

Understanding the concept of interchange fees is crucial for businesses looking to optimize their payment processing costs. These fees are set by the payment networks and are typically expressed as a percentage of the transaction value or as a fixed amount per transaction. The exact fee structure varies depending on factors like card type, transaction type, industry, and location.

It’s important to note that interchange fees are not collected by your payment processor or bank; they go directly to the card-issuing banks. Your payment processor, however, plays a role in facilitating the transaction and deducts its own processing fee from the overall charge.

Debit card transactions generally have lower interchange fees compared to credit card transactions. This is because debit cards are linked directly to the customer’s bank account, and the risk of non-payment or default is lower. By actively encouraging customers to use debit cards, businesses can effectively reduce the interchange fees associated with card payments.

While interchange fees may seem like an added expense, it’s crucial to recognize the value they bring to your business. Accepting credit and debit cards allows you to cater to a wider customer base, improve customer satisfaction, and enhance the overall shopping experience. By offering convenient payment options, you can attract more customers and increase sales.

To ensure the interchange fees you pay are reasonable and competitive, it’s essential to regularly review and negotiate your fee structure with your payment processor. Stay informed about any updates or changes in interchange fee schedules to ensure you’re paying the most optimal rates for your business.

Additionally, optimizing your payment processing infrastructure and implementing measures to minimize chargebacks can have a significant impact on reducing interchange fees. By investing in secure payment gateways, fraud detection systems, and robust transaction processing protocols, you can lower the risk of chargebacks and avoid unnecessary fees.

Remember, while interchange fees are an inherent part of accepting card payments, implementing smart strategies and staying proactive can help you minimize their impact on your business. One such strategy includes implementing credit card surcharging to offset the cost of interchange fees. By understanding the fee structure, promoting debit card usage, and optimizing your payment processing operations, you can effectively manage and reduce interchange fees, ultimately improving your bottom line.

Interchange fees are an essential consideration for businesses that accept card payments. These fees are a cost that businesses incur to facilitate the convenience and security of card transactions. While it’s true that businesses pay interchange fees, it’s important to understand that they are a necessary part of the payment ecosystem.

Interchange fees enable payment networks and card-issuing banks to cover the costs associated with maintaining the infrastructure, managing fraud risk, and providing the benefits and rewards programs associated with credit and debit cards.

As a business owner, it’s crucial to factor in these interchange fees when evaluating the overall costs of accepting card payments. By understanding the dynamics of interchange fees and implementing strategies to optimize their impact, businesses can effectively manage their expenses and find a balance that allows them to provide convenient payment options to customers while minimizing the amount they pay in interchange fees.

How Much Does Interchange Cost?

Interchange fees vary widely across card brands, credit card networks, card types, and how you process cards. Credit cards that offer points or rewards cards typically come with higher interchange fees, as do corporate cards.

Generally, debit card transactions are much less expensive than credit card payments for you to process and come with a lower interchange rate than credit cards. Card-present transactions also incur lower rates compared to card-not-present transactions. However, an exemption to this is debit cards issued by a bank with less than $10 billion in assets, also referred to as “exempt”, often a local bank or credit union—these have some of the highest interchange rates of all.

While you have control over whether a cardholder’s card is swiped or keyed in at the point of sale, you can’t control what kind of card they use. That’s why interchange varies so widely. For a $100 transaction, a swiped Mastercard debit card will cost you around 27¢. However, for the same transaction, using a Visa corporate commercial credit card will cost you around $2.60. It’s easy to see how over the course of the year, these fees can stack up.

Below, we’ll give a sampling of interchange rates for the most popular card brands. Please note there are many other categories not covered in this table, including variations by card type, business type, whether the bank is regulated or exempt, and more.

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Visa Interchange Fees

As mentioned earlier, interchange fees will depend on several variables. Before reading on, let’s also clarify the terminology you’ll see below. 

Beyond the card type (debit, or the various kinds of credit cards), you’ll also see “exempt” or “regulated” which indicate different fees for debit cards. The Durbin Amendment established these two ratings to differentiate the card-issuing banks based on their assets. 

For card issuing banks with assets in excess of $10 billion, these are regulated; card-issuing banks with less than $10 billion in assets are non-regulated and fall under the “exempt” category. The difference in these fees does vary significantly and is something the merchant has no control over or visibility into when the customer presents their card to pay.

Below is a list of common interchange for various scenarios, for the full list of interchange fees by Visa card type, refer to the guide linked below:

Transaction Type Card Type or Bank Classification/Interchange Fee
CPS/Retail, Debit – Card Present Exempt: 0.80% + $0.15

Regulated: 0.05% + $0.21

CPS/Card Not Present, Debit Exempt: 1.65% + $0.15

Regulated: 0.05% + $0.21

CPS-Restaurant, Debit – Card Present Exempt: 1.19% + $0.10

Regulated: 0.05% + $0.21

CPS/e-Commerce Basic, Debit Exempt: 1.65% + $0.15

Regulated: 0.05% + $0.21

CPS/Retail, Prepaid Exempt: 1.15% + $0.15

Regulated: 0.05% + $0.21

Retail, Credit, Performance Threshold III Visa Signature: 1.65% + $0.10

Visa Signature Preferred: 2.10% + $0.10

Traditional Rewards: 1.51% + $0.10

Small Merchant Product 2, Credit  Visa Signature: 1.43% + $0.10

Visa Signature Preferred: 1.88% + $0.10

Traditional Rewards: 1.43% + $0.10

See full Visa interchange rates.

Mastercard Interchange Fees

You’ll see below that MasterCard and Visa do not use the same criteria to delineate the type of transaction or card types, nor does their official guidance use the same verbiage. However, you’ll find the average interchange fee range of percentage plus the flat fee per transaction is similar to other popular card issuers.

