Would My Business Benefit From Using A Contactless Virtual Terminal?

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

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

TL;DR

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

What Is a Contactless Virtual Terminal?

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

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

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

How Does a Contactless Virtual Terminal Work?

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

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

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

Can My Business Use a Contactless Virtual Terminal?

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

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

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

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

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Is the Contactless Virtual Terminal Secure?

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

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

What Are the Benefits of Using Stax Contactless Solutions?

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

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

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

Stax Contactless Virtual Terminal Pricing

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

Would My Business Benefit From Using Contactless Virtual Terminals

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

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

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FAQs about Virtual Terminal

Q: What is a virtual terminal?

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

Q: What does a virtual terminal do?

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

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

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

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

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

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

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

 

Q: Is a virtual terminal a gateway?

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

Visa Interchange Rates 2024: What You Need to Know

If your company accepts credit card payments (which it should), chances are, you’re going to be affected by Visa’s interchange rates. Visa is one of the biggest payment networks in the world, with ~4.2B cards currently in use. So it’s virtually impossible for a business to not accept Visa cards.

Visa interchange rates are the fees charged by Visa to process transactions between issuing banks and merchants. These rates are determined by various factors like the type of card used, the industry of the merchant, and how the transaction is processed. Visa sets these rates, and they’re non-negotiable for merchants. They cover the costs of managing the network, ensuring security, and facilitating the transfer of funds between banks.

Visa generally updates interchange rates semiannually, so you need to check in on the rates somewhat frequently.

Overall, understanding interchange rates is crucial for anyone who accepts credit card payments because they form the foundation of the fees you’ll encounter when taking credit cards. It’s wise for merchants to keep an eye on these rates as they can affect their bottom line and profitability. The Visa interchange fee increases occurring in both October 2023 and April 2024 are expected to cost an additional $502M in yearly fees for all relevant merchants.

TL;DR

  • Interchange rates are the fees charged by credit card networks.
  • Visa had put off interchange rate changes during the pandemic years, so they’ve been introducing changes in two phases, with the second wave of updates coming in April 2024.
  • While you can’t avoid the rate hikes, there are strategies and resources available to help merchants mitigate the impact.
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What exactly are interchange rates?

Interchange rates are the fees charged by credit card networks (like Visa, Mastercard, American Express, and Discover) to facilitate card transactions between merchants and banks. These rates are set and collected by the network for processing transactions and maintaining the payment infrastructure.

The card issuers periodically update their interchange rates using the following factors. These factors are also used to set the specific interchange fees for each type of transaction, as interchange fees are not set as a flat fee across all industries, transaction types, etc.:

  • Card Type: Different card types (debit, credit, rewards cards) and card brands carry different interchange rates. For example, rewards cards often have higher interchange rates due to additional benefits.
  • Transaction Details: How the transaction is processed (e.g., in-person, online, keyed in entry) and the associated risks impact the interchange rates.
  • Industry: The type of business also affects interchange rates. Retail transactions might have different rates compared to healthcare or travel-related transactions.
  • Compliance and Regulation: Changes in regulations or compliance requirements can also influence interchange rates.

Changes in Visa Interchange Rates for 2024

Visa had put off interchange rate changes during the pandemic years, so they’ve been introducing changes in two phases. The first occurred in October 2023. The second occurs in April 2024.

Overview of the new rates

We do not yet know what the rates will look like in April, but a full list of Visa’s current interchange rates for US Merchants (the ones implemented in October 2023) can be found here. It’s organized by merchant category code (MCC). You can also find updated interchange reimbursement fees there. 

Visa InterchangeSimply put, there are dozens of different rates depending on both your industry and the type of payment (i.e. Visa business cards will have different rates than prepaid or debit cards). However, some rates that small business owners are likely to face:

  • For eCommerce basic debit card transactions utilizing an exempt Visa check card, the rate is 1.65% + $0.15
  • For retail Visa debit card present, an exempt Visa check card will run 0.08% +$0.15
  • Switch the above to card-not present and it’s 0.65% +$0.15, with a $2 cap

Comparison with previous years

According to the Wall Street Journal, the fee increases are going to largely target online transactions. As of October, Visa introduced a Digital Commerce Services fee on all card-not-present transactions (so all online transactions). The fee is 0.0075%. However, they did remove the Address Verification Service (AVS) charge of $0.001 per transaction and the Card Verification Value 2 (CVV2) fee of $0.0025 per transaction.

Other noticeable changes include

  • Visa is also expanding their small merchant interchange programs and rate range from 0%-2.7%. 
  • Fees on consumer infinite card products will increase an average of 0.13%. 
  • Finally, While international merchants will have some of their older fees eliminated, they will see program rates increase by an average of 0.01%.

Factors influencing the changes

The factors influencing Visa interchange rate changes in 2024—or any year—are myriad and include:

  • Changes in regulations on credit card networks, payment processing or financial regulations.
  • Market dynamics, including changes in consumer spending habits, transaction volumes, or shifts in the payment landscape. This particular factor is one of the main ones pushing the rate changes around card-not-present transactions as consumers shop even more online.
  • Risk management is an ongoing concern for networks setting interchange rates. Visa may modify rates to compensate for expected risks associated with different transaction types.
  • Visa’s own costs will affect interchange rates, as well. With the ongoing landscape of inflation, their operational costs have likely risen.

Impact on Merchants and Consumers

The biggest impact of interchange rate increases is on merchants. Fees associated with taking credit card payments will go up and cut into your profits. But that’s only the topline impact. 

Rate hikes are expected to affect small merchants more, as they have less profit to share. This is such a problem that it has merited a bi-partisan bill introduced in the US Senate, by two senators who are concerned that rate hikes will prevent fair market competition. 

It’s not just the merchants who suffer from interchange rate increases, though. As Senators Marshall and Durbin point out in their press release, merchants typically try to pass at least some of their costs onto the consumer by raising prices. 

Ultimately, for merchants looking to mitigate the impact of interchange rate hikes, raising prices across the board is one of the easiest methods. However, it can result in customers choosing to go to other businesses, like big box stores who are able to absorb the rate hike without passing it on (at least very obviously) to their customer base. 

So a few other strategies you can employ to either avoid raising prices completely or raise them a smaller amount are:

  • Train your staff in transaction optimization. Teach them to process credit card transactions the cheapest way as often as possible (i.e., accepting a swipe or contactless tap instead of typing in the card information).
  • Encourage your cardholders to use lower cost payment methods. Many businesses, like gas stations, choose to offer a small discount for cash transactions, for example. You could choose to reward cash transactions and lower-cost card transactions.
  • Audit your data security measures. Secure payment processing methods can result in reduced fees, as the card networks offer reduced fees on transactions they deem less risky.  
  • Improve your customer retention strategies. Building a reliable customer base can help offset concerns about your profit margins, since it makes revenue forecasting more reliable.

How to Manage Your Transaction Fees

While you can’t alter your interchange rates from any card network, like Mastercard’s interchange rates, you’re not totally defenseless. There are strategies and resources available to even the smallest merchants to mitigate costs:

Leverage tools and resources to reduce payment processing rates

There are a variety of resources that small businesses will find available, both virtually online and in-person.

  • Use rate comparison tools online to help compare interchange rates and fees among different payment processors or networks and can assist in choosing cost-effective options.
  • Stay informed through industry publications that discuss changes in interchange rates, regulations, and trends affecting payment processing.
  • Consider consulting with financial advisors, payment processing experts, or industry specialists who can offer personalized guidance on optimizing payment strategies.
  • Establish relationships with merchant services providers who offer transparent pricing, guidance on rate management, and assistance in navigating payment processing intricacies. A great payment provider can save your business tons of money in processing fees. For example, Stax operates on a flat-rate subscription model that provides you totally transparent access to the exact interchange fees—with no high markups.

Mitigate credit card processing costs

In addition to the above resources, you should also employ some or all of the following strategies to help keep credit card processing fees as low as possible.

  • Educate yourself on how interchange rates are calculated. Knowing which factors impact rates can help in optimizing credit card transactions.
  • Use technology that supports lower-cost transaction methods (e.g., EMV chip technology) or process transactions in ways that qualify for lower rates (e.g., swiping vs. manual entry).
  • Negotiate with processors. While interchange rates are set by card networks, negotiating with payment processors for better rates based on your card transaction volume and business type might be possible. This is particularly true if the credit card processor uses an interchange plus pricing model. In that case the provider will be charging service fees or other surcharges that you may be able to convince them to provide a merchant discount rate on.

Conclusion

Visa is raising the interchange fees – that’s a fact. But there are plenty of options available to merchants to help reduce the impact these new fees will have on their profit margins. Talk to Stax today to find out how much we can help you save on payment processing fees.

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FAQs about visa interchange rates

What is the interchange rate for Visa?

The interchange rate for Visa varies depending on several factors such as the type of card used (e.g., credit, debit, business, rewards), the merchant’s industry, the transaction size, and how the transaction is processed (e.g., in-person, online). These rates are typically a combination of a percentage of the transaction amount and a fixed fee. The specific rates are published by Visa and can be found on their official website or through financial service providers.

Which type of card has the highest interchange fees?

Premium and rewards cards have the highest interchange fees. This is because these cards offer additional benefits to cardholders, such as cashback, points, or travel rewards, which are funded, in part, by higher interchange fees.

What is the level 3 interchange rate for Visa?

Level 3 interchange rates apply to transactions that meet specific detailed reporting requirements, usually for business-to-business (B2B) and government transactions. These rates are often lower than standard rates but require more detailed transaction information. The exact rate depends on the compliance of the transaction with Level 3 data requirements and other variables like the type of card used and transaction size.

Who pays Visa interchange fees?

Interchange fees are paid by the merchant’s bank (acquiring bank) to the cardholder’s bank (issuing bank). The merchant indirectly pays these fees as part of the overall transaction processing fees charged by their bank or payment processor. Ultimately, these fees are factored into the cost of goods and services.

