Although it might be a stretch to imagine a world entirely without cash or checks, I was recently reminded how little I use either. I went for a haircut and discovered when it was time to pay that the barber wasn’t set up to accept credit cards. He told me he was in the process of setting up a merchant account with his bank so he could take credit cards, but in the meantime, since I had no cash on me, he said I could pay him the next time.

When I went back a month later, he was still getting the runaround from his bank. Fortunately, I brought cash this time. I asked him why he didn’t just set up an online payment account so that he could use his smartphone to accept credit card payments. We talked about several options, and he agreed to look into them.

I’ve been accepting credit card payments in my companies since 2002, both online and in person, and I’ve seen how much easier it has become for even the smallest of businesses to get paid this way. Far more options are available today than when I set up my first payment account, and the process is light-years faster. It used to take weeks. Now it takes about a day.

If you’re not set up to take credit cards, I can almost guarantee that you’re losing business. Tweet This  The good news is you can remedy the situation quickly and easily, whether your business is a brick-and-mortar establishment, strictly ecommerce, or a mix of both. You’ll soon be ringing up more sales, and your customers will appreciate the added convenience.

Advantages of using an online payment gateway

As my barber discovered, setting up a traditional merchant account through the bank to accept credit card payments can be a time-consuming, frustrating experience that can involve a lot of paperwork—and a lot of waiting. Also, with this type of account you are responsible for ensuring the security of your customers’ credit card information. With mega-merchants like Walmart, Target, and Home Depot experiencing serious data breaches in recent years, data security has become a huge concern for all businesses.

Establishing an account with an online payment gateway such as Stripe, Square, or PayPal helps alleviate those issues because these companies basically use a shared merchant account. That makes it much faster and simpler for you to begin accepting electronic payments, and you don’t have to set up additional security protocols because the actual payment transaction is handled externally. All you need to do is create an account with your online gateway of choice and you’re ready to go. It might take a few days to receive a card reader or other equipment if you’re conducting business in person.

Online payment gateways offer many benefits that are seldom available with bank merchant accounts. Here are several:

  1. Easy, fast (and usually free) set up

    As noted earlier, establishing an account with an online payment gateway is simple and quick—and with most gateways, it’s free. It takes about 20 minutes to sign up, and you should hear back within a day or so.

  2. Security

    All organizations that handle the major credit cards—Visa, MasterCard, Discover, and American Express—must adhere to the Payment Card Industry Data Security Standard. Online payment gateways have met stringent compliance requirements, which means you have less to worry about, although it is still important to follow any and all security requirements required by your city and state, or for your industry.

  3. One account does it all

    Speaking of major credit cards, you probably won’t have to set up separate accounts for Discover or American Express if you use an online payment gateway, as you most likely would if you set up a bank merchant account. You can also accept customer checks with many, if not most, online payment gateways. Some even support payments with Bitcoin.

  4. Lower cost

    You’ll probably pay transaction and percentage fees no matter what option you choose, but most online payment gateways don’t charge monthly merchant or gateway fees, whereas banks typically do, and most won’t make you sign a long-term contract or pay a termination fee, which banks often do.

  5. Quicker payments

    Generally speaking, online payment transactions are usually posted to your account within one to two business days, whereas it can take three business days or longer if you’re using a bank merchant account.

  6. Paperless

    With an online payment gateway, your customers’ transactions can be entirely electronic—and mobile! If you’re conducting business in person, customers can leave their signature on a smartphone or tablet and receive their receipt by email. Going paperless can be more convenient, more secure, and better for the environment.

  7. Cross-platform capabilities

    Services offered through Square, Stripe, and other online payment gateways often can be easily integrated with other software platforms you might be using, including CRM systems and accounting programs such as QuickBooks.

  8. Feature-rich

    Need to void a sale, issue a refund or set up recurring payments? Online payment gateways can make it easy to complete these and other transactions such as add-on purchases and returns. You also can getbuilt-in fraud protection and currency conversions for online transactions.

  9. An added bonus

    You can use the email addresses you collect from your customers for marketing purposes, if they opt-in to your mailing list during the transaction.

Which online payment gateway should you use?

Nearly all online payment gateways offer free setup and free equipment, if required. Other fees and terms vary from one gateway to the next, as do the services provided. For example, some, like Braintree, make it easy to migrate your customer data, if that ever becomes an issue. It’s worth researching to see which ones meet your specific needs, and from there you can compare costs to determine your final choice.

Based on my experience, I recommend using Square if your business has a physical location. There are no monthly fees, you get a free card reader (which arrives quickly), and you get paid within one to two business days. Square lets you accept credit and debit cards, cash, checks, and even gift cards. Plus, I’ve found they have excellent customer service.

If you only conduct business online, I suggest using Stripe or Braintree. You’ll pay no monthly fees with either, and both pay you within two business days. Stripe advertises that it allows you to begin accepting payments in less than 10 minutes. Braintree is now owned by PayPal, which gives you the added benefit of using any PayPal payment method, including pay by check. Both Braintree and Stripe integrate with major ecommerce platforms such as Bigcommerce, Shopify, Magento, and WooCommerce. Both provide good customer service, as well.

The ultimate goal is to make sales transactions easy for you and your customers. Any online payment gateway can help you accomplish that. Some will charge you more than others, but setting up a merchant account through a bank will cost you even more in terms of both money and time.

By the way, when I went for my next haircut, my barber was quite happy to accept my credit card.

Photo Credit: wmcs91, Twenty20