How to Accept Card Payments in Person

The imminent ‘death’ of cash is sometimes over-exaggerated in the media, but there’s little doubt that, in the 21st century, if you want to maximise your revenue, you need to have the widest array of payment options possible available to your customers. The days of being able to insist on customers paying cash (or even specific brands of credit card) are just about over, and businesses that don’t move with these times will find themselves missing out on valuable business.

Ways to Accept Card Payments in Person

Card payments have been an option for retailers since the 1970s, but the technology has changed enormously since then, with a plethora of options now available for customers, who are increasingly expecting retailers and traders to offer the widest selection possible.

Traditional Card Machines (Chip and PIN)

A Chip and PIN card is a type of credit card that requires the cardholder to authorise the transaction by entering their personal identification number (PIN). Chip and PIN cards are less susceptible to fraud than previous generations of debit and credit cards; they’re more difficult to clone and can hold far more information than traditional magnetic strip cards. The big drawback is, well, human fallibility. Customers can’t use Chip and PIN if they can’t remember their PIN, and some may have issues with doing this.

Contactless Payments

Chip and PIN was seen as something of a wonder of modern technology when it was first introduced in 2004, but ways of making payments have only become faster and more convenient for customers since then. The benefits are numerous. They’re faster, so queues are less likely to build, easier and more convenient for customers, while retailers also benefit from there being no additional processing fees associated with contactless payments. But there are also security risks–because contactless payments require neither PIN nor signature authorisation, lost or stolen contactless cards can be used to make fraudulent transactions–while contactless payments remain limited to purchases of £100 or less.

Mobile Payment Solutions

An increasing number of customers now tie their credit or debit cards through the digital ‘wallet’ on their mobile phones. This removes the need for them to take their wallet or purse with them when they go shopping, and having another layer of convenience is a big driver for businesses starting to accept them. However accepting mobile payments means investing in terminals capable of handling mobile payments, while there remain some security risks associated with them.

Online Payment Gateways for In-person Transactions

Payment gateways such as Paypal Payflow act as an intermediary between the merchant's website or point of sale system and a payment processor. It provides a secure and convenient way for customers to make online or in-person payments. Payment gateways typically support multiple payment methods, including payment cards and E-wallets. These can be easily integrated into websites or online stores and offer a secure and user-friendly payment processing solution for customers, but they can also be expensive–with both monthly fees and individual transaction fees–while the customer service in the event of any problems can be patchy. If anything goes wrong, you’ll likely be limited to email only in order to deal with it.

Choosing the Right Payment Processing Equipment

It’s essential for a company to choose reliable payment processing equipment. Reliable payment processing will greatly impact the efficacy and success of sales transactions. Your company and your customers can mutually reap the rewards of a trustworthy payment processor that makes the payment process safe, simple, and hassle-free. For taking payments in person, you will need a POS (Point-of-Sale) system and a card reader, but what combination you want depends very much on what you intend to do with it.

POS Systems

‘Point-of-Sale’ has more than one meaning in retail, but in this case, we’re referring to systems of hardware and/or software that facilitate customer purchases for businesses. Modern POS systems are highly sophisticated. They can update inventory, track sales, print receipts, scan barcodes and QR codes, clock employees in and out, run reports on sales and other analytics, and manage customer accounts and rewards.

Card Readers

The card reader is a component of the POS terminal. It transmits payment information to your payment service provider and then receives the information back confirming that the payment has been approved. Card payments can be completed contactlessly, using Chip and PIN, or with a card’s magnetic stripe, and many now also accept digital wallets too. They are secure, near-universally accepted, and make tracking and reconciling payments easy. And you may not need all the bells and whistles. A bricks-and-mortar retailer such as a shop or restaurant would require a full POS terminal, but if you’re a sole trader such as a builder, taxi driver or hairdresser, you may find that just a card reader and some software on your mobile phone is all you need.

Setting Up Secure Payment Processing

The specifics of what you need to do in order to set up secure payment processing will depend on the specifics of your business needs, but broadly speaking you’ll need to follow these steps to get yourself set up properly:

Understand Your Customers

In order to set up in-person payment, you first need to understand what payment methods best suit your customers. Not all customers are created equal; some prefer the speed and convenience of contactless payments or digital wallets, while others may prefer to pay by card in a more ‘traditional’ sense. What works best for them will ultimately work best for you.

Understand Your Business

Digital wallets have no specific limits, but contactless payments remain limited to a maximum of £100. Can you invest in NFC-enabled terminals for digital wallet acceptance or card readers for card payments?

Choose a Payment Service Provider

The job of a payment service provider is to take your customers from the initiation of a payment to its acceptance or refusal in the quickest possible manner. A good PSP should support all major credit and debit cards, digital wallets, local payment methods, online banking, and more. You’ll reach more people and improve the customer experience if they can also pay with digital wallets such as Apple Pay, Google Pay, Click to Pay and PayPal.

Implement Security Features

One thing to keep in mind is that when you create your own payment gateway is that you’re legally responsible for all cardholder data, so the security of your customers' data should be a top priority when choosing payment methods. Ensure that any digital payment methods you choose have robust security measures in place and are compliant with relevant financial and data protection regulations. You’ll also need to follow all PCI DSS standards if you’re handling credit cards.

Obtain the Required Certifications

Apart from PCI auditing, you’ll have to apply for 3DS certification from EMV (Europay, Mastercard, Visa). This international certification is required to process customer bank cards containing a chip.

What Are PCI DSS Standards?

