How a Home-Based Business Can Accept Credit Card Payments

Simple Steps to Accepting Credit Card Payments

Female design professional using mobile card reader with digital tablet
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Getting paid by credit card makes a home-based business more attractive to its customers. They'll appreciate the convenience of charging their purchases, and your sales may increase -- even skyrocket -- because they can make impulse purchases more easily when they pay for them instantly. Justly or unjustly, the ability to accept credit cards gives home-based businesses more credibility and the appearance of being more established than those that accept only cash and checks.

Getting paid by credit card can make your business life easier, too. Payments can't bounce as checks do when a customer's account holds insufficient funds. You’ll know as soon as you process the payment whether your customer has a balance that can cover the cost of the transaction.

Some home-based business owners are intimidated by the process of accepting credit cards or worry about the associated fees, which used to be outrageous. But the growing popularity of e-commerce and the power of the Internet have created new options for home-based business owners. Today, accepting credit cards isn’t all that difficult, and the increased sales volume and other benefits almost always outweigh the costs business owners incur for this capability.

Get a Merchant Account

You’ll need a merchant account to get started. This is where your credit card payments will be deposited. You have three options: You can use a bank, a third party provider like PayPal, or an independent sales organization.

Businesses with low sales volumes generally pay the least with third party providers because of the absence of monthly fees, but this arrangement also results in the longest waiting times to actually receive the funds. Businesses with higher sales volumes pay the least with banks or an independent sales organizations because the discount percentages per transaction are lower than those offered by third party processing companies.

Getting approved for a merchant account with a bank can be difficult, however. Many banks refrain from providing credit card processing capabilities to home-based businesses, particularly online businesses that lack a brick-and-mortar counterpart. Consequently, most home-based business owners are best suited to working with independent sales organizations that are affiliated with banks that encourage business relationships with home-based merchants -- even those with less-than-perfect credit. Many independent sales organizations allow merchants to use cosigners who have better credit.

If you work through a bank or independent sales organization, your home-based business owns its merchant account, so your company’s name will appear beside the purchase amount when customers receive their credit card statements. If you work with a third party provider, the provider's name appears on the statement. Customers are less likely to recognize this name and may initiate chargebacks as a result – an expensive, losing proposition for your business.

Processing limits tend to be more generous with banks and independent sales organizations. Many third party processing companies place a lower cap on the monthly volume and the highest ticket amount.

As your business grows, you should anticipate a higher transaction volume. Lower processing limits can preclude you from accepting credit cards over a certain threshold level, constraining your business’s growth and cash flow.

Working through an independent sales organization is the best way for home-based business owners to get paid by credit card in most cases, but it can depend on your specific circumstances. Many merchant account providers have special packages for home-based businesses, so take the time to shop around for the best deal.

Get Paid By Credit Card

Now that you have a merchant account, you need a way to actually accept credit card payments. If your home-based business has its own website, consider setting up an Internet gateway with a shopping cart. Incorporating a shopping cart that includes the product catalog and purchasing interface into your website provides the most convenience for your customers.

It also results in fewer lost sales because customers won’t be redirected to other sites for payment, during which time they may change their minds.

You can use a virtual terminal if you don't have a website. This requires logging on to a third party website and entering your customers’ credit card information for payment authorization. Services like DialPay allow you to use a touch-tone phone to enter the credit card information and receive immediate notification of sufficient funds.

You can also purchase or lease the equipment necessary to swipe credit cards in your own home if you usually interact with your clients in person.

Comparison Shop

You're well on your way to getting paid by credit card when you have a merchant account and a shopping cart or similar technology for processing payments. A variety of companies cater to home-based businesses and will do everything they can to help you through the process. Take your time and shop around. Make sure you understand all the associated fees. Compare deals until you find the one that best suits your specific needs.