Home Business Basics: How to Accept Credit Cards

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    According to Money Magazine, someone starts a home-based business every 11 seconds. Of these startups, over 20% will build yearly revenue of over $100,000- but over half will shut down before they even reach the 1-year mark. How can you take steps to make sure that your home-based business makes it through that first year and beyond?

    Whether you're selling products online, performing business services (bookeeping, online marketing services) from home, it's always a good idea to make payment as easy, fast, and reliable as possible. You can do this by setting up a merchant account to accept credit cards. According to one survey, over 70% of American adults have at least one card that they use "regularly." Credit card processing isn't just for online or retail businesses- professionals like architects, CPAs, and interior designers can accept credit cards as payment for services fairly easily. Here's a quick overview of your options when it comes to accepting credit cards:

    Merchant Accounts
    A merchant account allows you to accept customer payment. They're linked to processing software (if you accept cards online) or to a credit card terminal if you plan to accept cards at farmer's markets, trade shows, concerts, or craft fairs. You'll need to apply for an account before you can accept payments- it usually takes a few days for the approval process to be finalized.

    Online Providers
    If you accept payments online or on your website, an online provider is a good choice. Here are a few things you should consider when looking for an online provider:

    Software: You've probably seen credit card terminals at retail stores- "gateway" or processing software performs the same function- collecting credit card information so that it can be verified with the card issuer. If you use a popular service, such as PayPal, chances are you'll be able to integrate the processing tools with minimal adjustments to your site. Many accounts work with existing business software, such as QuickBooks. Most online providers offer merchant account services and processing services as a "bundle," while some charge for the software. Make sure you're aware of all costs.
    Security: The software you use will usually encrypt credit card information so that it can't be "hacked" or stolen. Make sure the provider you use has strict security measures in place.
    Rates: Merchant account providers (whether online or those that use credit card equipment, such as swipe machines) charge per-transaction for services, usually a set amount plus a percentage of each transaction, or a set percentage of each total sale. It pays to shop around and get the best rates for your product offerings- businesses with inexpensive products might be better off with a rate structure that calculates fees based on a percentage of each sale alone. The best rates are reserved for those businesses with a stable financial history and high sales volume. Don't despair if you aren't approved for the lowest rate possible- you might be able to negotiate your terms in the future as your revenue grows.

    Credit Card Processing Equipment
    If you process cards online, you won't need a terminal or a swipe machine. However, if you accept cards at local events, markets, or trade shows, investing in a swipe machine is a smart idea. Merchant account providers generally charge less for swiped, or magnetic, transactions, because there is less risk of fraud- using a machine usually results in significant savings. Most mobile terminals use a wireless internet connection or a phone line to transmit information to the merchant account provider, so make sure the venue you plan to sell at can accommodate whichever method you choose.

    Accepting credit cards is one of the easiest ways to ensure that customer payment is fast, reliable, and convenient. Research merchant account providers and compare the rate structures of several different services before making your choice.