As an entrepreneur, selling your product or service is a major part of business. Once you have your target’s attention and they agree to buy, one must be able to offer a variety of payment options. Long gone are the days of cash and carry, and some people don’t own any credit cards. Personal checks come with security risks, and take longer to receive the funds. But most people have a checking account, thus they have a debit card linked to that account. A debit card is convenient, because it allows the consumer freedom from carrying cash. It also allows the consumer to make a purchase and have it immediately deducted from their account. So, how does one accept debit cards?
The primary step is to obtain a merchant account. A merchant account is an account that links your business checking account with a debit card processing company. The company processes the purchase from the debit card and transfers the money into the merchant’s business account. The company may charge a transaction fee that can range from 1.5 to 3 percent of the purchase, or a flat fee. Some merchant accounts also charge a monthly fee in addition to transaction fees. Merchant accounts are offered through banks as well as independent providers. Many entrepreneurs employ the merchant account services of their business bank.
Once one has a merchant account established, one will need a debit card terminal. This is the same type of terminal used for processing credit cards. There are two ways of accepting debit cards – online or off line debit card transactions. With offline transactions the merchant swipes the customer’s card through the terminal, just like a credit card, and the customer signs the receipt. For off line processing, the debit card must have a Visa or MasterCard logo on it.
Online transactions require the merchant to swipe the card through the terminal, and the customer must enter their personal identification number on a separate PIN pad. Online processing is more economical because the merchant is charged a flat fee per transaction. Offline processing leads to a percentage charge per transaction. Terminals and PIN pads may be bought or rented from the merchant account provider.
Terminals aren’t the only option for processing debit cards. There are wireless options such as an 800 number verification service. Your merchant account provider may have an 800 number available where one can call in a debit card purchase and receive instant authorization. Only offline processing is available for this option. This option is good for mobile entrepreneurs who have limited or no access to electrical outlets to plug in terminals.
Internet businesses provide for merchant customer transactions where the two never meet. There are merchant account providers who specialize in processing payments over the Internet. An entrepreneur would link his website shopping cart to the merchant account providers system, and the transactions are processed immediately. With Internet processing only offline processing is available.
Today’s consumer has high expectations and demands of the merchants they deal with. They expect a high quality product at a competitive price with fast delivery. They also expect to be accommodated; no matter what payment option they choose. Debit cards are increasingly becoming a primary choice when making purchases. Are you ready for your customers? If not, another merchant is.
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