Friday, August 30, 2013

Which Credit Card Reader is Right for Your Small Business?

If you’re a small business owner, one of the easiest methods of accepting payments today is through a smartphone credit card reader. Although originally popular for those with a pop-up business or food truck, use of these devices is becoming increasingly ubiquitous in small businesses of all types.

While Square was the first on the market and now accounts for over $8 billion in transactions nationwide, a sea of contenders are now available, each powered through the audio jack of your phone or tablet. Major banks, such as Bank of America and Chase, have also come onto the scene, adopting the simpler fee structures of their competitors.

Card readers allow for fast and secure payments on the fly, but not all readers are alike. Although each reader is free to order, all have slightly different terms and fee structures, so it is up to each small business owner to decide which is most appropriate for their needs.

Slightly larger than a quarter in size, Square offers a user friendly interface with two fee structures. For most, the 2.75% per swipe fee is best, whereas high-volume businesses may take advantage of the $275 flat monthly fee, as long as item prices are under $400. Transactions are deposited into your bank account each evening. Though its per swipe fee is slightly higher than its competitors, Square offers an advanced “Square Register” system and marketing opportunities for its clients. Also, for high-volume businesses, its monthly flat fee can’t be beat.

Paypal Here integrates into PayPal’s widely used payment ecosystem, which allows for funds to be used instantly online. This can be preferable for small business owners who want immediate access to their funds or e-commerce merchants who already use Pay Pal to process sales. Pay Pal’s per-swipe fee is 2.7%, as oppose to Square’s 2.75%, no matter the volume or price of items. Though PayPal advertises their fee rate at only 1.7%, this only applies if you use your funds with their free debit card.

Intuit GoPayment charges 2.75% on all swipes or you can decrease the swipe fee down to 1.75% with a $13 monthly fee. In order to justify the monthly payment more than $1,500 a month of goods should be sold. One of the advantages of this system is that it easily integrates into QuickBooks for greater convenience. Funds are available in 2-3 business days, which is considerably slower than its competitors.

If you want to minimize the number of accounts you manage, you may want to look into your bank’s mobile pay options, which link directly with your business checking account. For example, Bank of America offers their own reader for a competitive 2.7% per swipe on most cards; American Express rates will vary depending on various factors.

*Though every attempt has been made to insure this information is accurate, please do your own proper research to identify which is best for your needs.

When choosing a smartphone credit card reader it is important to consider your gross monthly sales, in addition to how quickly you require access to your funds. For low-volume businesses all options are relatively comparable. When sales exceed $1,500 a month GoPayment may be ideal, whereas sales in excess of $15,000 may merit Square’s flat monthly fee. If instant access to funds is a priority Paypal Here may be best. Finally, consider your banks offerings, as they may be more willing to work with you to keep your business within their ecosystem of services. Regardless of your selection, each offers an easy way to process payments from your pocket!

1 comment:

  1. Great post! Thanks for sharing this! Very informative. I'm sure this is very helpful for other people too who are into payment processing programs.