Transaction type Program Name (Card Type)/Interchange Fee
Restaurant World (USD): 1.85% + $0.10

World High Value (USD) 2.00% + $0.10

Small Ticket (Transaction Amount <$5), Card Present Core (USD): 1.65% + $0.02

World (USD): 1.90% +$0.02

World High Value (USD): 2.30% + $0.02

Small Ticket (Transaction Amount <$5), Card Not Present Core (USD): 1.95% + $0.02

World (USD): 2.20% +$0.02

World High Value (USD): 2.60% + $0.02

Regulated POS Debit, purchases and purchases with cash back Debit Rate (USD): 0.05% + $0.21

Prepaid Rate (USD): 0.05% + $0.21

Payment Transactions, Debit and Prepaid Cards Exempt Debit (USD): 0.19% + $0.53

Exempt Prepaid (USD): 0.19% + $0.53

PIN Debit Payment Transaction Rate (USD): 0.19% + $0.53
PIN Regulated POS Debit Rate (USD): 0.05% + $0.21

See full Mastercard interchange rates.

Discover Interchange Fees

Discover does not publish its full interchange rates online, so below is an estimate provided by a third-party provider. Please note that for debit cards, the fees will vary depending on whether the bank is regulated or exempt and for credit cards it will vary depending on whether the card is swiped or hand-keyed.

Card Type Interchange Fee 
Discover Debit, card present Exempt: 1.10% + $0.16

Regulated: 0.05% + $0.22

Discover Debit, card not present Exempt: 1.75% + $0.20

Regulated: 0.05% + $0.22

Discover Consumer credit card Swiped: 1.56% + $0.10

Keyed: 1.87% + $0.10

Discover Rewards Swiped: 1.71% + $0.10

Keyed: 1.97% + $0.10

To access full Discover interchange rates, you need to use a verification code provided by your acquirer.

American Express Interchange Fees

American Express works differently from the other brands in that the card type does not impact the processing rate. Instead, your industry or merchant category code (MCC) will play a larger role in deciding how much you pay in credit card processing fees.

For smaller businesses, you’ll probably be accepting American Express through their program called OptBlue. Through OptBlue, your payment technology provider will determine how much you pay for AmEx and bundle it in with the ability to accept more popular card types. This way, you can accept AmEx customers (who historically have higher ticket prices) without breaking the bank.

You can read more about the OptBlue program at Merchant Maverick.

How Do Credit Card Interchange Fees Work?

As you can see, interchange fees vary from one credit card network to the next. These fees are set by Visa, Mastercard, Discover, and American Express every April and October. As for how these fees are split, a percentage of the interchange rates goes to the card issuers aka card-issuing banks—e.g., Capital One, Chase, or Bank of America. The rest of the fees go to the credit card brand. This is important to point out because it shows that interchange fees are not charged by your payment processing company (and thus, they’re non-negotiable).

Payment processors typically charge a markup on top of the interchange, which is essentially how they make money. So while you technically can’t negotiate your way to lower interchange fees, you can still save on overall payment processing costs by working with the right provider.

How Much Do You Pay?

At the end of the day, how much you’re paying for credit card processing relies on your payment solutions provider. Many payment processors like Stripe, Square, PayPal, and bank merchant services offer flat-rate processing. Some others, including Stax, offer subscription-style processing that gives you access to the lowest rates of interchange.

Avoiding Higher Interchange Fees

In the modern digital age, electronic payments have become the norm, with credit and debit cards being widely used for transactions. However, along with the convenience of card payments, businesses face the challenge of interchange fees, which can significantly impact their bottom line.

Choose the Right Payment Processor

The choice of payment processor plays a crucial role in managing interchange fees. Different processors offer various pricing models, so it’s essential to compare options and negotiate competitive rates. Look for processors that provide transparent pricing structures and offer interchange plus pricing, where the interchange fee is passed through directly without any markup. This approach can help you avoid unnecessary additional charges and optimize your fee structure.

Optimize Card Acceptance

Understanding the types of cards you accept and their associated interchange fees is key to minimizing costs. Payment networks classify cards into different categories, and fees vary depending on factors like card type (credit or debit), payment method (chip and PIN, contactless), and industry-specific cards (corporate, rewards). By optimizing your card acceptance policies, you can encourage customers to use lower-cost payment methods and reduce interchange fees.

Encourage Debit Card Usage

Debit cards generally carry lower interchange fees compared to credit cards. Actively promoting debit card usage among your customers can help lower your overall interchange fee expenses. Consider offering incentives, such as discounts or rewards, for customers who choose to pay with their debit cards. This not only benefits your customers but also reduces your payment processing costs.

Streamline Processing and Reduce Chargebacks

Efficient transaction processing and minimizing chargebacks can have a positive impact on interchange fees. Implementing secure payment gateways and fraud detection systems can help reduce the risk of chargebacks, which can result in costly fees. Furthermore, optimizing your payment infrastructure to streamline processing and minimize errors can help prevent unnecessary charges and improve overall cost efficiency.

Regularly Review and Update Your Fee Structure

Interchange fees are subject to change, as payment networks periodically update their fee schedules. It is crucial to stay informed about these changes and periodically review your fee structure to ensure you’re paying the most competitive rates available. This review process may involve renegotiating with your payment processor or exploring alternative options in the market to find the best fit for your business.

Consider Surcharge Programs

Depending on your region and applicable regulations, you may have the option to implement surcharge programs, where you pass on the interchange fees to customers directly. While this strategy requires careful consideration and compliance with legal requirements, it can be an effective way to offset interchange fees (especially for a small business) and transfer the cost to the end-user.

Interchange fees are charges imposed by payment networks, such as Visa and Mastercard, for processing card transactions. While these fees are unavoidable, there are several smart strategies that businesses can employ to minimize their impact. In this article, we will explore practical tips to help businesses navigate and reduce interchange fees effectively.

Here’s how these different rates work:

Tiered Pricing

A common pricing model in the payment processing realm is called tiered pricing. This method bundles the interchange rate with the processor’s markup and then puts your transactions into three tiers: qualified, mid-qualified, and non-qualified.

Card payments that are in the “qualified” tier incur lower rates while “non-qualified” transactions cost more to process.

Here’s where things get dicey: how transactions are categorized is completely at the discretion of the processor. What some payment processing companies consider as “qualified” may not be the same for others. There’s no transparency with tiered pricing fees, making it difficult to figure out whether or not you’re overpaying.

Set Rate Processing aka Flat Fee Processing

With set rate processing, you have a non-negotiable flat fee per credit card transaction, regardless of card or industry type. For instance, Stripe charges 2.9% + 30¢ per transaction. So whether you’re accepting a debit card with a 0.05% + 22¢ interchange rate or a corporate card with a 2.50% + 10¢ interchange rate, you pay the same rate.