Does Visa make money from interchange?

While Visa sets the interchange rates, the fees themselves are not collected by Visa. Instead, they are transferred between the issuing and acquiring banks. Visa makes money primarily through assessment fees and other charges related to the use of its network, not directly from interchange fees.

How does Visa interchange work?

Visa interchange fees are part of the process of electronic payment transactions. When a customer uses a Visa card to make a purchase, the merchant’s bank (acquirer) submits the transaction to Visa, which routes it to the cardholder’s bank (issuer) for authorization. Once authorized, the transaction is completed, and funds are transferred from the issuer to the acquirer, minus the interchange fee.

What is Dynamic Pricing? Everything You Need to Know About Implementing Dynamic Pricing in 2024

The phrase “dynamic pricing” often sparks heated debates in eCommerce and retail, and it’s not hard to see why.

If you’ve ever booked a hotel, ordered an Uber, or shopped on Amazon, you’ve experienced the effects of dynamic pricing in real-time. Prices may shift down or up at a moment’s notice.

But if dynamic pricing adds complexity to the customer experience, why have so many industries embraced it? What makes this pricing strategy so appealing to businesses?

Dynamic pricing based on various factors such as market demands, target groups, and time periods enables businesses to capture the highest possible value for a product or service at any time of day, week, or year. But the benefits of dynamic pricing aren’t restricted to price optimization. Dynamic pricing models allow businesses to be highly adaptable to changes in demand or competitor activities—and if executed well, actually increase customer loyalty and satisfaction.

So, how does dynamic pricing work, and what do businesses need to be aware of when implementing it?

TL;DR

  • Dynamic pricing refers to prices that fluctuate based on factors like demand, supply, customer behavior, and seasonality.
  • Dynamic pricing is calculated through the use of data collection and machine learning algorithms to analyze market conditions and make appropriate pricing decisions.
  • There are some serious ethical considerations involved with dynamic pricing, namely price discrimination and regulatory concerns related to consumer rights and data privacy.
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What is Dynamic Pricing?

Dynamic pricing systems refer to pricing models where the price of goods and services fluctuates based on a range of factors. This differs from a fixed price approach, where prices are reviewed and adjusted in regular installments.

Dynamic pricing models make it possible for businesses to align their pricing to current market conditions, helping to increase profit margins and offset operational expenses. Factors that influence price changes in dynamic pricing systems include:

  • Market demand
  • Availability
  • Supplier costs
  • Customer behavior
  • Competitor pricing
  • Time of day/year

Dynamic pricing is an evolution of older variable pricing tactics such as segmented pricing, where different prices are set for different customer segments, and yield management, where prices are adjusted based on demand and capacity.

Together, these strategies have paved the way for more sophisticated and responsive dynamic pricing systems, which use machine learning to make thousands of pricing decisions per minute. This is thanks to advances in automation and data analytics, making it possible for businesses to adjust real-time pricing.

The use of dynamic pricing methods is most common in industries where the demand for goods and services fluctuates. Food delivery and ride-sharing services, for example, levy peak pricing when the supply of drivers is low to rebalance demand. The travel industry also relies on dynamic pricing to accommodate peaks and troughs, with lower prices typically offered during the off-season to fill bookings.

How Dynamic Pricing Works

Dynamic pricing models use a range of variable conditions to offer different product prices at different times, and potentially to different groups of customers. To do this, businesses need to gather data to understand what influences pricing decisions.

Data can include anything from historical sales data to competitor pricing, product availability, and more. This makes it possible to set prices and a baseline for dynamic fluctuations based on customer demand or any factors deemed relevant.

Most businesses rely on algorithms to analyze data in real-time and identify trends in customer behavior or market demand. For example, if high demand peaks during the holiday season for certain products, an algorithm will take this into account when adjusting prices during November-December.

Benefits of Dynamic Pricing

For businesses: Increased revenue, better inventory management

Being able to adjust prices based on market conditions enables businesses to maximize revenue. Considering factors like demand or seasonality makes it easier to assess the actual value of their offerings. Ongoing data collection and analysis of consumer behavior makes it possible to gauge their level of interest, turning value-based pricing and adjustments into a real science.

Moreover, tying dynamic pricing to real-time supply chain management provides storefronts and eCommerce businesses with a more streamlined way of managing excess inventory. It’s also easier to avoid stockouts by removing discounts and driving buyer urgency via messaging such as “limited stock” or “5 or fewer units left!”

For consumers: Deals and price optimization

While discussions about dynamic pricing usually focus on high prices, consumers also benefit from low prices if they’re willing to buy when demand is less. With dynamic pricing, it’s flexibility (or the lack of it) that determines pricing. If consumers are willing and able to let prices dictate the times/days they are using certain services, this can result in significant cost savings.

Challenges and Criticisms about Dynamic Pricing

Ethical considerations

One of the biggest critiques of dynamic pricing models is a lack of transparency with consumers, who may not understand how pricing algorithms work. Because customer behavior plays a key role in setting prices, this can result in price increases being levied against some consumers but not others.

For example, a customer looking for urgent airline tickets to travel to a funeral may log several online searches for specific travel dates—data that can then be factored into price adjustments. This raises ethical concerns over whether businesses can exploit a lack of consumer flexibility to set higher price points.

Potential for consumer backlash

Consumers like to know the price of a product or a service upfront, so they can compare options and make informed purchasing decisions. However, one of the biggest problems with dynamic pricing is that it often works against these frictionless customer experiences.

For example, a person might check the price of an Uber ahead of time for a specific journey. But if demand is higher at the time of ordering, this causes surge pricing to kick in. Unexpected higher prices lower customer satisfaction, and may cause some consumers to choose alternative options where static pricing is available.

In sum, while flexible pricing can work in consumers’ favor, they’re far more likely to remember the occasions where dynamic pricing has conspired against them.

Regulatory concerns

Most of the concerns surrounding dynamic pricing focus on whether businesses using dynamic pricing models are ensuring that consumer rights and data privacy are being respected.

Price discrimination based on demographics such as race and gender is outlawed. However, pricing algorithms can still exhibit these biases. Businesses must be careful that their pricing tools do not use any of these indicators, as regulators can require businesses to disclose how price fluctuations are calculated.

Dynamic or not, any pricing practices that are considered unfair or deceptive may be subject to disciplinary action. If consumers are being misled about the reasons for price changes, for example, this may be considered illegal and subject businesses to penalties.

Implementing Dynamic Pricing with Technology

Data analytics plays a pivotal role in dynamic pricing. Without regular data collection and analysis, businesses cannot assess market conditions and align their pricing with what is happening on the ground.

Traditionally, dynamic pricing has relied on historical data to make predictions about demand. As well as predictive analytics, advances in AI and machine learning allow competitive pricing to be implemented at an extremely granular level. There has been widespread coverage about flight and hotel prices skyrocketing around concert dates for Taylor Swift’s Eras tour—a perfect example of how the growing sophistication of dynamic pricing has implications for consumers.

But as segmentation down to the individual consumer becomes easier to implement, metrics like customer loyalty and repeat purchase rates can be taken into account. Consumers will benefit more often from tailored offers from online retailers, creating better customer experiences.

Dynamic Pricing Strategies

There are several types of dynamic pricing that businesses can use, depending on the nature of their product or service.

Each pricing method, whether it be cost-plus pricing, price skimming, or dynamic pricing, involves setting prices based on different factors to maximize revenue and profitability. Here are some different types of dynamic price setting.

Segment-based pricing

Segment-based pricing is where a business separates its customers into different purchasing groups based on certain characteristics. This could be location, browsing behavior i.e. visiting the site or searching for specific routes/dates, or whether they are an existing or new customer. The business can then change prices for each segment, based on perceived buyer urgency or external factors that affect buyer behavior.

For example, a company may choose to offer first-time customers a more enticing deal in a bid to raise conversion rates, also known as penetration pricing. Another common practice is geo-targeting websites to offer different prices to customers in different regions.

Time-based pricing

With time-based pricing, a company will adjust its prices based on different seasons or times of day/week. This reflects how demand and supply for certain products and services will experience peaks and troughs throughout the year.

For example, airlines use time-based pricing because flights at certain times of the day, week, or year will see higher demand. Popular slots include the peak summer season, flights on Fridays and Sundays, and flights during rush hour. Many airlines will highlight their cheapest ticket prices online,  during typically low-demand periods like very early morning or late evening, or during the mid-week.

Demand-driven pricing

Demand-driven pricing is also known as surge pricing and is one of the most well-known dynamic pricing strategies, thanks to its use by ride-sharing services like Uber and Lyft. Demand pricing sees prices adjusted according to the level of demand experienced for that particular product or service. Prices rise sharply when demand is high and availability is more scarce, and decrease when demand falls. Given that demand-based pricing results in some of the biggest price fluctuations (often with little warning) this has sometimes made it a controversial practice.

Examples of Dynamic Pricing

It’s hardly surprising that some of the fastest-growing companies in the world use dynamic pricing to stimulate growth and maximize profits. 

Amazon

Amazon uses a highly intricate dynamic pricing strategy that sees prices for products change as frequently as 10 minutes, resulting in an estimated 2.5 million price changes every day. In Q3 of 2023, Amazon’s profits nearly tripled, mostly as a result of price-conscious customers using the platform to find good deals.

Airbnb

The short-term rental platform Airbnb has even incentivized hosts to embrace a dynamic approach to pricing. Their dynamic pricing software, named Smart Pricing, automatically adjusts prices according to factors like location, demand, and time left to book. While it’s up to those listings to decide if they want to use it, Airbnb announced that hosts using it saw as much as a 13% increase in revenue.

It’s worth noting that in these examples, there’s a risk that price optimization will come at the expense of customer satisfaction and loyalty. A consumer might reluctantly pay up for a hefty airline ticket or short-term rental, but that experience might persuade them to choose a different provider next time around.

