Q: Does my small business need to accept credit cards? Can't I just accept cash only?
A: Some businesses only accept cash payments, but before you decide on this business model, consider how your customers prefer to pay. If your customers don't carry cash or they prefer to pay by credit or debit card, you may lose sales if you only accept cash. According to the 2018 TSYS U.S. Consumer Payment Study, only 14% of consumers prefer to pay by cash, while 26% prefer credit cards and 54% favor debit cards.
Q: Can individuals accept credit cards?
A: Although all full-service payment processing companies and many mobile credit card processors require their customers to be actual businesses, a few mobile processors – like Square and PayPal – also work with individuals and allow them to use their services for things like garage sales and fundraisers. Another provider, SumUp, works with sole proprietors – even if their businesses are very small, such as crafters who sell at local events a few times a year.
Q: Is mobile credit card processing safe?
A: Data security is a top concern for the payment industry, and mobile processors proactively comply with the Payment Card Industry's Data Security Standard (PCI DSS), which has proven effective in discouraging hackers. According to one study, 96% of merchants that experienced data breaches in 2011 weren't PCI compliant.
Mobile card readers use tokenization and point-to-point encryption to securely capture and transmit payment data, and many are now EMV compliant. EMV adoption has been a significant force in the war against fraud; Visa recently announced that EMV-compliant merchants have seen counterfeit fraud losses drop by 87%.
Q: What is the best iPhone credit card reader?
A: The best credit card readers for Apple phones and tablets have both EMV and NFC technology so you can accept chip cards and contactless payments – including both contactless cards and mobile payments like Apple Pay and Google Pay. Usually, these credit card readers attach to your iPhone or iPad via Bluetooth. Most of the time you'll need to purchase one, as the free swipe reader that the mobile credit card processors give you only read the magnetic stripe on cards – not the EMV chip – which leaves you open to liability if you inadvertently accept a counterfeit credit card. Swipers also lack NFC capabilities, which may frustrate your customers who prefer to use Apple Pay.
The swipers usually have a headphone jack that plugs into your device, so if you have an iPhone 7 or newer, you'll need a Lightning adapter in order to use it. Square offers a newer credit card swiper for iPhone that has a Lightning port, but it can still only be used to swipe a card with a magnetic stripe, so you'll want to plan on upgrading to an EMV/NFC card reader.
Q: How can I save money on mobile processing?
A: Mobile credit card processing companies that post their rates and fees online usually don't negotiate their rates and fees unless you process a high enough volume of transactions each month to qualify for volume discounts or custom pricing.
However, there are things you can do to lower your mobile credit card processing costs or ensure that you're getting the best possible rate. Flat rates make it easy to calculate exactly what you'll pay for your processing, so if you know your average sales ticket size, you can do the math to figure out which mobile processor will save you money. Generally, the following guidelines apply:
- If you have large sales tickets, look for a mobile credit card processing company that has lower percentage rates, even if that means you pay a per-transaction fee.
- If you have small sales tickets, look for a mobile credit card processor that doesn't charge per-transaction fees. The percentage rate will be higher, but it will still be less expensive.
If your business is seasonal, a processing company that has pay-as-you-go or month-to-month terms with no monthly minimum can save you money, since you won't be paying fees for a service you aren't using during the offseason.
Also consider the cost of value-added features in your calculations. For example, some payment facilitators provide you with free POS software as long as you use their processing services. If it meets your needs, calculate whether it would be cheaper than subscribing or purchasing POS software elsewhere.
Q: What is the difference between a mobile credit card processor and a full-service processor?
A: As a small business owner, you may wonder what the difference is between a mobile credit card processor and a full-service one, and which one is the better fit for your business. Both types of processors can set you up to accept payments using a mobile device, but there are some key differences that can affect your costs, commitment length and overall satisfaction with your account.
The biggest difference between the two is that a full-service processor sets you up with your own merchant account, while a mobile processor sets you up as a submerchant under its master merchant account.
A submerchant account is faster to set up and has minimal application requirements. There's usually not a contract, many don't charge any monthly or annual fees, and the processor takes care of PCI compliance – which are all good things. The downside is that mobile processors have less risk tolerance . If there's something abnormal about your account, such as a sudden spike in your monthly processing volume, or a transaction that's much larger than average or otherwise looks suspicious, the processor may freeze your funds or suspend your account. There are also some industries that mobile processors consider high-risk and don't work with, so you'll want to read the user agreement before signing up to make sure your business type is supported.
Another difference is that some mobile credit card processors, such as PayPal and Square, allow individuals to sign up for accounts, which may be useful for solopreneurs, freelancers, and very new businesses that are still getting set up and may not yet qualify for an account with a full-service processor.
Generally, mobile processing is the most cost-effective payment processing solution for businesses that process less than $3,000 per month because, in most cases, you pay as you go for the processing services you use and there are no monthly or annual fees. It's also a good solution for businesses that don't yet know what their monthly processing volume will be. The trade-off is that you pay higher transaction rates than you'd pay a merchant services provider. If the processor only charges a percentage for each transaction and doesn't tack on a flat per-transaction fee, it's also an affordable option for businesses with low-dollar sales tickets – even those processing well over $3,000 per month.
Mobile credit card processing has minimal hardware requirements, so you can start accepting credit cards with very little upfront cost. If you already have a phone, the only processing equipment you need to buy is a mobile credit card reader. These cost under $100 (and often $50 or less) for a model that can accept chip and contactless cards as well as mobile wallets like Apple Pay and Google Pay. With just your phone, the free mobile processing app, and the card reader, you can ring up sales and accept card payments wherever you do business, whether you're at a job site, a trade or truck show, or even your brick-and-mortar location. As your business grows, you can purchase peripherals like a receipt printer, cash drawer, barcode scanner and tablet stand.
Established business owners have the option of working with a full-service processor and adding mobile credit card processing to their account or working with a mobile processor. Their employees can then use mobile card readers with tablets or phones as line busters to speed up the checkout process or, for restaurants, to accept tableside payments.
If you decide that a mobile processor is the best fit for your business, our reviews can help you identify the companies you want to learn more about, but you'll still want to contact the companies directly to verify that you have the pricing and terms that apply to your specific business. This call will also allow you to feel out the quality of a company's customer service. Finally, before signing up for an account, you should read the user agreement or contract to make sure that the processor works with your business type and the items or services you sell aren't prohibited.
If you prefer to work with a full-service processor, see our credit card processing review for our recommendations. Our point-of-sale systems review is another helpful resource to check out if you plan to add this technology to your business.