While this may seem simpler at first, the reality is that you could be overpaying for credit card processing with these systems. In the example above, Visa would receive the .05% + 22¢, while Stripe would be making a whopping 2.5% + 8¢ on your transaction. That’s why we introduced simple subscription-based pricing.

Interchange Fees And How To Understand Them | Payment Processing

Flat Subscription Rate Processing

Subscription-based processors have a similar concept to other subscription services you’re used to, such as warehouse stores like Costco. You pay a low fee to get access to warehouse pricing on goods, where you then can buy as much as you want with no cap on savings. Stax’ subscription pricing starts at just $99 per month. Regardless if your sale is $50 or $5,000, you pay the flat cost of processing without a percent markup.

Every business is different, which is why we don’t believe in one-size-fits-all solutions. Based on the types of cards your customers are using and your average transactions, we’ll be able to show you exactly which type of plan makes sense for your business.

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FAQs about Interchange Fees

Q: What are interchange fees?

Interchange fees are charges imposed by payment networks, such as Visa and Mastercard, to businesses for processing credit and debit card transactions. These fees are set by the payment networks and go to the card-issuing banks to cover various costs, including infrastructure maintenance, fraud protection, and rewards programs.

Q: Do I pay interchange fees directly?

No, interchange fees are not paid directly by businesses to the payment networks. Instead, they are deducted by your payment processor or acquiring bank and passed on to the card-issuing banks.

Q: How can I reduce interchange fees?

While interchange fees are unavoidable, there are strategies to help minimize their impact. These include negotiating competitive rates with your payment processor, optimizing card acceptance policies to encourage lower-cost payment methods, promoting debit card usage, streamlining processing to minimize errors, and staying updated on fee structures to ensure you are paying the most competitive rates available.

Q: Are interchange fees the same for all types of cards?

No, interchange fees vary depending on factors such as card type (credit or debit), payment method (chip and PIN, contactless), and industry-specific cards (corporate, rewards). Debit card transactions generally have lower interchange fees compared to credit card transactions.

Q: Can I pass interchange fees on to my customers?

The ability to pass interchange fees on to customers depends on regional regulations and legal requirements. In most states, businesses may have the option to implement surcharge programs where interchange fees are directly passed on to customers. However, it’s important to research and comply with applicable laws before considering this option. CardX by Stax is the leader in automated surcharging compliance and can help your business implement passing on these fees properly.

Q: How often do interchange fees change?

Interchange fees are subject to periodic updates by payment networks. They can change annually or even more frequently. Staying informed about these changes and periodically reviewing your fee structure is essential to ensure you are paying the most competitive rates available.

Q: Is it possible to avoid an interchange fee?

It is not possible to completely avoid interchange fees when accepting card payments. Interchange fees are an inherent part of the payment ecosystem and are charged by the payment networks and card-issuing banks to cover various costs associated with processing transactions, maintaining infrastructure, managing fraud risk, and providing cardholder benefits. Your business cannot avoid paying interchange fees, but you can employ strategies to minimize the impact and optimize your payment processing costs.


 

Credit Card Surcharge Sign Examples and Templates for Merchants

Did you know that in 2021, merchants ended up paying a whopping $105 billion in credit card processing fees? Even though they’re one of the most popular payment options today, accepting credit cards at your business can turn out to be a significant expense.

Fortunately, credit card surcharging is a good way to offset some—if not all—of the cost of accepting credit card payments. All you need to do is charge an additional fee (or surcharge) on top of the final bill amount for customers paying by credit card.

However, you must keep in mind several federal and state laws as well as credit card network guidelines (e.g. Visa, Mastercard, American Express, Discover, etc.) before you can start surcharging.

One such guideline that credit card companies and certain US states impose is that you must inform customers that you practice credit card surcharging. Whether accepting payments online or in person, banners, posters, and other appropriate types of signage should inform customers that an extra fee, such as a surcharge, will be added (as a separate line item) to the final dollar amount of their credit card purchases.

TL;DR

  • Credit card processing fees can add up quickly and eat into a business’s bottom line. Fortunately, in states where surcharging is legal, you can recoup these processing costs by transferring them to the cardholder.
  • Customers need to be informed of surcharging, which necessitates the need for plenty of credit card surcharge signs at your store—whether brick-and-mortar or online. Signs should be clear and visible, so customers don’t have to go looking for them, and large enough so that customers can’t miss them.
  • Card companies set the guidelines around credit card surcharge signs, and disregarding them can lead to your business’s merchant account being terminated. So make sure to follow all rules related to the placement, content, design, and compliance of your signage.

Understanding Credit Card Surcharges

Card networks not only help businesses process credit card payments but they also regulate the industry by establishing surcharging rules and maintaining compliance. In exchange for their services, card companies charge certain fees (interchange fees and assessment fees) on each credit card transaction they process.

Merchant service providers help businesses connect with these credit card networks and offer the necessary hardware and software to process credit card payments. In exchange, businesses pay a host of different fees (e.g. markup, monthly fees, compliance fees, equipment lease fees, per-transaction fees, statement fees, etc.) to their payment processing company.

All of these credit card processing fees can add up quickly and eat into a business’s bottom line. Fortunately, in states where surcharging is legal, you can recoup these processing costs by transferring them to the cardholder.

Surcharging rules

Surcharge laws and guidelines can vary from state to state. As of 2023, the states and territories that prohibit or limit surcharging are Connecticut, Massachusetts, and Puerto Rico. Plus, there are federal laws governing surcharges.

However, in general, surcharge laws state that businesses cannot profit from surcharge fees—they can only use it to offset some or all of the fees they pay to credit card networks and processors. Visa caps the surcharge rate at 3% (Mastercard caps it at 4%) and it can be as low as 2% in certain states (e.g. Colorado).

Also, customers need to be informed that you will be applying a surcharge on their transaction amount. The rules state that your signs should be clear and visible, so customers don’t have to look for them. Credit card surcharge signage should be plenty and large enough so that customers can’t miss them. 

If a customer feels they weren’t adequately informed about surcharging on their payment method, they can file a complaint with the state attorney general’s office. An investigation will ensue and if the cardholder’s complaint is found to be valid, the business can be prosecuted.

Card companies set the guidelines around credit card surcharge signs and flouting them can lead to your business’s merchant account being terminated. 