But dynamic pricing does show there can be serious benefits to consumers and businesses when factors like demand and availability are factored into pricing decisions.

FirstTable

Hospitality services like FirstTable, which gives diners a 50% discount in exchange for booking the traditionally least popular “first table” of the evening, offer consumers an enticing deal while helping restaurants fill up their traditionally slow times. It’s a step back from straight dynamic pricing that avoids accusations of price discrimination, while still achieving a similar level of optimization.

Final Words

Although its use may be controversial, it’s clear that dynamic pricing is here to stay. As consumers and brands collectively adjust to the effect that dynamic pricing has on purchasing decisions and strategic planning, the question remains: Is it a good idea to implement dynamic pricing?

While there is potential for consumer backlash, dynamic pricing can prove advantageous to consumers when implemented well. For example, taking into account factors such as customer loyalty and purchase frequency makes it possible to reward long-time customers with attractive pricing, while still maintaining healthy profit margins. As AI becomes more advanced, we can expect to see much more targeted approaches to dynamic pricing become the norm.

Whether you’re using dynamic pricing or not, having an easy solution for accepting payments is a must. This is where Stax comes in. With Stax, you can use any payment type and integrate essential tools to grow your business. With our payments-as-a-service pricing businesses know what they are paying and when.

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FAQs about Dynamic Pricing

What is dynamic pricing?

Dynamic pricing is a pricing strategy where prices are adjusted in real-time based on various factors such as demand, supply, competitor pricing, and other market conditions. This strategy is commonly used in industries like airlines, hospitality, entertainment, and retail.

Is dynamic pricing illegal?

Dynamic pricing is legal in most industries. However, it must comply with all relevant laws and regulations, including anti-discrimination laws and consumer protection laws. It becomes illegal if it involves price fixing, collusion, discrimination, or deceptive practices.

Is dynamic pricing fair?

The fairness of dynamic pricing is subjective and can vary from case to case.  While it’s seen as fair from a market and business standpoint, some consumers may view it as unfair, particularly if there’s a lack of transparency or significant price differences for similar products or services.

Who uses dynamic pricing?

Companies in these industries frequently use dynamic pricing:

  • Airlines and Travel: For flight tickets, hotel bookings, etc.
  • Retail: Especially online retailers.
  • Entertainment: In pricing tickets for events, movies, and theme parks.
  • Transportation: Ride-sharing services like Uber and Lyft.
  • Sports: For ticket pricing based on demand and importance of the game.

How does dynamic pricing work?

Dynamic pricing works by adjusting prices in real-time or near real-time based on various factors.  

Usually, companies that implement it use a system that gathers data related to demand, supply, competitor prices, customer behavior, time of day, seasonality, and other relevant factors. Advanced algorithms analyze this data to understand patterns and predict how changes in these factors affect demand.

From there, prices are set and adjusted accordingly. 

 

What Is a Credit Card Surcharge?

Credit cards remain a favored way of making payments among customers. Purchase volumes through credit cards jumped 51% between 2015 and 2021. However, the idea of applying a credit card surcharge to offset the processing cost of credit cards has always been a hotly debated topic.

Simply put, a surcharge amount is an extra fee that some merchants choose to levy on customers to cover the costs of processing credit card payments. The rate varies between 1.3 to 3.5% in most US states.

Before 2013 though, credit card brands like Visa and Mastercard didn’t allow surcharging because they didn’t want to discourage customers from using credit cards as a preferred mode of payment. However, after a 2013 lawsuit, card companies started allowing businesses to charge customers a fee for using credit cards. This is now known as a “merchant surcharge” or “checkout fee.”

In this article, we’ll explore what a credit card surcharge is and why it should matter to small business owners.

TL;DR

  • A credit card surcharge is an additional fee tacked on to the purchase amount when a customer pays via a credit card. It is added at the point of sale and depends on the total amount of a transaction and the cap set by credit card companies.
  • The simple benefit of credit card surcharges for merchants is that they no longer have to bear the full brunt of processing costs. With surcharging, they can transfer a significant portion of it to their customers.
  • Once you have ensured that surcharges are permissible by law in your state, you must meet card brand guidelines for compliance. It is also important to inform your customers—both in-store and online—about credit card surcharges on any purchases they might make. 

What Is a Credit Card Surcharge?

A credit card surcharge is an additional fee tacked on to the purchase amount when a customer pays via a credit card. It is added at the point of sale and depends on the total amount of a transaction and the cap set by credit card companies.

The state law, however, determines the final percentage. By using a credit card surcharge, the transaction cost shifts from merchants to customers. However, the cost gets added to the final dollar amount which may make the sale less lucrative.

Surcharge vs Convenience Fee

Even before 2013, businesses used to charge convenience fees to customers on credit card transactions in certain situations. This was meant for the “convenience” of paying by credit card over all other forms of payment. Note that a convenience fee is a flat rate rather than a percentage.

In contrast, a surcharge is a percentage-based credit card processing fee. This is true for all credit card transactions and is charged by all credit card companies. However, card companies as well as federal and state laws put limits on surcharges. These apply to all the four leading card brands—Discover, American Express, Visa, and Mastercard.

Surcharge vs Cash Discount

When customers pay with cash, some merchants may offer a price reduction which is called a cash discount.

A credit card surcharge on the other hand is the additional percentage that a customer pays for a product for making the payment through a credit card.

In case of a cash discount, the customer pays less than the original listed amount. While, in case of a surcharge, the customer pays more than the listed price. Any extra amount charged on a product, no matter what name a payment processor calls it, is a surcharge.

While this may seem like a pretty straightforward and minor difference, it is necessary to consider it for legality and compliance purposes. Getting it wrong could mean risking a fine or penalty.

Surcharge vs Interchange Fee

The interchange fee is the amount a merchant pays to the card-issuing bank whenever a customer makes a purchase using a credit or debit card. This is to cover the risk of fraud, bad debts, handling costs of the money, and the merchant’s bank account. Interchange rates depend on factors such as card type, business size, industry, and payment methods such as POS, card-not-present, mail-order-telephone-order, etc.

This is different from the surcharge that customers pay when they purchase via credit cards. This enables merchants to process credit card payments at no cost to themselves.

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Legal and Compliance Aspects

By now, you might have understood that surcharging is a matter of law and public policy. This means surcharge rules and regulations vary by state and country. The first thing you need to check—as a merchant—is whether your state or federal laws allow you to surcharge your customers. As such, surcharging has been a question of intense debate, and class action lawsuits have been piling up in many states on the matter.

Variations in laws by country and state

Here’s a quick snapshot of how surcharging laws currently vary in different states and countries.

  • There are several US states where anti-surcharge laws are on the books but these are either unenforceable at present or being challenged in courts. These states are Utah, Texas, and California.
  • Hawaii, Illinois, New Jersey, and Rhode Island, on the other hand, are considering or have pending laws to make surcharging illegal.
  • In sum, surcharging is currently legal in all US states and territories except Massachusetts, Connecticut, and Puerto Rico.
  • The only thing you need to remember is that you can surcharge credit card transactions only in the states where it is permitted by law at present.
  • Globally, surcharging laws vary from country to country. It is legal in several major economies such as Canada, UK, and Australia. On the other hand, the EU allows an interchange fee of 0.3% on credit cards but has banned surcharges.

Requirements for compliance

Once you have ensured that surcharges are permissible by law in your state, you must also meet the guidelines for compliance.

  1. You must notify your services provider and the credit card network about your intent to impose surcharges at least 30 days before.
  2. You are not allowed to profit from surcharges but only cover your baseline costs. Hence you must follow the caps strictly.
  3. Transparency in surcharging (along with its percentage) when making credit card purchases is a must.
  4. For Mastercard and Visa cards, you can either apply surcharges at brand level or product level but not both.

Implementation of Credit Card Surcharges

Once you have ensured that your state allows surcharging and that it is the right move for your business, follow these steps to get started:

  1. Provide notice to card companies about your intent to surcharge. Different card issuers have different processes, but you’ll most likely have to fill out a surcharging form 30 days before you begin to surcharge.
  2. Next, inform your acquiring bank about your intent, again, 30 days in advance.
  3. Decide whether to surcharge all cards or only some specific ones such as reward cards or prepaid cards. Also, decide on the percentage you wish to charge, below or equal to the cap.
  4. Notify customers that they will be surcharged using posts or signs. Also, disclose the percentage of surcharges. Online businesses must display the charges on the first page of their website.
  5. Re-program your payment gateway to record surcharges as per the requirements of card networks.
  6. Display the surcharge as a separate line item on your receipts.

Best practices for transparency

It is important to inform customers visiting in person about credit card surcharges on any purchases they might make. As a retailer, the recommended spots for full disclosure and transparency are the point(s) of entry at your store and the POS.

Mention the rates you intend to charge and that it doesn’t exceed your processing fees. Visa for one, offers a resource page that includes downloadable signage that merchants can use. While these may not be useful for other card brands, these could still act as useful templates for your signage.

Impact on Business

Surcharging, if allowed by specific rules in your state or country, is an important business decision. Make sure you have thought through it before you begin.

Pros

The simple benefit of credit card surcharges for merchants is that they no longer have to bear the full brunt of processing costs. With surcharging, they can transfer a significant portion of it to their customers.

  • Surcharge fees can be a significant support to merchants to cover their baseline costs. Although it is impossible to eliminate your entire transaction costs, the additional fee can still help you cover a substantial portion.
  • Surcharging may enable you to lower your product prices if your processing costs are included in your pricing. This will reduce the final dollar amount your customers have to pay and make your products more competitive.
  • In industries with thin profit margins, surcharging can be especially helpful to reduce processing costs significantly.

Cons

  • If the payment method most of your customers use is a credit card, surcharging might make your products more expensive, putting a large customer base at risk.
  • If you operate in a highly competitive marketplace, you could start bleeding customers to your rivals selling at lower prices.

