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Introduction to payments and payment processing:
This is a confusing area for new entrepreneurs, because you’re thinking, “doesn’t my e-commerce solution already process my payment? I mean, that’s what they do, right?” Well, no, or maybe sometimes. Most shopping cart software vendors allow you to sign up for a payment processor from within their websites or log in to a payment processor you already use, but you need a payment processor in addition to an e-commerce solution. A payment processor (in the way I’m using the term) is what allows you to charge credits cards and gets the money from the credit card company to you (through a merchant account or its equivalent). It handles disputes and charge backs if there are questions about what you sold or don’t behave well and it protects you from fraud and fake credit cards.
Adding confusion to this area is that there are many steps in the payment process, and you can actually find vendors to handle each one. Luckily, for new entrepreneurs, the ones below have mostly integrated the process under one roof.
However, if you do a lot of revenue either online or off, sometimes you can save money by getting different merchants for your payment process, merchant account and so on.
The name of the game when choosing a payment processor is fees, fees, fees, and to a lesser extent, ease of integration. If you’re opening your very first online store with little capital, don’t worry about the fees too much, worry about getting it up and running, the fees are not that different among the vendors that it will make a difference before you sell 100 of whatever it is you sell. All payment processors typically charge a fee per transaction and also take a cut of the transaction as a percentage.
Introduction to Point of Sale Systems
A point of sale system allows you to accept credit cards in person (at the point of sale), which is pretty much a necessity for retail businesses, restaurants, or anyone that accepts a payment besides cash in person. If you never have a customer in person, you don’t need a P.O.S. We’ve combined Payment processors with P.O.S. systems because they are often offered together.
You’ve probably seen Square’s little square card reader at the farmer’s market or small vendor that you put your card into, or some people have a little card reader attached to their phone. Vendors will send you a device or allow you to enter the numbers into an app on an iPad or phone. Vendors for large establishments like restaurants will have whole machines they send you or you can rent.
POS systems can be mobile, allowing you to accept credit cards out on appointments (instead of having the customer call the office), so you can do things like accept payments while you’re in a home fixing the plumbing or at your food cart or at the outside tables of your restaurant.
Payment Processors & P.O.S Vendors:
Look at the options below, see which are easily integrated into your e-commerce solution, then start doing the math. If you’re new to this, pick your e-commerce solution first then sign up for a compatible gateway. Besides the ones listed below there are many, many others, but a lot of them require developers to integrate to your website. The first two listed (Square and Stripe) are the most popular with small online merchants.
- Square: popular with in-person businesses, like food carts, art stalls, and contractors, and it can also easily be used at restaurants, coffee shops, and the like. You get a little square card reader, or you can buy the bigger register or stand (actually an iPad, which you’ve probably seen, it’s the thing you swivel around at a coffee shop to enter how much tip you want). You can also use it as your payment processor with e-commerce software that has integrated it.
- Stripe: integrates with a lot of websites. Many e-commerce options actually use Stripe or offer their own payment processor that is actually Stripe in disguise. They now also have Point-of-Sale systems with Stripe Terminal.
- PayPal: You’ve probably used this before. It has a large international reach, so if you’re not based in the U.S. this might be a good option (or your only option). They also have a P.O.S. system.
- Amazon Pay: offers the ability for shoppers to use their Amazon accounts on your website to pay, meaning they don’t have to set up an account.
- Clover: they have a lite plan for under $10 a month, and then full-featured plans and hardware.
- Global Reach: These payment processors have a large global reach, making it easier to accept payments from many countries, or payments from the U.S. if you are outside the U.S. However, they require you to integrate it into your website, so not a good fit for non-coders.
- For developers: while Stripe will probably be any developer’s first choice, there are a number of other options you can integrate into your saas project or website (including some of the ones above).
Industry Specific P.O.S: Restaurants
- Toast POS: made for larger restaurants, a small place might opt for Square instead. However, this system is pretty robust and they’ve got the restaurant business down. You can buy different terminals (for example, a handheld one for taking to the outside tables)
- Touch Bistro: Based on iPads, they can also offer restaurant specific add-ones, like a kitchen display system you can purchase. Requires you to have an additional payment processor.
- Already mentioned, but Square has a solution just for restaurants called Square for Restaurants.
Multiple Industry POS Focus:
- Harbor Touch: will send you the hardware for free if you sign up for the service, which can be a great incentive. Requires you to have a separate merchant account and payment processor though. Available for a lot of industries, but concentrated in food and retail, salons and convenience stores.
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