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Design Principles for Surcharge Signs

When it comes to credit card surcharge signs, there are certain design principles or best practices that you must keep in mind. Take a look below.

1. Clarity and visibility

A credit card surcharge sign can be of two types: point-of-sale notification and point-of-entry notification. Essentially, you should have a credit card surcharge sign at each of your points of sale (POS) at your brick-and-mortar store.

Signs must also be placed at the main entrances (point-of-entry) of your store, and for added measure, place signage at strategic locations in your store where customers are most likely to come across them.

The idea is that, with all of this, customers will be aware of your credit card surcharge program as they enter your store premises and before purchasing at the cashier’s terminal. The rate of surcharge should also be present on your signs, especially those at points of sale.

For online stores, the home page should have a credit card surcharge sign. Checkout pages should also have clear banners, alerts, text, sections, etc. that inform customers about surcharging.

2. Font, color, and placement

All disclosure signage must be unobstructed. Make sure that the fonts you use on each credit card surcharge sign—whether for online transactions or in-person ones—are big and easily legible so that customers can read them from a distance.

Contrasting colors can help highlight sections of the signs that are important such as the rate of surcharge. Different colors can also make your signs more attractive and can make a big chunk of text quicker to read.

However, it’s best to avoid fancy lettering and too many colors that can make your signs difficult to read. 

3. Compliance

Individual states may have different requirements when it comes to disclosure signage. Credit card networks also have different surcharging rules for signs so it’s best that you do your research before getting your signs printed or adding banners to your website. 

Examples of Effective Surcharge Signs and Templates for Merchants

A credit card sign can be as simple as a poster that says, “We impose a surcharge of __% on credit cards that is not greater than our cost of acceptance.”

 

Or you could use any of the following templates:

“We impose a surcharge of __% on the transaction amount on credit card products, which is not greater than our cost of acceptance. We do not surcharge cash or debit cards.”

 

“A service charge of __% will be applied to all credit card purchases. For your convenience, customers may avoid this extra fee by paying with cash or debit. We accept ___________, ____________, ___________, and ____________ .”

“A __% credit card fee will be applied to all credit card transactions. Cash and debit card transactions are not subject to a surcharge.”

 

“Dear customers, 

if paying with a credit card, a __% convenience fee will be added to your check. If you pay with cash or debit, you won’t get charged.”

 

“To our valued customers,

Instead of raising our prices, your receipt now includes a __% service fee to cover the rising cost of credit card acceptance that we pay when cards are used. If you pay cash or with a debit card, you won’t get surcharged.

Thank you for your continued patronage”

***

The good news is that credit card networks provide tips and templates of signage for their credit card products. Here are some templates from Visa that you may also use for credit cards of other networks.

Credit Card Surcharge Sign2 Credit Card Surcharge Sign1

This credit card surcharge sign is an example from Visa. Not only is it simple and easy to read but also clearly states the surcharge rate and the card brand being surcharged. What’s more, the sign clearly states that debit cards and prepaid cards are not surcharged. 

Mastercard guidelines for surcharging can be found here. Businesses need not fret as their payment processor can help them set up appropriate signage too.

Final Words

Credit card surcharging is an excellent way for merchants, especially small businesses, to prevent profits from being lost in credit card fees. Customers also appreciate transparency even if they have to pay a bit more. So it’s best not to ruin this opportunity by having non-compliant signage. 

If you’re looking for an automated credit card surcharging solution that helps you save money while ensuring compliance with state laws, federal laws, and card company rules, look no further than Card X. To learn more about how we can help, contact us today.

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FAQs about credit card surcharge sign

Q: What is a credit card surcharge sign?

A credit card surcharge sign is a notification displayed by businesses to inform customers that an additional fee may be charged for transactions made with a credit card. This surcharge is intended to cover the costs that the merchant incurs for processing credit card payments.

Q. Why do businesses need to display a credit card surcharge sign

Businesses display credit card surcharge signs to maintain transparency with customers about potential extra charges. It’s a way to communicate any additional costs upfront, helping customers make informed decisions about their payment method. Additionally, in many jurisdictions, it’s a legal requirement to notify customers of any surcharges.

Q: What happens if a merchant doesn’t have a credit card surcharge sign?

If a merchant doesn’t display a credit card surcharge sign and imposes a surcharge, they may be violating consumer protection laws and regulations regarding transparency and fair trading. This can lead to customer complaints, fines, and legal action, depending on local laws and regulations.

Q: What are the guidelines for displaying credit card surcharge signs?

Credit card surcharge signs must be clearly visible and easy for customers to read. They must also be located in a place where customers are likely to see them before they make a purchase. The signs must disclose the amount of the surcharge, as well as the fact that the surcharge is not a government fee.

Q: How can businesses create credit card surcharge signs?

Businesses can create their own credit card surcharge signs, or they can purchase pre-made signs from a variety of retailers. There are also a number of online templates available that businesses can use to create their own signs.

Small Business Saturday Success Tips

Small Business Saturday, or SBS, is a much-anticipated shopping event that takes place between the Black Friday and Cyber Monday holiday shopping frenzy. This day benefits local businesses since it encourages 72% of shoppers to shop and dine at small, independently-owned retailers and restaurants—not only on SBS—but year-long. 

This Saturday is always the last one in November, falling somewhere between November 24 and November 30. It’s the day small business owners get the chance to show off their offerings to shoppers looking for local gems.

But what exactly is it, what are its benefits, and how can you leverage it to your advantage? Here’s everything to know about Small Business Saturday.

TL;DR

  • Founded by American Express in 2010, Small Business Saturday encourages consumers to shop at local small businesses.
  • Participating in Small Business Saturday can help SMBs boost revenue, foster customer loyalty, and strengthen the local economy. It’s a smart, efficient move to maximize your holiday operations and long-term success.
  • Small businesses can thrive on SBS with these 8 tips: (1) Lay the groundwork with past data, (2) enhance digital presence, (3) improve the in-store experience, (4) run marketing campaigns, (5) promote special offers, (6) engage the community, (7) collect feedback, and (8) develop post-event strategies.

What is Small Business Saturday?

