How Do Your Customers Pay?

For good or for bad, consumers prefer to carry credit and debit cards rather than cash. Some do it for conveniences sake, others don’t like carrying a lot of cash for fear of theft or loss. It doesn’t really matter why. What matters is that Indiepreneurs must have a method for accepting credit cards or risk turning customers away — a lot of customers away.

It’s important, first off, to get straight on the terminology when it comes to merchants and credit cards. A merchant account is the service of actually processing the credit card for funds — the bank transfer, if you will.

Getting and sending information to that merchant account to be processed is an entirely different service known as payment gateways. Yes. There are more and different fees for payment gateways. And, yes again. Those fees can be steep. You must 1) know all the costs to you for accepting credit cards and 2) you must factor that cost into your product(s) price(s).

An analogy that may help you understand a bit more is writing a check as a consumer. The bank will process the check, sure, but you have to pay to get the checks printed with your name and account number. The bank doesn’t supply you with checks, right? Well, not FREE anyway … not MY bank!

While there are a number of options for accepting credit cards online (which will be discussed in an upcoming installment of Lovely’s Journal) where one can avoid the merchant account, it’s impossible to avoid when accepting credit cards in person. In fact, selling in person requires an additional pieces of equipment, credit card machines.

As a dealer in an antique mall, the antique mall has the machine and the merchant account — but if I want to accept credit cards at flea markets or antique fairs, I’ll have to have a merchant account and my own machine.

There are also different types of machines:

Those that need to plug into a phone jack — a problem out in the middle of a field or barn.
Those old paper imprint machines — a problem because cards are not instantly approved. You’ll get stung with declines, mark my words.
And a new modern mobile version — apps that turn your iPhone or Blackberry into a machine. If you’ve got wireless, you’ve got credit accepting capabilities.

Merchant Warehouse is a good online (dare I say 2AM?) source to do research on the mobile solutions as well as standard credit card machines.

There are machines out there that accept credit cards and checks. For an additional fee (are you surprised?) you can set up your merchant account to process checks, too. Personally, I don’t find many people who carry check books anymore, so I find it an unnecessary expense.

Another personal comment, I have to admit that I hate credit card companies. I hate the rates they charge me as a consumer. I hate the fees they cost me as an Indiepreneur even more. It chaps me to no end that banks take a cut in practically every transaction between merchants and customers. Not only does it drive up the cost of goods and services, credit card companies are shysters. Sorry, that’s just the way I feel. Filling contracts with legal mumbo jumbo is just one example. If you think consumer contracts are bad, just wait until you see the pages of fine print in a merchant account contract.

Nevertheless, if I’m an Indiepreneur who wants to turn a profit, I MUST accept credit cards. But I could always give customers who pay cash a discount. Maybe we can change consumer habits one discount at a time?

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