Payment processing for new businesses

All businesses share a lot of common goals, whether you’re running a contracting business or selling succulents online. One of those basic shared goals is managing your cash flow. To get paid, you need to be able to accept payments. That may sound basic. Once you dive in, however, you begin to realize that payment processing for small businesses has a lot of moving parts that can get complicated at times.

That’s why for business owners, especially the ones hanging shingles for the first time, it’s important to have a good understanding of what payment processing is and everything that goes along with it to achieve your business goals. And there are a lot of factors to consider for accepting payments. Will you mostly be accepting payments online or in person? What kind of technology is needed? Is that technology secure? And how do you deal with the fees associated with accepting payments?

It sounds like a lot, but we’re going to cover the basics, defining what everything means as well as offering up ways that an innovative payment system can keep your day-to-day operations running smooth while providing your customers a simple and easy credit card processing solution. So, let’s get started.

What is payment processing?

Your business provides a good or service, you accept payment from your customer, right? Well, it seems simple, but there are actually a lot of things going on in the background of payment processing.

When a customer places an order for a product or service, you are at the point of sale (POS). Payment methods at a point of sale can include a debit or credit card, cash, check or other digital forms of payment that are becoming increasingly popular.

Then, a payment gateway takes the payment data presented by the customer, encrypts the data and sends it off to the payment processor.

Next, a payment processor facilitates the payment, making sure the customer has enough credit to pay for the product or service. The issuing bank will accept or decline the payment.

If the transaction has been approved, the payment processor will settle the payment funds to the merchant's depository bank account.

Payment processing security and compliance

You have to protect that payment data provided by your customer. When it comes to protecting the cardholder data of the customers you accept payment from, the bulk of responsibility is often on the business owner. And with potential fines, fees, loss of income and a hit to your business’s reputation on the line, you want to make sure you have a solid payment processing solution in place to protect you and your customers.

Make sure you’re covered by checking that your payment provider offers encryption and tokenization to best protect you and your business.

Encryption: When a payment card is swiped or inserted, encryption protects the card data as it travels across various systems and networks until it is decrypted at a secure data center.

Tokenization: Tokenization replaces cardholder data with a unique token value that is substituted for the payment data in the processing environment for use in subsequent transactions. The sensitive cardholder information is inaccessible should a breach event occur within the business's payment acceptance environment.

Check out Elavon Safe-T security solutions to learn more about how we can help keep your business and your customer's information safe.

Credit card processing fees

Credit Card processing fees are fees that are attributed for payment transactions accepted at your business. Common processing fees include:

Interchange fee — A charge collected on behalf of the payment card network on every transaction where their card is used to make a payment

International fee — This world-traveler of a fee is charged on non-U.S. issued payment cards presented as a form of payment to businesses located in the U.S.

Chargeback fee — This payment card fee applies when the customer or their card issuing bank dispute a payment transaction claiming fraud or faulty goods or services and perhaps non delivery of same. It’s basically the bank’s reversing the original card payment back to them, which you do not want.

Now you have a good sense of all the challenges within the payment processing landscape.

Technology solutions

When it comes to running your business efficiently and effectively, make sure you do your homework to find the right payment solutions partner to keep your business (and your payment revenue) moving in the right direction. Technology plays a huge factor in successfully accepting payments. Here are some of the ways technology can work for your business.

Payments in person are one of the most familiar ways of accepting payment. Even though this method of payment is almost as old as commerce itself, in today’s retail environment, you need payment solutions for the ease and convenience of your customers. These options can include tablets, countertop devices and even smart terminals, depending on your business’s unique needs.

These days, a majority of companies use some type of online payment solution, even if a fair share of their business is done in person. These in-store payment options can include web-based virtual terminals, in-app payment integration and digital wallets.

Explore all of Elavon’s payment solutions.

While it may seem daunting, especially for a new business owner, the good news is there are answers out there. Just make sure you’re looking into the right solution. To make sure you are prepared, here are 20 questions to ask before committing to a payment processor. That should give you some helpful options to get your business on the right path!

To find out more about how Elavon can give your new business a boost, contact us.