Small Business Saturday, a.k.a. The Shop Small® Movement, is a shopping day dedicated to supporting local small businesses across the US. It was established by American Express in 2010 and gained official recognition from the US Senate the following year. The 14th annual event is set for November 30th, 2024. 

As a partnering non-profit organization, The Small Business Administration (SBA) invites shoppers to patronize 32 million SMBs nationwide and throughout the holiday season. It encourages consumers to shop at SMBs rather than large chain stores (e.g., Walmart, Target) and eCommerce giants (e.g., Amazon, eBay).

Fast-forward to today, the initiative’s cumulative impact has resulted in about $163 billion in purchases across all 12 Small Business Saturdays. Here are some of the advantages of seizing this opportunity.

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Why Participate in Small Business Saturday?

With 71% of surveyed shoppers doing their holiday shopping on Small Business Saturday, SMBs can maximize holiday sales by participating. Check out the remarkable benefits it provides in terms of boosting sales, enhancing customer loyalty, and strengthening community ties.

Increased revenue

Small Business Saturday drove an estimated $17.9 billion in US consumer-reported spending in 2022. Thanks to the strategic schedule between Black Friday and Cyber Monday, coinciding with the holiday shopping season’s peak—right when customers are already eager to shop.

This one-day event garners substantial media coverage and promotional support, which can significantly boost consumer awareness. Shoppers will find your business through Shop Small Maps (i.e., American Express’ database for SBS-registered SMBs). Thus, they’re likely to seek out your special deals and promotions to maximize holiday savings.

Better customer loyalty

Participating in annual Small Business Saturdays lets shoppers recognize your brand as a local staple. They can easily associate you as a reliable go-to during their holiday shopping haul. This instills in them a strong sense of purpose as they contribute to your company’s post-Covid resilience and recovery.

Improved local economy

Over two-thirds of consumers (72%) will continue to shop small throughout the holiday season because of its impacts on their local community. A shopper spending $10 at a small business alone would support $2 billion in local economic activity across the country.

Small businesses benefit from a strong local economy over the long term. With more financial resources circulating locally, SMBs have a better chance of weathering economic challenges.

Now, let’s look at some strategies you can employ to realize these benefits.

8 Small Business Saturday Tips for Success

Small Business Saturday demands careful preparation for businesses aiming to excel. Whether you’re a seasoned participant or new to the scene, these 8 pointers will help you make the most of this annual event.

1. Lay the groundwork

Analyzing past sales data lets you forecast product or service demand during the event. It would help you stock up on bestsellers and maintain optimal inventory levels.

To do so, compile your Small Business Saturday sales records for at least the past few years. It should include sales figures, customer foot traffic, transaction details, etc. Assess which products had the highest sales and cross-reference this with your current inventory level to optimize your stock purchases.

Lastly, establish contingency plans with suppliers to meet unexpected demand (i.e., how many additional units and when they can deliver if needed). The key is to always rely on data, not guesswork.

2. Enhance digital presence

36% of consumers prefer to interact with small businesses online. Strengthening your digital presence is critical to attracting them. Optimize your website and highlight Small Business Saturday deals on your homepage. 

Smore, a beauty eCommerce brand, prominently displays its 15% off and free shipping promotions in the site’s above-fold. It advertises the Saturday sale while making the offerings irresistible for shoppers and new visitors.

Sbs1

Source: Smore

Don’t forget to ensure mobile responsiveness for a seamless user experience. Visit your website on various devices (e.g., smartphones, tablets, and different web browsers) to test if your site looks and functions correctly on all screens.

3. Improve in-store experience

While 36% prefer online shopping, 64% of shoppers want in-person interactions in brick-and-mortar stores. Create an open and welcoming ambiance inside and outside the store to attract foot traffic and engage passersby. 

Use a combination of signage, lighting, and creative arrangements to grab their attention. American Express provides free ‌marketing materials like in-store banners and window displays here

If you want to go the extra mile, organize product demos, mini-workshops, or interactive activities related to your products or services. These events not only provide value to customers but also create a memorable in-store experience. Bonus: Offer freebies or refreshments to set your store apart from the competition. 

4. Implement effective marketing campaigns

Collaborate with local businesses for cross-promotions to reinforce your local community presence. Here’s an example from Denver, Colorado’s Highlands Square neighborhood. The district’s staff and SMB owners team up to promote the Small Business Saturday event.

Sbs2

Source: Highlands Square

Through joint marketing initiatives, it’s easier to pool resources and generate more buzz for the big day. Send engaging email marketing campaigns a week before to create anticipation and drive traffic. You can also use local hashtags (e.g., #SBS2024, #ShopSmall, #SBSDeals) and geo-targeted ads on social media to reach a broader audience.

The AmEx marketing resources have free social media posts and email templates. Pro-tip: Post content between 9 AM to 12 PM CT from Tuesday to Thursday, as these are peak engagement hours.

5. Promote special offers

Some shoppers need an extra nudge to make a purchase. Introduce time-sensitive promotions, flash sales, and bundle deals to entice them. These strategies leverage the sense of urgency and added value to encourage buying decisions.

  • Limited-time offers. By setting a clear start and end time, you motivate customers to act quickly and take advantage of the deal. E.g., “3-hour 20% Off Sale from 2 PM to 5 PM on Small Business Saturday”
  • Flash sales. Surprise your audience with unannounced, short-duration sales—e.g., “Flash Sale: 50% Off Select Items for the Next 2 Hours!” Use different communication channels, such as social media, email, or in-store announcements so they won’t miss out.
  • Bundle deals. Create packages of complementary products at a discounted price to offer value and convenience. E.g., a “Family Movie Night Bundle” that includes a DVD, popcorn, and candy at a reduced price.

Do you notice an influx of first-time Small Business Saturday shoppers? Offer loyalty rewards and discounts to foster retention. This incentive urges them to come back not only on that day but also for future recurring purchases.

6. Engage the community

​​Many places organize special events like local markets, fairs, or festivals on Small Business Saturdays. Identify any local festivals or parades happening in your community. Inquire with the organizers about sponsorship opportunities or participation.

If you operate a bakery and lean toward charitable initiatives, collaborate with a local food bank. You can pledge to donate a percentage of your SBS sales to support the food bank’s mission and community efforts. 

On the other hand, let’s say you own a fashion boutique. Invite a local fashion blogger or influencer to visit your store, explore your collection, and share their experiences online. Both cases help nurture local camaraderie and increase visibility, drawing potential customers to your small business.

