Accounting Software and Credit Card Payment Processing
Credit card payments seem to be a wave of the future. When I read statements form the Internet like; “SVP of government affairs for the Financial Services Roundtable, says, “Credit and debit card services play a vital role in our economy. 70% percent of our GDP is based on consumer purchases, and credit cards and debit cards make that easy, safe and fast.” This has to mean something…!
For the business customer that does not currently take payment in the form of credit card, the industry seems daunting and laden with fears of fraud and high costs. Some of those are true realities, but taking a step back and following some tips and common sense can ensure the process to start accepting credit cards can be less painful and the business result can be extremely lucrative.
For business customers that already accept credit cards, they already know the reward and the administrative hassle when the business runs an ERP/Accounting System. Depending on the ERP/Account System, the capabilities to process credit card transactions within the ERP/Accounting System can be limited and expensive. There are other options such as third party solutions that specifically designed to work with certain ERP systems and merchant account providers.
For anyone who wants to start accepting credit cards as form of payment for services or goods, you will need a merchant account provider and or a gateway provider. Often, merchant account providers either own, or are aligned to existing gateway providers.
A business cannot transact credit card transactions without a merchant account and gateway.
A merchant account is essentially a bank account where your credit card transaction payments will be deposited. Merchant account providers will charge fees (%) per each transaction and depending on the transaction, the fees may change accordingly based on the level of risk the merchant account determines. Risk to merchant account provider? Well yes, the merchant account provider is responsible for collecting the funds from the credit card issuing banks. If the transaction is/was fraudulent, and the transaction funds have been deposited, and the business owner has withdrawn the funds, the merchant account provider assumes the risk.
Gateway providers electronically transact the credit card transaction between the issuing banks and merchant account providers. It is the gateway that allows communication to the issuing credit card banks to verify funds do exist in the customer account. Gateways also charge fees per transaction or monthly fees. Depending on the number of transaction per month, a customer my pay both monthly and per transaction fees.
As I spoke about merchant account and gateway fees, there are other fees that the credit card issuing bank changes. They are called Interchange fees. Everyone who accepts credit cards pays Interchange fees above any merchant account/gateway fees. Merchant account providers and gateway providers do not have control or receive any revenue from Interchange fees. These fees are simply the industry standard monitored by the federal government or within the governing body of any country where merchant account is located.
Payment processing solutions integrated with existing ERP/Accounting systems do exist. If the manufacturer/developer of the ERP/Accounting System does not offer a built-in solution, there are many third party software developers for each major ERP/Accounting Systems manufacturer. Payment processing software add-on’s can save the business owner hours if not days in time and several thousand dollars in money depending on how the business currently enters the credit card transaction data back into their ERP/Accounting System. This is one of main benefits in payment processing solutions that integrate with ERP/Accounting System. Often the payment processing software will offer further tools for mass credit card processing or recurring payment processing. The advantages of automating through software are a great benefit for any business customer who has many customers and many transactions per day.
Choosing the software to purchase is more a reality of finding out who offers the solution. Although this is one of the newest types of payment processing solutions, there are at least one or two you can use that fully integrates with existing ERP/Accounting Systems. Seek help from your business partner that installed your existing ERP/Accounting Systems. Choose wisely as you will need to select a provider that is already PCI Compliant. If you currently process credit cards, expect that you may need to switch merchant account providers when choosing a specific payment processing software solution.
In choosing a merchant account provider it’s matter of understanding what your needs are now and in the future. The merchant account industry is hyper competitive which results in low rates for everyone. The most important aspect in your decision, is what other services does the merchant account provider provide? You may want to integrate into an ERP/Account System or you may need recurring payment solutions; each merchant account provider should fit within your needs and grow with your business. Always ask the merchant account provider to walk you through the merchant account contract and especially Schedule A, which lists all fees and when they will be charged. Knowledge is power and you should do everything possible to stay informed.
As mentioned, the gateway often is part of the merchant account service. Often the customer does not have a choice of gateway as merchant account providers do get a small portion of the revenue as part of their alignment of that gateway. Where you can choose a gateway only service may be through utilizing software to automate your payment processing needs or if the gateway cannot process your payment based on any rules/policies that the gateway provider may have. Fortunately, the merchant application process will highlight any potential roadblocks that may occur.
Payment processing solutions for any business is always a good idea. Before taking any initial steps in either accepting credit cards or installing payment-processing software, take a look at you own sales transactions. Estimate that fee’s can affect your revenues, but payment-processing solutions offer the ability to sell more goods and services and recognize your funds quicker. As in the old business philosophy, “You need to spend money to make money”. Payment processing solutions certainly fit in that philosophy.
Article by:
Carlos Balagat
Director of Business Development, Paytelligence
carlos@paytelligence.com
www.paytelligence.com
(800) 955-3060 Office
For more information please contact Rick Chase 800-294-2900 x 111
Tags: Credit Card Processing