PCI DSS stands for Payment Card Industry Data Security Standards. They are a set of general practices–governed by the major credit card companies–intended to ensure that cardholder information is transmitted, stored and handled securely. They set out the technical and operational requirements for any organisation that accepts or processes payment transactions, as well as manufacturers and developers involved in the production of devices or applications that are used in these transactions.

Understanding Payment Processing Fees

All of this convenience comes at a cost, and it is absolutely critical to the profitability of your business that you understand these costs if you’re to successfully make the transition to accepting the widest range of payment methods possible. These fees are, broadly speaking, divided into two types; those incurred for each specific transaction and monthly or one-off costs charged for payment services and hardware.

This can start to get complicated (and there is a near-endless variety of payment fee permutations), but as a baseline, you should expect the charge to work out at around 3% per transaction; while this might not sound like much, these fees can soon start to mount up over time. Card processing fees charged for each transaction are bundled into one charge known as a Merchant Service Charge, and these can be split into three components:

Acquirer Fees

These are the card processing fees charged by the acquirer to cover their fees and profit margin. They are also known as the acquirer markup or processing fees. Acquirer fees are variable and can be negotiated down, so it's hard to give a typical processing fee as they vary considerably, but as a rough guide, most processing fees would be between 0.8% and 2.6% per transaction.

Interchange Fees

These are the card transaction fees that card acquirers pay to issuers each time a card is used to buy goods or services. They are normally a fixed percentage and non-negotiable. Typical interchange fees are 0.2% for debit cards and 0.3% for credit cards for UK consumer cards, but these rates are normally higher for commercial cards.

Scheme Fees

These are paid by card acquirers to the operators of card payment systems such as Mastercard, Visa and UnionPay to cover their maintenance costs for providing their payment network. The total scheme fee is composed of assessment fees, cross-border fees, clearing and settlement fees. The card type used and the geographical location of the acquirer will affect the total amount charged.

There is room to be able to minimise these fees. Not all card payment fees are created equal, and you can save money by accepting card payments in person–payments by phone or over the internet are considered higher-risk–and ensuring your account and terminal are correctly set up. Remember to use the correct Merchant Category Code (MCC). The MCC is a four-digit number used by credit card companies to categorise business types. Those businesses operating in a category that is deemed lower risk may be offered lower interchange fees. Account fees can add to your overall processing costs; some of these are also negotiable.

Best Practices for a Smooth Transaction Process

Collect In-Person Payments if Possible

In-person card payments have far lower rates of fraudulent use and chargeback than those made remotely, so if possible, have payments made face to face. Multiple chargebacks are expensive and can even jeopardise a processor’s willingness to continue to work with you, so it’s important to keep those to a minimum.

Confirm ID Where Appropriate

It’s not necessary to demand to see identification for every single purchase, but there will be times when it is appropriate. Extra steps to confirm identity—such as entering a one-time passcode sent by text, a PIN or being required to use a card reader or log into a banking app—are increasingly commonplace, and may be required by some processors for higher-value purchases.

Use the Correct MCC

Using the correct Merchant Category Code (MCC) will ensure that you’re charged the correct amount in fees by the processor.

Be Flexible with Payment Methods

When you don’t offer a full range of payment methods, the likelihood is that you will miss out on sales. For all the talk of fraud and the like, the overwhelming majority of payments are made legitimately, so make sure that you understand your customers and what payment methods will work best for them.

Use a Recognisable Business Name and Purchase Description

One of the biggest reasons for returns and potentially very expensive chargebacks is that a customer simply doesn’t recognise a transaction on their bank or credit card statement. You can minimise this by making it absolutely clear who you are and what they’re paying for at the point of sale.

Provide Easily Found Information for Customer Support, Disputes, and Other Issues

Telling customers to just ‘call the bank’, should they have queries or complaints about the service they’ve received, is unlikely to net you any repeat custom from them. Providing customers with prompt and considerate customer service will help prevent them from escalating disputes and increase their trust and confidence in you.

Update POS if You’re Using Legacy Hardware and Software

Relying on old, outdated technology increases your security risks, as well as increasing the likelihood of transactions not being successfully processed. New hardware and software developments secure your business against known vulnerabilities, and continuing to rely on older technology can be a false economy; some of these protections will not be present, increasing the risk of processing fraudulent transactions.

Provide Receipts and Confirm Deliveries

Receipts are an absolute must. Make sure that yours are issued promptly and with all the information required for the customer to be able to identify your payment on their statement. If you’re delivering items, ensure that you have all the documentation to demonstrate that the transaction and delivery concerned were properly completed.

Integrating With Online Payments

Payment gateways enable businesses to accept payments both online and in person. However, choosing the right payment gateway can be a challenge, as pricing and transaction fees differ, and so do the features and inclusions.

Which Method of Taking Payments Online is Right for Me?

There’s a plethora of questions that you need to ask yourself before deciding which method of making payments online is right for you. What’s your budget? What are you selling, and how do you sell? How do your customers normally pay you? The good news here is that SwitchPal can help! We can help simplify the process, using a board of trusted payment processors to find the right deals for you and gathering together a range of options to best suit your business needs.

A cashless society remains some way off, but the days of being able to demand that customers pay by cash are already becoming a fading memory. But while the vast majority of what you’ll read about credit and debit card payments relates to fraudulent behaviour, the fact of the matter is that security has come along in leaps and bounds in recent years. Your company could benefit from increased customer satisfaction and consequently increased sales, greater global reach, a significantly reduced risk of fraud, streamlined accounting and improved cash flow from bringing your systems and procedures completely up to date. Get started now, and you too could be benefiting from this!