7. Engage customers and collect feedback

Gathering feedback allows you to assess your customers’ firsthand Small Business Saturday experience. Understand what worked well and what didn’t to improve future SBS events.

First off, set up a feedback station in your store where shoppers can share their experiences. It could be a physical suggestion box or a digital kiosk where they can leave reviews in exchange for incentives. E.g., a 10% off coupon for their next visit or a small free item or sample like a complimentary dessert.

Another strategy is to interact with old and new customers on social media platforms to further solidify your relationships. Encourage SBS shoppers to share their purchases and repost them on your profiles to express gratitude. You can also turn it into a giveaway contest—either way, it’s free word-of-mouth marketing.

8. Develop post-event strategies

Send personalized thank-you emails or messages to nurture long-term customer relationships. Perhaps add a sneak peek of upcoming products, special promotions, or behind-the-scenes insights into your business. Make them feel like valued insiders.

Pro-tip: Personalize the messages whenever possible. Specify the customer’s name and reference their specific purchase.

To keep the momentum going, share how the SBS day unfolded and how the local community came together to support small businesses. It can help inspire ongoing brand support and turn one-time customers into repeat customers.

Analytics-wise, examine sales data to determine which products or services were the most popular. Review your revenue for the day and compare it to previous Small Business Saturdays to gauge your success.

Small Business Saturday Simplified with Stax 

Small Business Saturday celebrates entrepreneurship and community spirit while providing local businesses a platform for growth. This November, implement the 8 tips above to thrive during the holiday season and be one of the neighborhood champions.

Now, you didn’t boost your SBS sales only to grapple with uncollected payments. Reduce late/failed payments by up to 700% and save 80% of billing time with the help of service providers like Stax.

Our payment processing solutions ensure a seamless checkout process for credit cards, debit cards, mobile wallets, and contactless payment methods. Less stress, more efficiency. Make this year’s Small Business Saturday effortless with Stax.

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FAQs about Small Business Saturday

Q: What is Small Business Saturday?

Small Business Saturday (SBS) is an annual shopping event that encourages consumers to shop at local small businesses. Founded by American Express in 2010, it takes place on the last Saturday of November. The day is dedicated to supporting small businesses across the US.

Q: When is Small Business Saturday celebrated?

Small Business Saturday is always the last Saturday in November, falling between November 24 and November 30. The 14th annual event is set for November 30th, 2024.

Q: Why is Small Business Saturday important for small businesses?

Small Business Saturday is an important event for small businesses as it helps to boost revenue, foster customer loyalty, and strengthen the local economy. It brings significant media coverage and promotional support, which can significantly boost consumer awareness and drive sales.

Q: How can small businesses effectively participate in Small Business Saturday?

Small businesses can participate effectively in Small Business Saturday by preparing well in advance. Key strategies include analyzing past sales data, enhancing digital presence, improving the in-store experience, running marketing campaigns, promoting special offers, engaging the community, collecting customer feedback, and developing post-event strategies.

Q: What are some marketing strategies for Small Business Saturday?

Effective marketing strategies for Small Business Saturday include promoting special offers like time-sensitive promotions, flash sales, and bundle deals. Businesses can also collaborate with local businesses for cross-promotions, utilize social media, and send out engaging email marketing campaigns.

Q: How can a business engage the community on Small Business Saturday?

Businesses can engage the community on Small Business Saturday by sponsoring or participating in local events like markets, fairs, or festivals. They can also collaborate with local charities or influencers to increase visibility and draw potential customers.

Q: How can a business improve its digital presence for Small Business Saturday?

Businesses can improve their digital presence for Small Business Saturday by optimizing their website and highlighting Small Business Saturday deals on their homepage. They should also ensure mobile responsiveness for a seamless user experience.

Q: How can businesses collect customer feedback on Small Business Saturday?

Businesses can collect customer feedback on Small Business Saturday by setting up a feedback station in the store where shoppers can share their experiences. They can also interact with customers on social media platforms to solidify relationships and encourage word-of-mouth marketing.

Q: What post-event strategies should businesses implement after Small Business Saturday?

After Small Business Saturday, businesses should send personalized thank-you emails or messages to nurture long-term customer relationships. They should also analyze sales data to determine the most popular products or services and compare revenue to previous Small Business Saturdays to gauge success.

Q: What role does Stax play for businesses on Small Business Saturday?

Stax is a payment processing solutions provider that ensures a seamless checkout process for credit cards, debit cards, mobile wallets, and contactless payment methods. By using Stax, businesses can reduce late or failed payments and save billing time, making Small Business Saturday more efficient and less stressful.


 

Tap to Pay: What It Is and How It Works

Since the first plastic credit card was issued by American Express in 1959, payment tech progress has been growing exponentially. Magnetic stripe payments enjoyed a 30-year reign between the ’70s and ’90s. EMV chip card technology had a good two decades or so, beginning in the mid-’90s. And the winner of the 2010s and beyond is the NFC-powered, contactless sensation that is tap-to-pay.

Contactless payments became a must-have during COVID. Most modern card readers and payment terminals are NFC-equipped. But tap-to-pay is transcending that plastic card of the last 60+ years. NFC technology is in the midst of an evolution. Customers are driving digital advancements, and savvy small business owners should be aware of what’s to come.

In this article, we’ll dive deeper into the tap-to-pay movement, where it is now, where it’s going, and how businesses can implement tap-to-pay for smooth, future-proof card transactions.

TL;DR

  • The 2010s marked the era of NFC-powered contactless payments, and unlike its predecessors, this technology has the sticking power to take it beyond our traditional plastic cards.
  • NFC payments are faster, more secure, and more versatile than any other payment solution we have seen before
  • Implementation is smooth, and the possibilities go far beyond accepting payments. Tap-to-pay technology will take us to advanced loyalty, marketing, and end-to-end customer satisfaction solutions.

History of Tap to Pay

Although contactless payments weren’t widely adopted until the 2010s, the technology actually dates back to 1995. In Seoul, South Korea, the Seoul Bus Transport Association introduced the UPass, a contactless payment card that commuters could tap on as they entered the bus. Almost ten years later, the US tried the technology, and it was four years after that when all EMV cards became NFC-equipped.