While these disadvantages are valid, by using surcharging tactically, businesses can stand to benefit overall.

How surcharges can affect customer behavior

Surcharging has gained tremendous popularity as courts and government agencies across the US have removed the ban on it. But business-wise, whether surcharging will benefit you or not, is for you to decide.

If you have a well-established customer base and operate in a not-so-competitive market, surcharging won’t have much impact. After all, paying by credit card has benefits that often outweigh the disadvantage of an additional fee. But if you have lots of competition next door, surcharging could erode your customer base and affect the long-term standing of your business.

Success with surcharging

If you’ve decided that surcharging might be the way to go for your business, partnering with CardX can help you implement it quickly and conveniently. With CardX’s integrated online checkout solution, Lightbox, several companies have achieved remarkable success thanks to its seamless surcharging and payment acceptance.  

By integrating Click-to-Pay, CardX makes it extremely quick and easy for customers to check out as guest buyers which benefits merchants and cardholders alike. With a highly secure tokenization mechanism and features to reduce cart abandonment, this has been received very well by merchants and customers across the board.

Final Words

As is clear, surcharging lies in a gray zone and hence requires nuanced decision-making on your part. It is one payment processing decision that you need to properly think through. Surcharging can have long-term implications for the competitiveness of your products and services especially if your customers prefer credit card payments. However, if you are well informed about all aspects of surcharging, you could end up using it to your advantage.

Before leaping in, make sure you know all the legal aspects and surcharge rules, the step-by-step process, recommendations for transparency, and the pros and cons for your business. While you cannot profit from surcharging, using it selectively and tactically can reduce your transaction costs and improve your bottom line.

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Quick FAQs about Credit Card Surcharge

Q: What is a credit card surcharge?

A credit card surcharge, also known as a “checkout fee”, is charged to a customer for the use of a credit card. Surcharging provides the ability for merchants to process credit cards at zero percent cost to themselves. Instead, the credit card interchange fees are passed directly to the customer at the time of payment.

Q: How can credit card surcharges benefit businesses?

Credit card surcharges can help businesses to cover the credit card processing costs and pass it directly to the processing company. This allows a merchant to offer greater flexibility in collecting payments based on customer preferences without the need to take on the cost themselves.

Q: Are credit card surcharges legal?

In 2017, a Supreme Court ruling protected surcharges as a form of free speech from merchants. As of the time of publication, there are only 2 (Connecticut and Massachusetts) states and Puerto Rico with laws that prohibit merchants from charging surcharge fees. However, companies also need to account for the guidelines set by each card network.

Q: What should businesses consider before choosing to surcharge?

Businesses should consider the potential impact of credit card surcharges on the customer experience, what industry competitors might be doing, what information must be disclosed to customers and how, and the cost of credit cards and other forms of payment.

Q: How does surcharging work and what needs to be considered?

Many businesses opt to avoid using cost-saving surcharging strategies due to assumed complexity. This is from the very specific rules and expectations set by VISA, Mastercard, American Express, and Discover to ensure customers are protected from bad payment practices, in addition to individual state regulations.

Q: How can the credit card processor enable surcharging?

Not all payment processing platforms are built equally. While more payment processing providers are starting to offer merchants the ability to surcharge, how and to what extent can make a big difference in how easy it will be for merchants to start adding a surcharge to credit transactions.

Q: What benefits can software companies get from enabling credit card surcharges?

As the growth of adding payment features within Software platforms continues to grow, so do the opportunities that come with expanding payment options for their software users. Adding additional surcharge payment functions into their software is yet another way to add value for their sub-merchants.

Q: What services does Stax offer in relation to credit card surcharges?

Stax offers easy enablement, automated compliance, a data and reporting dashboard, transparency, 100% compliance and customer satisfaction, dedicated support, and top-level security in relation to credit card surcharges.


 

Is Quickbooks Desktop Being Phased Out?

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

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

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

TL;DR

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

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

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

This change affects the following products: 

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

QuickBooks Enterprise solutions for desktop will not be affected.

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

Indications of a QuickBooks Desktop Phase-Out

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

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

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

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

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

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

Impact on Current QuickBooks Desktop Users

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

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

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

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

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

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

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

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

QuickBooks Online vs QuickBooks Desktop

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

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

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

So, how does QuickBooks Online compare with QuickBooks Desktop?

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

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

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

QuickBooks Desktop Alternatives

Zoho Books

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

FreshBooks

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

Xero

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

Sage 50cloud

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

Final Words

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

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

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Quick FAQs about QuickBooks Desktop Ending

Q: What is happening to QuickBooks Desktop 2018?

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

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

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

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

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

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

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

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

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

 

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

Xero vs QuickBooks Online: Which Accounting Software is Best for Your Business?

Most small business owners hunting for cloud accounting software will find themselves trying to choose between the two most popular names: Xero and QuickBooks Online. These two giants in the small business accounting software space are equally adored in the business community.

Examining reviews of Xero vs QuickBooks Online can often lead to more confusion. Both are comprehensive tools that tick all the foundational boxes. So how do you know which accounting solution is actually better?

TL;DR

Xero and Quickbooks are two of the most popular cloud-based accounting platforms. Both solutions offer a variety of features that small businesses need to run accounting, but notable differences are:

  • Xero’s plans generally provide unlimited users while Quickbooks’ does not
  • Quickbooks enterprise offer is noticeably more robust
  • Quickbooks customer service is reachable via more channels
  • Xero‘s interface is designed for users with limited accounting experience

Online Accounting Software Basics

Accounting software is a must for businesses large and small. At its most basic level, these tools help you to track your earnings and expenses so that you can monitor cash flow, make accurate reports, analyze your financial data and optimize your efforts.

All of the accounting tools out there will meet that outline. It’s what they offer beyond that that helps you spot which is better for you.

If you’re a small mom-and-pop shop, your needs are going to differ significantly from a law office. The former will deal with purchase orders and ringing up sales at the register, while the latter will need capabilities related to invoicing and managing client records.

In reality, neither platform is necessarily better than the other. The stand-out platform will reveal itself only when assessed against your business needs. So let’s look at the platforms’ similarities and differences, what business needs they meet, and deduce which solution has the functionality you’ve been looking for.

Xero vs Quickbooks: Side by side comparison

Xero QuickBooks Online (QBO)
User Interface User-friendly, designed for limited accounting experience User-friendly, though may appeal more to accounting professionals
User Limit Unlimited users on all plans User limit on most plans (up to 25 users on the highest plan)
Pricing Plans Early ($15/mo), Growing ($42/mo), Established ($78/mo) Simple Start ($30/mo), Essentials ($60/mo), Plus ($90/mo), Advanced ($200/mo)
Integrations Over 1,000 third-party platforms 750+ pre-built integrations and well-established API for custom integrations
Payroll Integration Partnership with Gusto In-built features in QBO
Tax Tools Limited tax tools More advanced tax tools
Time Tracking Only in Established plan Available at every plan level
Project Management Available on standard plan Some features available on standard plan
Customer Support Online support 24/7, extensive resource portal Phone and chat support, but with limited hours
Inventory Management Basic features Basic features
Customer Ratings Consistently strong reviews, high ratings for ease of use and setup. Generally good, average rating 4 stars.

 

Xero vs Quickbooks: The Overlaps

Both QuickBooks Online and Xero are cloud accounting platforms. This means that you can access either from anywhere you have internet, including your phone. If you’re in a cab and remember you need to track time, this can be done via an Android or iOS mobile app. Both solutions have this feature.

They also both boast a huge range of integration options via third-party tools, monthly subscription plans, and add-ons for customization to fit a wide range of business needs.

These similarities are what make them both front runners for flexibility and ease of use. Let’s look at their differences.

Xero Features, Pricing, Pros, and Cons

Xero is a business out of New Zealand that established itself in the accounting software space with the goal to make accounting tasks more user-friendly and even enjoyable.

Xero’s user-friendly interface has set the standard in the accounting software sphere. This ease of use makes the learning curve low for customers and adoption of the platform extremely high.

Features

At any level, Xero offers a full range of accounting features, including:

  • Dashboard and reporting
  • Invoicing and quotes
  • Tracking receivables and payables
  • Purchase orders
  • Bank feeds
  • Bank reconciliation
  • Sales tax management
  • Inventory tracking and management
  • Fixed asset management
  • Contacts, smart lists, and file storage
  • Payment processor integration
  • Payroll via Gusto.

Integrations

Xero can integrate with over 1,000 third-party platforms. There are far too many to mention here, but some of the most beneficial integrations include:

  • CRM systems
  • Time tracking tools
  • Reporting tools
  • Ecommerce platforms
  • Email marketing tools
  • Point-of-sale systems
  • Inventory management
  • Debtor tracking.

Pricing

Xero offers three pricing plans: Early, Growing, and Established.

Xero Early

With Xero Early, you have access to all of the features above for only $15 per month. However, there are some usage limits:

  • Send 20 invoices and quotes
  • Enter five bills
  • Capture bills and receipts with Hubdoc
  • View a snapshot of short term cash flow and business health

Xero Growing

The Xero Growing plan will set you back $42 per month but gives you access to all the basics, plus unlimited invoices, quotes, bills, and you can reconcile bank transactions.

Xero Established

The Xero Established plan comes in at $78 per month and combines all of the Growing features plus:

  • Multi-currency
  • Project management
  • Expenses
  • Advanced analytics
  • Expense claiming

Xero’s Projects feature gives businesses the ability to track and bill for projects through the platform with features like time tracking, expense capture, and recording deposits against each project so that you can monitor the project’s performance. Billing is done directly from the project to keep project management and finance tightly connected.

Xero Expenses lets users—from mobile or desktop—track, assign, and manage business expenses, including capturing receipts, labeling expenses, and controlling permissions on who can view, submit, and approve them.

