2018 — One of the best things one can do to increase sales as a small business owner is to get a merchant credit card account. Most customers want to pay by credit card, and if you have a business that sells stuff nationwide, or internationally, to buyers you don’t see in person, offering a way to charge it is an absolute necessity.
You basically have two choices: 1) apply to a bank for a merchant account (the hard way), or 2) get an account via an online platform such as Stripe (the easy way. With a bank such as Bank of America, as a self-employed person or a new business, they will probably ask you to fill out a detailed application with your personal guarantee in case your business goes South, plus 30 pages of financial information, including your last two years of business tax returns, plus a profit & loss statement for the past six months. Then they will review your application for a few weeks, and if you are lucky, approve you for a credit card account. What a hassle. If you do get approved, they may offer next day clearing of charges, and charge you a monthly maintenance fee and about 1.8-2.0% fees (the discount rate) deducted from each sale. You’ll need a terminal to process transactions for a brick & mortar business.
There is another way. Apply online with Stripe, skip all the tax forms and paperwork, and get approved in most cases, ready for business, the same day or within a day, for credit or debit cards. The “discount” rate on sales may be slightly higher than a major bank (2.9%, international credit cards add 1%), and your charges will clear and funds made available in two days instead of one. There are no set-up fees and you get real-time reporting. No credit check. They offer a cloud-based platform and fraud detection. Stripe works with financial institutions, regulators, payment networks, banks, and consumer wallets so businesses who run on Stripe don’t have to. I know which option I’d take. Door #2 for me. Easy peasy.
If you have a mail order type online business where you don’t see the customer in person, the big banks consider you more risky than a brick & mortar business with a physical location, meaning there’s a good chance you’ll get turned down. Not so with Stripe.
Stripe.com lets you enter the client’s credit card number, expiration date, address and email online via a “virtual terminal”. Yes, you can issue refunds there too. A typical transaction may take 2 minutes.
If you have a business where you are out of the office when dealing with customers and are not near a PC (i.e. a fitness trainer, mobile pet grooming service, etc.), you may want to get a Square Point of Sale Magstripe Reader that plugs into your smartphone. With Square’s credit card processing, you can accept all major cards and get deposits as fast as the next business day. Connect a Square Reader to your device or slip an iPad into Square Stand to take payments at the standard rate. The fee is 2.75% of the sale amount. No monthly fees, chargeback protection, same rate for all cards, deposits in 1-2 business days, phone support. Apply and sign up in minutes online. No credit checks. Again, easy peasy. See Squareup.com for sign-up and more details.
Why deal with the bureaucracy of big banks if you don’t have to?
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