Despite the tap technology being available on most major cards, it was the smartphone advancements that really pushed consumers to adopt it. Tapping their phone to a terminal proved far more exciting than tapping the card.

Google was the first, in 2011, to enable contactless payments via their mobile app. Apple Pay caught up in 2014; in 2015, the wearables market made everyone aware of the tap’s potential.

Once the thought of the tap was there, the behavior followed. In 2015, many merchants switched to NFC-enabled terminals; by 2019, most banks were issuing contactless cards.

How Tap to Pay Works

Tap-to-pay, whether used with a contactless card or a smart device, operates through Near Field Communication (NFC) technology. This short-range wireless communication technology allows data exchange between devices close to each other, typically within a few centimeters.

NFC operates on radio-frequency identification (RFID) principles and electromagnetic induction, enabling communication between devices without needing physical contact or Wi-Fi connectivity.

Here’s how it works:

  1. NFC-enabled devices: The customer’s payment card (credit, debit, or mobile wallet app) and the merchant’s payment terminal must be equipped with NFC technology.
  2. Close proximity: The customer holds their NFC-enabled card or smartphone close to the merchant’s NFC-enabled terminal to make the payment.
  3. Data transmission: The NFC antennas in both devices communicate with each other. The customer’s payment information is securely stored in the NFC chip and transmitted to the merchant’s terminal.
  4. Authentication: The payment terminal validates the transaction by sending the payment details to the payment network (such as the card issuer—e.g. Visa, Mastercard, and the customer’s bank) for authorization.
  5. Secure transaction: The payment network verifies the transaction details, ensuring sufficient funds and confirming the transaction’s authenticity. A unique, one-time code is generated for that specific transaction if approved.
  6. Completion: The transaction is completed, and the customer receives a payment confirmation. The entire process is fast and secure and does not require physical contact between the card or smartphone and the payment terminal.

Learn More

Safety and Security

Within the NFC transaction process are encryption protocols to secure the data being transmitted. These protocols ensure that the data exchanged between devices is encrypted and cannot be easily intercepted or tampered with. The authentication methods verify each party’s identity before exchanging sensitive information. This prevents unauthorized devices from participating in transactions. In addition, many NFC transactions often use dynamic data, meaning that a new, unique code is generated for each transaction. This dynamic data makes it difficult for attackers to reuse intercepted information for fraud.

Despite the thorough processes embedded in this transaction type, merchants still play a role in enhancing security through considerations like:

  • Only using EMV-compliant terminals
  • Ensuring network connections are secure
  • Implementing tokenization via their payment processor
  • Regularly updating software
  • Monitoring transactions
  • Implementing strong access controls.

Customers can also take precautions to protect their information when using NFC, particularly when using it through a mobile device. These include:

  • Using secure devices
  • Enabling device lock
  • Only using official payment apps
  • Turning off NFC when not in use
  • Using strong authentication
  • Only enabling NFC on a secure internet connection.

Tools compatible with contactless payments

Contactless cards are most commonly used for contactless payments, but smartphones, smartwatches, and other smart mobile devices (even implants) are now enabled with this technology through their digital wallets.

Contactless cards

All cards today can come contactless. There are contactless credit cards, debit cards, and even gift cards. If it has a contactless symbol such as a checkmark or four curved lines indicating a communication frequency, it’s NFC enabled and can be used in-store wherever the merchant has an NFC reader.

iPhone

Apple’s iPhone and Apple Watch use Apple Pay.

Android

Google’s Android devices use Google Pay, and Samsung’s Android devices use Samsung Pay.

These are all enabled through the respected devices’ payment app, where the cardholder can store their card information on their phone or device to enable secure contactless transactions.

Benefits of Using Tap to Pay

During the pandemic, the number one benefit of contactless technology was the simple fact that it is contactless. No contact, no germs. But the benefits made known during that time were more aligned with the original reason for its development.

It’s faster

Contactless technology speeds up the payment process. Rather than “dipping” the card into the machine, merchants can quickly pass the reader close to the customer. The customer taps the card, and the transaction is complete. NFC devices facilitate the fastest and most convenient data exchange available today.

It’s secure

NFC transactions are secure due to the short distance over which they occur. Moreover, NFC devices can be secured with encryption and authentication protocols that ensure the confidentiality and integrity of the transmitted data, such as the cardholder’s personal information and card number.

It’s universally compatible

Unlike the chip card and magnetic stripe, NFC technology is standardized. This ensures compatibility between different devices and applications. Standardization enables seamless integration of NFC into more devices, including smartphones, tablets, payment cards, and other smart gadgets. It can power a payment future beyond our current plastic cards.

It’s versatile

One way to verify the longevity of a technology is to look at its usability outside of the obvious application. Businesses are using contactless loyalty cards and even loyalty apps that allow customers to store those loyalty cards digitally. Interactive marketing lets customers tap NFC-enabled promotional material to access offers, discounts, and product information. Beyond retailers and accepting payments, NFC is used for public transport, access control systems, smart advertising, data exchange between devices, and interactive gaming. NFC even enables smart packaging to provide customers with product and usage information at the point of sale.

How Businesses Can Implement Tap to Pay

The tap-to-pay revolution is here, and it’s not going anywhere. Any SMEs not yet on board should be looking to change that soon. Here’s how:

Research and choose the right vendor

Many different POS (point of sale) providers offer contactless payment capabilities. There will be a long list with a search online, but not all providers suit all businesses. There are a few options.

Full-service POS and credit card payment providers

Full-service providers like Stax offer complete POS solutions and backend payment processing, which are essential to accepting contactless payments.

At the front end (the POS), all-in-one providers like Stax offer hardware, software, and additional services tailored to specific industries. Stax specifically is POS agnostic, allowing merchants to use any preferred POS hardware, unlike many POS specialists that force merchants to use theirs only. Then, they also handle payment processing services in the backend, ensuring seamless transactions by securely authorizing and settling payments.

These types of all-in-one providers often have direct relationships with card networks, allowing for competitive transaction rates.

Specialist POS providers

Specialist POS providers, such asSquare, offer simple solutions, often appealing to smaller businesses and individuals. The emphasis is on user-friendly interfaces and quick setup. They may lack some advanced functionality but often have low entry costs, making them attractive to small businesses with limited budgets.