Pros

Unlimited users – One of the main ways Xero stands out against QuickBooks Online is in offering unlimited users. No matter which pricing plan you have on Xero, you can add an unlimited number of users to the account. That means your bookkeeper, accountant, tax advisor, and staff can all have access at no additional cost.

Integrations – Xero’s integration options are also superior to QuickBooks Online. Both offer a pretty significant number of integration options, but no accounting software comes close to Xero’s 1,000+ integration options.
Payroll – Companies in need of payroll will also find Xero the winner through its partnership with Gusto to give you full-service payroll integrations. The first two months with Gusto are free for Xero customers.

Customer support – Xero’s customer service is first class. Not only does it have an extensive resource portal online where customers can find answers to most questions, but it also offers free online support 24/7, regardless of plan level and timezone. All customer service employees are also Xero employees — no outsourced support.

Cons

Limited tax tools – Although Xero offers sales tax software, it doesn’t match QBO with the level of its tax tools. If you need tools to maximize tax deductions, manage 1099 payments, and create tax categories that can be auto-added to expenses, QBO may be a better option.

Limited time tracking – Xero only offers this feature on its highest plan, the Established tier. Comparatively, QBO offers time tracking at every plan level.

Customer ratings and reviews

“Xero is the best!” – 18th August 2021

Xero’s reviews are consistently strong, and it gets high customer ratings, such as:

  • 8.7 for ease of use
  • 8.1 for ease of setup.

Which Businesses Benefit from Xero Accounting Software?

Because of its interface, which is clean and easy to use, Xero has attracted a young market, particularly in the startup world. If you want a solution that has an extremely low learning curve, Xero is a great option.

Xero’s unlimited user offering is also a huge selling point for the platform. This feature makes it a strong solution for large and small businesses alike.

If you’re self-employed and don’t need to send more than 20 invoices a year, $9 per month is a great value. Similarly, if you’re a big business that requires 25 users or more, you’re going to save significantly with Xero.

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Quickbooks Online Features, Pricing, Pros, and Cons

QuickBooks Online (QBO) is a platform from Intuit that was designed to help businesses streamline repetitive tasks and processes, particularly when it comes to managing bills, invoices, time, and projects.

In the market for longer than Xero, QBO got picked up by accountants early and has established itself as the platform of choice for the industry. When your accountant is using the tool, it’s extremely convenient to have the same software.

Features

On any of the QBO plans, you can get access to:

  • Basic reporting
  • Income and expense tracking
  • Invoicing and estimates
  • Bank account connection and reconciliation
  • Tax organization tools
  • Accepting payments
  • Receipt capture and organization
  • Integration with QuickBooks apps and third-party platforms
  • Phone-based customer support.

Integrations

The number of QBO integrations are too many to list here, but they cover the most beneficial, such as:

  • CRM systems
  • Time tracking tools
  • Reporting tools
  • Ecommerce platforms like Shopify
  • Email marketing tools
  • Point-of-sale tools
  • Inventory management
  • Debtor tracking.

Pricing

QBO offers four different monthly subscription plans: Simple Start, Essentials, Plus, and Advanced.

QBO Simple Start

Simple Start costs $30 per month and covers all of the standard features above, as well as:

  • Importing transactions (from bank accounts, credit cards, PayPal Square, Stripe, and more)
  • Automatically sorts transactions into tax categories
  • Manual organization of income and expenses into tax categories
  • Accepting credit cards and bank transfers from invoices
  • Tracking invoice status
  • Send payment reminders
  • Automatically matching payments to invoices
  • Sales and sales tax tracking automatically on invoices
  • 1099 management and tracking
  • Track miles using your phone’s GPS
  • Run basic reporting, like profit and loss reports

QBO Essentials

The Essentials plan will set you back $60 per month and covers all of the above, as well as allowing you to:

  • Up to three users
  • Manage bills, track status, and record payments
  • Create recurring payments
  • Pay multiple vendors and bills simultaneously
  • Create checks from anywhere
  • Track employee time and billable hours
  • Automatically add time to invoices
  • Let employees enter their own time
  • Integrate with TSheets by QuickBooks
  • Detailed reporting available on a dashboard
  • Send estimates to your clients

QBO Plus

The Plus plan comes in at $90 per month, offering all the features we’ve discussed so far, plus:

  • Up to five users
  • Advanced reporting
  • Project profitability tracking
  • Purchase order creation
  • Vendor management
  • Job Costing to track labor costs, payroll, and expenses
  • Track inventory, goods costs, and low-stock notifications
  • Import inventory from Excel
  • Sync inventory with e-commerce tools
  • Create custom user permissions and assignments.

QBO Advanced

Finally, the Advanced plan, with a $200 per month price tag, offers all of the previously mentioned features and then some:

  • Up to 25 users
  • Accelerated invoicing
  • Smart reporting via Fathom
  • Enhanced custom fields for reports
  • QuickBooks priority care for premium customer support
  • Bookkeeping automation
  • Revenue recognition that allows you to automatically track deferred revenue
  • Financial planning tools that allow you to create and manage budgets
  • Automation of your common workflows

Pros

Plan Options – While QBO is more expensive for businesses that don’t need lots of functionality, it actually works out in providing better value for those who do. The QBO plans give businesses more options, and the structure of these plans considers the scale of businesses at each plan level.

Tax Tools – QBO trumps Xero with the power of its tax tools. While Xero has sales tax software, QBO has tools to maximize tax deductions, manage 1099 payments, and create tax categories that can be auto-added to expenses.

Time Tracking – QBO offers time tracking at every plan level, while Xero only offers it for the Established plan, the most costly pricing plan.

Cons

Limited Users – Even at the highest plan, QBO limits the number of users to 25. If you need to share access with many staff and outside financial support in bookkeeping and accounting, this is going to be a frustrating limitation.

Limited Customer Support – QBO does have phone support, but the hours are limited, so it’s actually not as flexible as Xero.

Customer Ratings and Reviews

“Solid platform for easy bookkeeping” – 24th August 2021

For the 2,600+ reviews QBO has, its average rating is 4 stars (out of 5) is still pretty good, with these ratings averaging:

  • 8.1 for ease of use
  • 7.9 for ease of setup.

Which Businesses Benefit from QBO Accounting Software?

QBO is really the more robust of the two accounting platforms, but it’s also the most costly. This means that it’s particularly suited to businesses that want to gain deeper insight into the logistics of their business as it grows.

The way the QBO plans scale up reporting capabilities at each level tends to match business needs at each growth stage, making it great for businesses that plan to scale.

QuickBooks vs Xero: Feature Comparison

Let’s take a look at how the two solutions stack up in a side-by-side feature comparison.

Ease of Use

Both solutions are known for their user-friendly interfaces. One crucial difference is that Xero is specifically designed for users who have limited accounting expertise.

Users

Number of users is where there is a crucial difference between Quickbooks and Xero. Xero allows for unlimited users on all plans. Quickbooks caps users on most, if not all, plans.

Analytics

For small businesses, Quickbooks and Xero offer similar analytics capabilities. However, because Quickbooks doesn’t devote itself solely to supporting small businesses, its reporting for large companies allows for a more in-depth financial analysis.

Invoicing

When it comes to invoicing, there is very little difference in the solutions’ offerings. Both Xero and Quickbooks provide invoicing templates, recurring invoices, online payments, automatic invoice reminders and more.

Payroll

Overall, Xero and Quickbooks have similar offerings when it comes to payroll, offering automatic payroll calculations, direct deposit, leave management, employee self-service, and more.

Inventory Management

Neither Xero nor Quickbooks is an inventory management solution, so if you’re looking for a robust system, you should look for something specialized. That said, they both do offer basic inventory management features that enable a business to track inventory, make adjustments, and even place purchase orders for new inventory.

Project Management

While both solutions have project management offerings that are quite similar at the advanced tier, Xero offers these features on their standard plan while Quickbooks only offers some of its project management features on its standard plan.

Integrations

Both solutions have robust ecosystems of third-party integrations. That said, Quickbooks has an edge here. They have 750+ pre-built integrations compared to Xero’s 500+. They also have a well-established API for custom integrations, while Xero is continuing to expand its capabilities.

Customer Support

It’s worth noting that Xero provides help through email and an online help center, while Quickbooks also offers phone and chat support.

Ultimately, for small businesses, there isn’t a huge amount of difference in the key features between these cloud-based solutions. They’re both popular accounting software tools for good reasons.

QuickBooks vs Xero: Both Solid Solutions When it Comes to Accounting Software

QuickBooks and Xero are both strong contenders in the realm of small business accounting. The right solution depends on your (or your accountant’s) preferences and specific needs.

Regardless of which software you choose, know that Stax can easily connect with both. Our direct integration with QuickBooks enables you to connect your accounting software with Stax’s payments platform. If you’re using Xero, you can connect Stax through Zapier with just a few clicks.

If you need help sorting out your payments and accounting integrations, get in touch with the Stax team and we’ll help you figure out the right setup for your business.

Request a Quote

FAQs about Xero vs QuickBooks

Q: What is the difference between Xero and QuickBooks?

The primary differences between Xero and QuickBooks are:

  • User Interface: Xero is designed for users with limited accounting experience, whereas QuickBooks has a user-friendly interface but is also well-suited for those with more accounting knowledge.
  • User Limit: Xero offers unlimited users across all its plans, while QuickBooks has a user cap on most plans, going up to 25 users on its highest plan.
  • Pricing and Plans: Xero’s plans are Early, Growing, and Established, with prices ranging from $15 to $78 per month. QuickBooks offers Simple Start, Essentials, Plus, and Advanced plans, ranging from $30 to $200 per month.
  • Tax Tools and Time Tracking: QuickBooks provides more comprehensive tax tools and time tracking on all plan levels, whereas Xero has limited tax tools and offers time tracking only on its highest plan.
  • Integrations: Xero integrates with over 1,000 third-party platforms, while QuickBooks also offers a wide range of integrations but with a focus on deeper financial analysis for larger companies.

