Payment Processing Tips for Small Businesses
In a tight economy, small businesses are finding it increasingly necessary to offer their customers a payment card (credit/debit) option. Here are a few tips for small businesses about payment processing:
Choose a technically savvy and financially stable payments provider. Due to product complexities and ongoing investment in infrastructure and security, payment systems have moved from being bank owned to technology providers that can vary in size, depth and trust.
Consider what are your needs and identify providers that process the forms of payments (credit cards, debit cards, ACH payments—which include direct deposits or e-checks—check services and gift/loyalty cards) and methods (retail point-of-sale, Web, phone, mobile, check scanner) that fit those needs.
Look to maximize sales channel opportunities. You can "close the sale" by being accessible in all the places your customers want to buy: over the phone, on the Web, at a trade show, in the field, etc. Forcing customers to call or go into a store to make the sale limits sales opportunities.
Embrace credit cards. Credit cards can be more expensive to accept than cash or checks, but some customers prefer only to use credit cards. Asking customers not to use a credit card can mean sacrificing repeat sales. Additionally, business-to-business (B2B) shops can pick up new customers by being credit card friendly, and are well positioned as a first alternative when a competitor is out of inventory.
Integrate payments data with the accounting system. A best practice is integrating payments acceptance into your accounting system. Not only can this eliminate the inaccuracy of manual data entry, but it can also reduce days sales outstanding (DSO) and enhance your audit and compliance positions.
Establish a check payments strategy. As e-payments replace more and more checks, don't lose sight of the potential increased exposure with fraudulent checks. Converting paper checks electronically to ACH, checks-by-phone, Web, Check 21, and check guarantee can increase cash flow and mitigate losses.
Focus on becoming PCI-compliant and scanning your PCs. Payment Card Industry (or PCI) compliance is a requirement of all businesses that interact with credit or debit cards. PCI compliance ensures that you are up to date on the latest best practices to protect your business and your customers from card payment fraud. And, just as you use antivirus software on a PC, you should use security vulnerability software that scans a PC for potential security leaks.
Understand the importance of end-to-end encryption technology. End-to-end encryption (E2EE) starts with payment capture devices, and goes all the way to the transaction's being authorized. E2EE prevents the card account data from being stolen electronically, and lessens the cost and impact to become a PCI-compliant business.
Understand the importance of mobile payments. This involves more than just a smartphone that can accept a credit card payment, or a mobile phone that replaces a credit card in making a purchase. It's also about delivering information and marketing activities, such as offering coupons through an array of mobile devices that build customer loyalty.
Attention to the tips presented above will go a long way towards helping your small business offer payment processing options that are a win/win for you and your customers.
The preceding was adapted from an article of the same name by Greg Hammermaster that appeared in the Journal of Accountancy. Copyright 2010. American Institute of Certified Public Accountants, Inc. All rights reserved. Used with permission.