Some specialist POS providers offer payment processing services but do not have direct relationships with the card networks. At the entry-level, their fees are low, but once businesses are processing high volumes, these often work out much more costly than full-service providers.

Payment aggregators

Payment aggregators, such as PayPal, have a unique system that doesn’t require businesses to set up a merchant account. Instead, PayPal and other aggregators group all of their clients’ transactions into one. This makes businesses sub-merchants under PayPal’s own merchant account.

Aggregators are appealing for their convenience, but they can be very expensive for merchants processing a high volume of transactions.

Evaluate costs, fees, and customer support

Providers often have different costs and plan structures as they serve different types of businesses. Full-service providers like Stax use flat-rate subscription pricing, which keeps fees low when businesses process high volumes. However, subscription pricing may seem high for businesses with a low transaction rate. So always run the numbers and consider your transaction volume when selecting a merchant service provider. 

Fees, too, differ among providers. Cheap vendors often have hidden fees. Look out for:

  • Transaction fees
  • Chargeback fees
  • Monthly minimums
  • Statement fees
  • Gateway fees
  • PCI compliance fees
  • Upgrade and support fees
  • Cancellation fees
  • Additional hardware costs.

Once the provider is identified, the steps are simple.

Upgrade or purchase necessary hardware

As technology advances quickly, even merchants with NFC-enabled terminals or readers should look at whether theirs is up to date. There may be a need for additional infrastructure, like Wi-Fi or data connectivity, which is not essential for the transaction but is necessary for some of the advanced features this technology offers.

Train staff

To achieve the smooth process promised by contactless card or mobile payments, staff must know how to use and troubleshoot the system. Formal training helps bring everyone up to speed, developing super users who can use the technology and effectively educate customers on the benefits.

Promote the new payment option

The extra security offered by NFC technology is a great benefit to customers. It should be promoted and used to emphasize that customer privacy and security are important. This message will bode well for building loyalty. It may also be worth offering promotions and incentives to encourage the initial usage of this technology, especially for businesses that plan to utilize NFC loyalty cards or other NFC-enabled solutions.

Regularly review and update the system

Providers will regularly update software to improve services. These improvements then flow onto customers and merchants alike. Keeping the software updated ensures it will run for optimal security and performance.

Finally, it’s worth soliciting customer feedback to learn what they think of these NFC-enabled solutions. This insight can inform how advancements in this technology may be used to improve business offerings. 

The Future is Tap to Pay

The era of traditional payments is coming to an end. Tap-to-pay has ushered in a new direction for the payments industry.

For almost a decade, tap-to-pay has offered seamless, secure transactions that can be made in seconds with the wave of a hand. That convenience and advanced security capabilities have solidified this technology as the go-to payment method.

NFC technology has already given businesses the tools to introduce tech-advanced payment solutions, from mobile wallet payments to digital loyalty programs on both cards and phone apps. For those that it benefits, this technology can extend to in-store NFC promotions and pioneering packaging that takes customers straight to the information they need at the moment they need it.

Tap-to-pay is the future, and Stax Payments offers the front and backend tools to power this progress.

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FAQs about Tap to Pay

Q: What is Tap to Pay?

Tap to Pay is a technology allowing users to make payments by tapping or hovering their contactless card or NFC-enabled device over a payment terminal. It’s a fast, secure, and convenient way to handle transactions.

Q: How does Tap to Pay work?

Tap to Pay operates through Near Field Communication (NFC) technology, a short-range wireless communication system that allows data exchange between devices in close proximity. The customer’s payment information is securely stored in the NFC chip and transmitted to the merchant’s terminal for authorization. The process is fast, secure, and does not require physical contact between the card or smartphone and the payment terminal.

Q: What are the benefits of Tap to Pay?

Tap to Pay offers several benefits. Firstly, it is faster and more convenient than traditional payment methods. It is also secure due to the short distance over which transactions occur and the encryption and authentication protocols embedded within the NFC technology. Moreover, it is universally compatible and versatile, opening doors for applications beyond payments, such as loyalty programs, smart advertising, and interactive gaming.

Q: How can businesses implement Tap to Pay?

Businesses can implement Tap to Pay by upgrading or purchasing necessary hardware, training staff, promoting the new payment option, and regularly reviewing and updating the system. It is also important to research and choose the right vendor, considering factors such as costs, fees, and customer support.

Q: What devices are compatible with Tap to Pay?

Most modern devices are compatible with Tap to Pay, including contactless cards, smartphones, smartwatches, and other smart mobile devices. Many of these devices come with digital wallets such as Apple Pay, Google Pay, and Samsung Pay, which can store card information securely and enable contactless transactions.

Q: How secure is Tap to Pay?

Tap to Pay is highly secure. The NFC transaction process includes encryption protocols to secure the data being transmitted, ensuring that it cannot be easily intercepted or tampered with. Additionally, many NFC transactions use dynamic data, generating a new, unique code for each transaction, making it difficult for attackers to reuse intercepted information for fraud.

Q: What is the future of Tap to Pay?

Tap to Pay is seen as the future of payment methods. The convenience, security, and advanced capabilities it offers have made it the preferred payment method for many. With advancements in NFC technology, businesses have the tools to introduce tech-advanced payment solutions, from mobile wallet payments to digital loyalty programs, marking a new direction for the payments industry.

Q: What role did smartphones play in the adoption of Tap to Pay?

Smartphones played a significant role in the adoption of Tap to Pay. Tapping a smartphone to a terminal proved far more exciting than tapping a card for many consumers. Companies like Google and Apple introduced contactless payments via their mobile apps, pushing consumers to adopt the technology.

Q: What are some precautions to protect information when using NFC?

Some precautions include using secure devices, enabling device lock, only using official payment apps, turning off NFC when not in use, using strong authentication, and only enabling NFC on a secure internet connection.

Q: How can Tap to Pay be used beyond accepting payments?

Businesses are using contactless loyalty cards and even loyalty apps that allow customers to store those loyalty cards digitally. Interactive marketing lets customers tap NFC-enabled promotional material to access offers, discounts, and product information. Beyond retailers and accepting payments, NFC is used for public transport, access control systems, smart advertising, data exchange between devices, and interactive gaming. NFC even enables smart packaging to provide customers with product and usage information at the point of sale.