Q: Why do accountants use Xero?

Accountants use Xero because of its user-friendly interface, making it accessible to clients with varying levels of accounting expertise. Its ease of use, comprehensive feature set, and extensive integration options make it a versatile tool for accountants managing the accounts of diverse clients.

Q: Do accountants prefer QuickBooks?

Many accountants prefer QuickBooks, especially in the U.S., due to its advanced features, robust tax tools, and scalability. QuickBooks has been a long-standing favorite in the accounting industry, and its detailed reporting and analytical tools make it suitable for more complex accounting needs.

Q: Do I still need an accountant if I use Xero?

Yes, using Xero doesn’t eliminate the need for an accountant. While Xero simplifies many accounting processes and is user-friendly, an accountant’s expertise is invaluable for complex financial decisions, tax planning, compliance, and optimizing your financial strategy.

Q: Do I need a CPA if I use QuickBooks?

Yes, even if you use QuickBooks, a Certified Public Accountant (CPA) can be crucial. A CPA can provide expert advice, ensure compliance with financial regulations, help with tax filings, and offer strategic financial planning, which goes beyond the scope of what QuickBooks can automate.

Q: What is easier to use, Xero or QuickBooks?

Ease of use can be subjective and depends on the user’s background. Xero is often cited as easier for individuals with limited accounting experience due to its intuitive interface and straightforward design. QuickBooks, while user-friendly, is known to have a steeper learning curve but offers more advanced features, making it a preferred choice for users with more accounting knowledge.

How to Find the Right Credit Card Terminal for Your Business

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

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

TL;DR

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

The Best Payment Terminal Companies For Your Business

Level Up Your Terminal with Stax Card Readers

What is a Credit Card Terminal?

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

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

Types of Credit Card Terminals

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

Countertop terminals 

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

Mobile card readers 

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

Wireless terminals 

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

Virtual terminals 

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

Integrated payment systems 

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

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

Learn More

The Traditional Retail Payment Terminal

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

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

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

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

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

Recommended Credit Card Terminals 

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

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

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

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

Mobile and Wireless Payment Terminals

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

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

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

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

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

Recommended Payment Solutions

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

Stax Pay

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

SwipeSimple: Mobile Chip Reader

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

Virtual Credit Card Processing Terminals/eCommerce

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

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

Restaurant Manager With Shipping Companies Processing Payment Via Payment Terminal Companies

Recommended Solution

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

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

Selecting the Right Payment Terminals for Your Small Business

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

1. Figure out your needs (and wants)

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

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

2. Understand fee structures

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

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

3. Read customer reviews

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

Get the Right Credit Card Terminals for Your Business

Looking to level up your payment processing?

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

Request a Quote


FAQs about Credit Card Terminals

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

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

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

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

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

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

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

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

Q: What is a virtual credit card processing terminal?

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

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

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

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

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


 

The 7 Best Mobile POS Systems for Small Businesses in 2024

Whether businesses are on the road or staff are simply moving about in-store, mobile point of sale systems (mPOS systems) are becoming an increasingly popular POS option for small businesses.

Around since the 2000s, mPOS systems have come a long way from their origin as a glitchy solution used primarily by micro-businesses to process payments. Today, they’re known for their robust services, enhanced security, user-friendly interfaces, and the integration of advanced data analytics. They’re no longer just for SMBs. They’re indispensable for businesses of all sizes.

In fact, mPOS systems are gradually gaining market share from the fixed cash-register-style POS market. Come 2030, mPOS is on track to share the market equally, and it’s clear to see why.

Imagine a restaurant using a mobile POS system to manage sales both at its permanent locations and through its food truck. At various locations where the food truck operates, staff use tablets equipped with a mobile app for transaction processing. When a customer orders food, the staff member enters the order into the app, processes the payment using a portable card reader, and sends a digital receipt directly to the customer’s email. The mPOS system then seamlessly synchronizes the transaction, updating sales and inventory records in real-time across the brick-and-mortar restaurants and the food truck.

mPOS systems enable business owners to transact anywhere on a mobile network or Wi-Fi. They offer customers flexibility. And they come with many powerful business solutions, from real-time data access to invaluable inventory management capabilities.

mPOS solutions are the superpower for small businesses in 2024.

TL;DR

  • mPOS systems enable business owners to conduct transactions anywhere there is a mobile network or Wi-Fi.
  • More than just a mobile terminal, mobile POS systems today are packed with inventory management features, CRM integration, and analytics tools that supercharge operations and customer satisfaction.
  • Businesses using mPOS solutions are better-positioned to adapt to future market changes.
Learn More

Key Features to Look for in an mPOS System

When selecting a mobile point of sale system, certain key features are essential to ensure that the system meets a business’s specific needs and enhances operational efficiency. Here’s a closer look at these features:

User-friendly interface

The interface of the mPOS system should be intuitive and easy to navigate. Extensive upskilling training is often out of the budget for small businesses, so the system should be straightforward to learn and use.

Payment processing options

An mPOS system should support various payment options to accommodate customer preferences. Traditional methods like cash and credit cards/debit cards are a must-have, as are digital wallets and contactless payments such as Apple Pay for iOS and Android’s Google Pay. Some may still want to allow magstripe card payments, but near-field communication (NFC) compatibility is non-negotiable for 2024 and beyond.

Inventory management capabilities

Effective inventory management is now standard for most mobile POS systems to help businesses avoid stock shortages or overstock situations. An mPOS system with robust inventory management capabilities can track stock levels in real time, send alerts for low stock, and even automate reordering processes.

Customer Relationship Management (CRM) features

CRM functionalities help businesses to better understand and engage with customers. Features like customer data collection (e.g., purchase history, preferences), loyalty programs, and targeted promotions can enhance customer retention, leading to customer loyalty and encouraging repeat business.

Security and compliance standards

Security is paramount in any POS system to protect sensitive customer information. An mPOS system should adhere to industry-standard security protocols, such as PCI DSS compliance, and include encryption and tokenization to safeguard data. Regular POS software updates and security patches are important to protect against new threats.

Integration with other business tools

Want to get the most out of your mPOS? Make sure it plays nice with your other solutions. Systems should be compatible with accounting software, eCommerce platforms, CRMs, and other operational tools that a small business or retail store might use, including loyalty solutions and other marketing tools. 

Top Mobile Point-of-Sale Systems of 2024

Square

Square is well-known in the mobile point-of-sale market, offering a particularly popular solution among small to medium-sized businesses.

Hardware costs

There are a few Square POS options for mobile, including its Mobile POS Kit for Square Reader ($599) and Restaurant Mobile POS Kit ($259).

Processing fees

Square’s in-person transaction fees are 2.6% of the sale + 10¢ per transaction.

Key features

  • Accepts various forms of payment
  • Users can track inventory, manage items, and receive stock alerts
  • Comprehensive reporting features
  • Restaurant-specific solutions
  • Digital receipts and invoice management
  • Employee management tools
  • Compatible with various third-party apps and software.

Clover

Clover is another prominent mPOS provider, offering a range of solutions that cater to different types of businesses.

Hardware costs

Clover Go ($49) is Clover’s main mobile POS hardware tool, pairing with any smart device (Apple iPhone, iPad, Windows, or Android) to take chip, dip, and contactless payments or mobile payments.

Processing fees

Clover’s in-person transaction fees are 2.3% of the sale + 10¢ per transaction.

Key features

  • Diverse payment options are accepted
  • Full suite of POS features
  • Customizable interface
  • Extensive app marketplace
  • Detailed reporting and analytics
  • Features for managing employees.

PayPal Zettle

PayPal Zettle is PayPal’s mobile POS solution, known for its simplicity and integration with PayPal’s wider range of payment services.

Hardware costs

PayPal Zettle can be used with just their software or a card reader for $29. They also offer add-on hardware like receipt printers, cash drawers, and barcode scanners.

Processing fees

PayPal Zettle charges 2.29% of the sale + 9c per transaction.

Key features

  • Seamless integration with PayPal accounts
  • Accepts a range of payment methods
  • Basic inventory management tools
  • Provides sales reports and analytics
  • The Zettle app is known for its simplicity and ease of use.

Toast

Toast is a cloud-based mobile POS provider designed exclusively for the restaurant and food service industries.

Hardware costs

Toast hardware solutions include tablets, handheld devices, kitchen display touchscreens, and other peripherals. Costs are rolling into monthly tiered plans depending on the restaurant’s needs.

Processing fees

Toast charges 2.99% of the sale + 15c per transaction.

Key features

  • Toast is specifically designed for the restaurant industry
  • The system integrates seamlessly with online ordering platforms
  • Toast offers a kitchen display system
  • Offers robust inventory tracking and management capabilities
  • Comprehensive reporting tools
  • Includes options for customer loyalty programs and gift card management.

TouchBistro

TouchBistro is another mobile POS system specifically tailored for the restaurant industry, offering a range of features unique to the operational needs of food service establishments.

Hardware costs

TouchBistro requires the purchase of iPads as the primary hardware, along with optional additional hardware such as printers, cash drawers, and kitchen display systems. Hardware is rolled into monthly plan fees, starting at $69/month.

Processing Fees

TouchBistro does not process the payments. Merchants can work with their preferred credit card processing provider, giving them flexibility to find the best rates based on their transaction volumes and needs.

Key Features

  • Servers can take orders directly at the table using iPads
  • Flexibility to customize and update menus used online and for QR codes, including item modifiers
  • Easy management of restaurant floor plans and table assignments
  • Provides detailed inventory tracking features
  • Includes tools for staff scheduling, time tracking, and managing staff roles and permissions
  • Captures customer data for personalized service and targeted marketing efforts
  • Offers comprehensive reporting and analytics tools
  • Supports integration with various payment processors and third-party applications.

Revel Systems

Revel Systems is an advanced mPOS solution for a diverse range of businesses, including retail, restaurants, and quick-service venues.

