How to Accept Credit Card Payments at Your Small Business

Setting Up for Card Payments

The system that allows businesses to accept credit card payments is known as merchant services. Almost all banks provide these services to their business banking customers using third-party vendors. As Bizfluent1 explains, setting up a merchant services account involves buying or leasing a processing terminal (or using your own proprietary software, if you have one) that connects either to a telephone line, cable internet or wireless internet and entering a contract agreement for the processing service.

Your banker can connect you with their merchant services partner, who will help you choose the best point-of-sale card payment processor for your business, install the equipment for you, and provide you and your staff with in-person training. Typically, the system can be set up in one day. The more information you share with the merchant services representative about your customers and their spending habits, the better they can identify the program features that fit your business needs.

Card Processing Fees

Merchant services companies charge a fee per transaction. That fee is typically a percentage of the total amount of each transaction and depends on the card issuer, your company's industry, the average dollar amount per ticket (or sale), the total volume of your credit card receivables, and whether the transaction is made in-person versus online or by phone.

Visa and Mastercard, the most widely accepted credit cards, have a similar fee structure, while American Express has its own more expensive pricing grid. The less commonly used Discover card charges merchant services fees that are generally in line with Visa and Mastercard.

Credit card processing fees can be substantial, but they are a cost of doing business that should be weighed against the convenience to your customers and the opportunity for your business to make sales to those who prefer to pay by credit card.

Credit Card Transaction Trail

Understanding how credit card payments are processed — and how long it takes to receive the money after a transaction is processed — can help you better manage your company's cash flow. Anyone who has used a credit card as a consumer is familiar with what happens at the point of sale. When a customer's card is swiped or inserted into the terminal, or their card information is typed in, the data is transmitted electronically to the card issuer for authorization of the transaction. Seconds later, the terminal screen flashes either “approved" or “declined."

A primer from the Federal Trade Commission2 describes what happens in between. The merchant services processor (also known as the “acquirer") transmits the authorization request through a payment card network to the card issuer, which instantly checks the customer's account. The issuer transmits its response back through the payment card network and then to the processor to the merchant's card terminal.

Bizfluent3 notes that merchants usually close a batch of credit card sales somewhere between every few hours and every few days and then send them to their bank electronically. The money is typically deposited into the company's account within 36 hours of submitting a batch, often within 24 hours if the customer and the merchant use the same bank.

Your bank is an important business partner in helping you manage your receivables, including credit card payments. You don't need to sweat the technical and logistical details of this process when you already have so much on your plate. Let your Synovus banker connect you to the experts who will make the task easy.