Options for Accepting Credit-Card Payments

The first question to ask yourself is, "Will accepting credit cards produce enough additional sales to at least cover the cost of processing credit-card transactions?" Fixed and variable fees make it possible to lose money by accepting this form of payment. Many store owners have stopped providing this service once the headaches and true expenses were realized.

Traditionally credit cards have been processed using a merchant account. Application requirements are extensive and qualifying for the lowest rate is tough nearly impossible. Many businesses get approved but end up paying 5% (or more) of gross because they aren't deemed to be 'good risks' even with a good credit rating.

Merchant accounts may be the most expensive route. Fees vary and are only limited by issuers' imaginations, like application fees in the $100's and $50 per chargeback. There's monthly fees ($20 for processing, $15 for statements) and issuers often keep part of each sale to build a reserve. Long-term contracts are usually required and early-termination fees apply.

The up side is convenience. Buyers like credit cards because they can avoid carrying cash and they don't have to wait for and worry about correct change. They can also continue to spend when they are broke. Swiping the credit card auto-starts the transaction. If approved, copies of the transaction are printed and ready for the customer's signature.

Thanks to Google and PayPal less costly methods are available with easier qualifying and no long-term obligations. Both services allow stores to email invoices (more practical for online businesses) and PayPal offers a 'Virtual Terminal' (less convenient - requires accessing a web page and completing purchase information).

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