Hardware costs

Revel Systems’ hardware setup includes iPads as terminals, barcode scanners, receipt printers, and card readers. There is no pricing information available on their website.

Processing fees

Revel does not process payments themselves. Merchants are free to select their preferred payment processing partner, and both providers can integrate together.

Key features

  • Supports both in-store and online sales
  • Advanced inventory tracking and management features
  • Offers detailed insights into sales, customer behavior, and business performance
  • Includes tools for managing customer data, loyalty programs, and personalized marketing
  • Robust tools for staff scheduling, payroll, and performance tracking
  • User interface can be customized to meet specific operational needs and preferences.

Shopify

Shopify’s mPOS solution is an extension of their existing services, ideal for retail businesses, enabling sales management both online and in physical locations.

Hardware costs

Shopify’s Tap & Chip Card Reader ($49) connects to smart devices through Bluetooth and can be used with other peripheral hardware like iPad stands and receipt printers.

Processing fees

Shopify’s payment processing fees depend on the plan. Retailers that do more than casual sales will have to start at the Retail Plan for $89/month with processing rates of 2.7% + 0c for in-person transactions.

Key features

  • Seamless integration with Shopify’s online store platform
  • Supports various payment methods
  • Advanced inventory management capabilities across all sales channels
  • Detailed reporting and analytics tools
  • Options to tailor both the online store and physical storefront, including custom receipts, branding, and promotional tools
  • Access to the Shopify App Store.

Cost-Benefit Analysis for Small vs. Large Businesses

When conducting a cost-benefit analysis of mPOS systems, businesses should consider the following:

  1. Transaction volume and value
  2. Business growth trajectory
  3. Additional features and services
  4. Hardware costs
  5. Integration needs
  6. Payment processing options.
  7. Security and compliance
  8. Support and training

Small businesses will often want low upfront costs and simplicity, while large businesses may prioritize lower transaction fees at higher volumes, comprehensive features, and scalability. In either case, businesses should consider the long-term. What additional features and services might be necessary in the future? Transactions may be low now, but will that be the case in the future? Which mPOS provider gives the flexibility to get the best rates with the needed services?

Conclusion

Choosing the right mobile point-of-sale system is vital for businesses, impacting everything from customer satisfaction to operational efficiency. The ideal solution must align with a business’s specific needs, including transaction volume, industry type, and scalability, ensuring efficient checkouts, accurate data analytics, and seamless integration with other business tools. The right tool can significantly enhance customer experiences and streamline operations, regardless of the business sector.

mPOS systems are increasingly shaping the landscape of business transactions. They are evolving to include advanced technologies like AI for predictive analytics and personalized customer interactions. As contactless and digital payments continue gaining prominence, mPOS systems adapt to these trends. Businesses on board with this technological progression are positioned to adapt to future market changes, securing their relevance and success in a digitally driven marketplace.

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FAQs about mobile POS systems

Q: What is a mobile point system?

A mobile point system—aka mobile POS or mPOS—is a portable point of sale system that operates on a smartphone, tablet, or dedicated wireless device. It typically includes software for processing sales transactions, managing inventory, and conducting various types of payments (like credit cards, cash, or mobile payments). These systems are designed for flexibility and mobility, often used in retail, hospitality, and on-site services.

Q: What does a mobile POS do?

Specific functionalities will depend on your provider, but generally speaking mobile POS systems enable you to facilitate sales transactions, take payments, manage inventory, and more. 

Q: How much does a POS system cost for a small business?

Basic mobile POS systems can be relatively inexpensive, often with a monthly subscription fee ranging from $10 to $100. More advanced systems with additional hardware (like receipt printers, cash drawers, and barcode scanners) can cost more, potentially several hundred to a few thousand dollars, plus the subscription fees.

Q: Can you turn your phone into a POS?

Yes, you can turn a smartphone into a POS system using mobile POS apps. These apps can be downloaded onto the phone, and with the addition of a card reader (often plugged in or connected via Bluetooth), your phone can process payments and perform other POS functions.

Q: What is the difference between POS and mobile POS?

The key difference is mobility and hardware. Traditional POS systems are stationary, consisting of a computer, monitor, cash drawer, receipt printer, and barcode scanner. Mobile POS systems, on the other hand, are portable and run on mobile devices like smartphones or tablets, often with fewer hardware components, making them more flexible and suitable for on-the-go transactions or businesses without a fixed location.

Q: Can you run a mobile POS system without the internet?

Some mobile POS systems can operate offline, allowing basic functions like processing sales and recording transaction details. However, for processing credit card transactions and syncing data with cloud-based services (like inventory management), an internet connection is usually required. Once the device reconnects to the internet, the transactions made offline are often synced and updated.

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.


 

5 Best Business Savings Accounts for 2024

Business savings accounts are crucial to a sound organizational strategy. Savings act as a financial buffer and can become a strategic asset. It can weather an organization through fluctuating market conditions and unforeseen expenses, providing a much-needed safety net and ensuring liquidity and financial stability.

While business savings stats are hard to come by, the average U.S. resident has only $1000 or less in their personal savings account. If this trend translates to businesses, $1000 would not go far in safeguarding against unplanned bills, let alone significant financial interruptions.

It’s not all for the bad times, either. A well-selected account can act as a growth catalyst, transforming idle capital into a source of passive income through accrued interest. Moreover, it can bolster a business’s creditworthiness and lay a foundation for future investment opportunities. In essence, the right business savings account is the cornerstone for smart financial management, blending security with the potential for fiscal growth.

In this article, we will explore the fundamental aspects businesses must consider when selecting a savings account and which business savings accounts should be up for assessment in 2024.

TL;DR

  • Savings can be a financial buffer and a strategic asset. It can get businesses through unforeseen expenses, ensuring liquidity and financial stability. It can also extend beyond the safekeeping of funds to be a growth catalyst.
  • Interest rates, fees, deposit requirements, liquidity needs, and accessibility are some of the key considerations when selecting the right business savings account. Accounts combining high-interest rates, no fees, and advanced online solutions are available.
  • Equipped with knowledge of the accounts and a thorough assessment of the internal requirements, getting set up is as simple as visiting a branch or going online.
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Factors to Consider When Choosing a Business Savings Account

Considering that a business savings account aims to work for the business, not just to store money but to maximize it, certain critical factors must be considered to ensure the selected account will meet this objective. Each factor contributes to the overall suitability and effectiveness of the savings account for the business.

1. Interest rates

The interest rate determines the earnings on the account’s balance. Higher interest rates translate to greater returns on the saved funds.

Businesses should compare rates from various institutions, noting any tiered interest rates based on account balances. It’s also essential to distinguish between introductory rates and the standard rate that applies after the introductory period.

Introductory rates are higher savings interest rates offered by financial institutions as an incentive for new customers. This rate is typically significantly higher than the standard rate.

Standard rates are the regular interest rate that applies to a savings account after the introductory period ends.

Tiered interest rates. Some high-interest accounts offer tiered interest rates based on the account balance. Higher balances might earn higher rates, and vice versa. To assess the feasibility of these tiered savings rates, businesses need to identify the optimal average daily balance level that maximizes returns without stretching financial resources too thin.

2. Rate fluctuations and conditions

Rates are not always static. They can change according to expired offers or variable contracts. Different fluctuations and conditions include:

  • Introductory rates: If the high-interest rate is an introductory offer—a proposal exclusively for the account opening—assess how long this rate applies and what the standard rate will be post-introductory period.
  • Variable rates: For accounts with variable rates, consider how fluctuations in the rate could affect interest earnings and whether the business can withstand this variability.
  • Adjustment periods: The rate changes at predefined intervals in the statement cycle, which can be monthly, quarterly, annually, or as specified in the account or business loan terms.

3. Fees and charges

Fees can significantly reduce the account’s potential earnings. High-interest rates, coupled with high fees, will nullify the benefit of those rates. These must be understood and compared to avoid being tempted by what looks best on the surface.

Common fees include:

  • monthly maintenance fees
  • transaction fees
  • overdraft fees
  • penalties for not maintaining a minimum balance. 

Some banks might offer fee waivers under certain conditions, such as maintaining a combined balance across multiple accounts.

Net interest earnings vs. fees

Remember that high-interest accounts might also come with higher fees. Calculating the two is crucial to get an accurate picture of the net interest earnings after accounting for monthly maintenance fees, transaction fees, or other charges. This can be done by looking at the annual percentage yield and a break-even analysis:

Annual percentage yield (APY)

The APY is the rate of return that an investment earns over a year. Unlike a simple interest rate, an APY includes the effects of compounding, which is the process where earned interest is added to the principal balance, and future interest calculations are based on this increased balance.

Break-even analysis

Determine the APY and then take out the fees. Find the balance at which the interest earned outweighs the fees. This helps in understanding the minimum effective balance to maintain in the account for it to be beneficial.

4. Deposit requirements

Deposit requirements will determine which business savings account is suitable for different types of businesses. Within this, there are two types of requirements:

Minimum opening deposit

Many business savings accounts require a minimum cash deposit to open the account. Depending on the bank and the type of account, this can range from a nominal sum to a substantial amount.

Minimum balance requirement

Some accounts require a minimum balance to avoid fees or earn the advertised interest rate. This can affect cash flow, particularly for smaller businesses or those with fluctuating revenue.

5. Liquidity needs vs. withdrawal restrictions

Some accounts may have limitations on withdrawals or wire transfers. Businesses need to ensure that these restrictions align with their cash flow needs. Check for:

  • Penalties for access: penalties or fees for accessing funds could negate the benefit of higher interest earnings.
  • Minimum balance penalties: falling below the minimum could result in lower interest rates and attract additional fees. Moreover, it can impact cash flow and operational expenses, limiting the money available when it’s needed in order to maintain the balance required by the account.

6. Accessibility and online services

Easy access to the account and robust online services are essential for efficient business operations. When assessing these features, small business owners should focus on how they align with the business’s operational efficiency and convenience. The ease of managing finances can significantly impact a business’s day-to-day operations. The following should be considered:

  • Online banking capabilities: User interface, account management features, and integration with business software can streamline financial management and save time.
  • Mobile banking services: A robust mobile app with comprehensive features like mobile check deposit, real-time alerts, and transaction capabilities allow for smooth management of finances on the go. Strong mobile banking security measures, such as two-factor authentication and encrypted data transmission, are essential to protect sensitive financial information.
  • ATM and branch network: ATM access is important for businesses that handle cash or need to deposit checks frequently. Access to ATMs, as well as branch locations, might be of significant convenience.

7. Additional benefits and features

Beyond the basic features, some accounts offer additional benefits that can be valuable for businesses. These might include free business advice, options to set up joint account holders for partnerships, higher transaction limits, or bundled products and services that offer cost savings. Specialized features tailored to specific business needs, such as integration with accounting software, can also be a deciding factor.

Additionally, look out for banks that say “Member FDIC” on their website. All reputable banks in the U.S. are compliant with FDIC insurance, but it’s worth an extra check.

Top Business Savings Accounts for 2024

Looking at high-interest accounts, no-fee accounts, the most accessible accounts, and those with extra perks, we have put together a list of the best business bank accounts to build business savings in 2024.

Live Oak Bank Business Savings Account

Live Oak Bank specializes in small business financing, offering business loans, lender solutions, and savings products. Its focus on business growth makes it a go-to for companies seeking comprehensive financial services beyond just savings. In addition, they offer personal finance solutions, including personal savings accounts — great for businesses that like a single bank to suit all needs.

Live Oak Bank Business Savings Account offers:

  • APY: 4.00%
  • Minimum Deposit: $0
  • Maintenance Fee: $0

First Internet Bank Business Money Market Savings

First Internet Bank, a pioneer in online banking, offers a range of digital-first banking services. Its advanced online platform caters to businesses looking for efficient, tech-savvy banking solutions along with competitive savings options. Although its services are online-first, money can be accessed in person with their ATM card.

First Internet Bank Business Money Market Savings account offers: 

  • APY: 3.67% to 5.33%
  • Minimum Deposit: $100
  • Maintenance Fee: $5

Axos Business Premium Savings

Axos Bank is a digital-first financial institution offering a broad spectrum of innovative banking services, including high-yield business savings accounts, checking accounts, commercial lending, and treasury management solutions. Known for its efficient online platform, Axos caters to both personal and business customers, emphasizing convenience, competitive rates, and reduced fees.

Axos Business Premium Savings account offers: 

  • APY: 4.01%
  • Minimum Deposit: $5,000
  • Maintenance Fee: $0

nbkc Bank Business Money Market Account

nbkc Bank is known for its transparent fee structure and customer-centric approach. It provides a suite of digital banking tools, making it an attractive option for businesses valuing simplicity and clarity in their banking relationships.

nbkc Bank Business Money Market Account offers: 

  • APY: 2.50%
  • Minimum Deposit: $0.01
  • Maintenance Fee: $0

Capital One Business Savings

Capital One offers a broad spectrum of financial products and is recognized for its extensive branch and ATM network. Its commitment to both digital innovation and physical accessibility makes it a strong choice for businesses seeking versatile banking solutions.

Capital One Business Savings account offers: 

  • APY: 0.10%
  • Minimum Deposit: $250
  • Maintenance Fee: $3 (if businesses maintain a minimum balance of $300, Capital One waives its $3 monthly maintenance fee)

Best High-Interest Accounts

High-interest accounts are ideal for businesses looking to maximize returns on surplus business funds. The best high-interest accounts for 2024 are:

Account

APY

Live Oak Bank Business Savings Account 4.00%
First Internet Bank Business Money Market Savings 3.67% to 5.33%
Axos Business Premium Savings 4.01%

Best No-Fee Accounts

For cost-conscious businesses, no account fee savings accounts offer an opportunity to save without the burden of monthly service fees, minimum balance requirements, and other charges.

Account

Minimum deposit

Maintenance fee

nbkc Bank Business Money Market Account $0 $0
Live Oak Bank Business Savings Account $0 $0
Axos Business Premium Savings $5,000 $0

Top Easily Accessible Accounts

Ease of access is vital for businesses that need to withdraw or transfer from their savings account regularly. For some businesses, this may mean ATM access is paramount; for others, easy accessibility could mean advanced online features.

Account

Access benefits

Capital One Business Savings Extensive branch and ATM network
First Internet Bank Business Money Market Savings Range of digital-first banking services

Best Small Business Savings Account

What is “best” should be carefully determined by each business, but of the business savings account providers on our list, one stands out above the rest for small businesses and sole proprietors:

Live Oak Bank Business Savings Account

What we love about Live Oak Bank Business Savings Accounts:

  • High-interest rates: APY: 4.00%
  • No minimum deposit
  • No fees
  • Offers a CD account
  • Provides a broad range of services beyond business banking.

Best Certificate of Deposit Account

Different from a business savings account, a Certificate of Deposit (CD) account is a financial product offered by banks and credit unions that provides an interest rate premium in exchange for a lump-sum deposit that is to be untouched for a predetermined period, anywhere from a few months to several years.

CD accounts often have higher interest rates than traditional savings accounts, making them an attractive option for businesses with idle funds available to lock away for a specific duration.

Live Oak Bank

  • Business Savings Account APY: 4.00%
  • CD Account APY: 5.40%
  • Terms: 12-month hold with a minimum deposit of $2,500, with a cap of $250,000 per CD.

Chase, Bank of America, and U.S. Bank fall short

Notably absent from the list above are traditional banks, Chase, Bank of America, and U.S. Bank. Barely comparable to those on our list, U.S. Bank offers 0.05% APY, while Chase and Bank of America come in well below at only 0.01%.

While not competitive in their business savings account offering, the traditional banks still prove their value for other business services like loans and business credit cards.

Interest-Earning Business Checking Accounts

Another great interest-earning strategy, particularly for businesses seeking additional functionalities such as check writing and a business debit card, is a high-yield business checking account. Our favorites are:

  • Bluevine Business Checking: This account provides a 2.0% interest rate on balances up to $250,000 and is free from monthly, minimum balance, and non-sufficient funds (NSF) fees.
  • Grasshopper Business Checking Account: This account yields an APY of up to 2.25% for balances between $25,000 and $250,000. Additionally, it offers unlimited 1% cashback rewards on signature-based purchases made online and in-store.

Tips for Maximizing Benefits from Your Business Savings Account

Minimums, variable rates, fees and other accounts all make it necessary to actively manage a business savings account. Set and forget may not yield the best benefits. Careful planning can go a long way.

Strategically balance between savings and checking accounts

  1. Strategically allocate funds: Keep enough in the checking account to cover operational expenses and short-term needs. Then, move excess funds to a savings account to earn higher interest.
  2. Set up automatic transfers: Automate transfers from the checking to the savings account. This can be a fixed amount or a percentage of monthly revenue.

Understand the implications of interest rates and fees

  1. Compare APYs across different banks to ensure you’re getting a competitive rate.
  2. Beware of introductory rates that drop significantly after a certain period.
  3. Analyze all associated fees, such as monthly maintenance fees, transaction fees, or minimum balance fees, and how they might offset interest earnings.

Best practices for account management and review

  1. Periodically review the business savings account to ensure it still meets business needs, especially as the organization grows or market conditions change.
  2. Utilize online and mobile banking tools for convenient account monitoring and management.
  3. Build a relationship with the bank to get a better service, valuable financial advice, and potentially more favorable terms or rates.
  4. Set up alerts for low balances, large transactions, or other important account activities to stay informed and proactive in account management.

Start Saving for Your Business

Money in the bank serves as one of the most crucial buffers against the unpredictable nature of business operations. A solid financial reserve can help businesses navigate tough times without disrupting the business’s core operations. In good times, this financial cushion can also be pivotal in capitalizing on sudden opportunities, such as investing in growth initiatives or taking advantage of favorable market conditions.

As with all business solutions, individual research is imperative. Every organization has unique requirements, and while certain options stand out in key categories, each business needs to conduct thorough due diligence to find the solution that best fits its specific needs. Once that’s done, all that’s required is to go in-store or online, provide a social security number and employer identification number (EIN), and get started building this invaluable asset.

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FAQs about the Best Business Savings Accounts

Q: Are there savings accounts for business?

Yes, there are savings accounts specifically designed for businesses. These accounts are tailored to meet the unique needs of businesses, such as higher transaction limits and potential for earning interest.

Q: Do businesses use savings accounts?

Many businesses use savings accounts to manage their finances. These accounts can help businesses save for future expenses, earn interest on surplus funds, and provide a buffer for unexpected costs.

Q: What is the best interest rate on business savings accounts?

The best interest rate on business savings accounts varies depending on the financial institution and the current economic environment. Be sure to shop around and compare rates from different banks or credit unions to find the most competitive offer.

Q: Do you pay taxes on business savings?

Generally, the interest earned on business savings accounts is subject to taxation. Businesses must report this interest income on their tax returns. The tax treatment can vary depending on the business structure (e.g., sole proprietorship, partnership, corporation).

Q: Where can I open a business savings account?

Business savings accounts can be opened at most banks, credit unions, and online financial institutions. 

Q: How many months of savings should a business have?

A common guideline is to have enough savings to cover at least 3 to 6 months of operating expenses, though some businesses may need more.

Q: Does FDIC apply to business accounts?

Yes, the Federal Deposit Insurance Corporation (FDIC) insures business accounts just like personal accounts. The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.

Q: Do business savings accounts pay interest?

Most business savings accounts pay interest. The rate of interest can vary based on the account balance, the type of account, and the policies of the financial institution. It’s important to read the terms and conditions to understand how interest is calculated and paid.