So you’re designing a website layout, either for yourself or for a client, and you’re looking for some best practices and examples to follow.
Maybe you’ve even spent some time digging through templates for inspiration, because hey… it can’t hurt, right?
Website templates are great… but they can be drastically affected by stock photos, brand assets, colors, fonts, etc.
Before you start browsing templates, you first need to understand what your site needs to do, what content you’ll have, and how you need to lay it all out for an optimal user experience.
So how do you do that? Great question! Here’s my step-by-step process to designing a website layout with best practices:
Step One: Set Your Goals
A website is more than just a collection of pages. Really, it’s a roadmap for your audience. It helps them find what they’re looking for when they’re looking for it.
Which means before you start looking at templates and designs, you have to first understand what your audience needs from your site to begin with.
What’s the goal of your site? Is it educational? Is it selling products? Is it a resume site to help you get hired?
Before you can start navigating somewhere, you have to know the end destination. The same applies to your website. Before you even start planning the website layout, define the overall goal of the site.
What to Consider:
Your website today doesn’t have to be your website tomorrow. Set your goals for what you want to accomplish right now.
Your overall website will have a goal, and each page will have a goal. Separating the two can help you get clear on the overall flow.
Your site is all about the user. What are THEY trying to accomplish?
What to Avoid:
Biting off more than you can chew. If you’re trying to do too much at first, you’re either going to end up with a messy site or no site at all.
Getting caught up in the nitty gritty. We’re not talking functionality, yet.
What to Learn:
How to create a minimally viable website
Examples to Copy:
Sandy Springs Artsapalooza
Step Two: Map Out Your Main Content
Once you have the main goal of the website, you can start to think about what content you need.
What types of information is your audience searching for? How should that information be grouped?
This will become the overall architecture of your site (and the navigation). Remember, your site is all about your audience’s journey.
The end goal is to get them to the information they need in the fewest steps possible. It doesn’t matter how beautifully designed your website is if no one can find what they’re looking for!
The key here is clarity. The navigation should be intuitive — your people shouldn’t have to dig for information.
Define your site’s primary navigation and content groupings before moving into design, so you can choose or design a template that supports an intuitive architecture.
What to Consider:
Think about how a user who lands directly on a given page would feel (without having navigated from your homepage).
Think about someone how has accessibility needs, or is simply in a hurry would feel.
Again, less is more. If you don’t need multiple pages to say it, don’t use multiple pages to say it!
What to Avoid:
Burying important pages in a deep hierarchy. Prioritize key information
Death by content. Your website doesn’t have to be the final destination.
What to Learn:
How to use keywords on your website
Smashing Magazine resource on content planning
Examples to Copy:
Au Lit Fine Linens
Lesley M.M. Blume
Step Three: Get your page layout down
I know, I know… it sounds counterintuitive to think about a layout before you start searching for a template. But again, this is all about organizing your information.
If you have an idea of the type of layout you need for each page, you’ll narrow down template options a lot sooner (and will be less distracted by frills that you probably don’t need anyway).
Again, the goal is to get people the information they need in the quickest way possible. Think about your own browsing behavior. You’re likely not reading each and every word on the site, right?
What to Consider:
Use size to distinguish between important info / details that may not be as crucial — the most important information should be the biggest on the page
Use headers and subheads to help scanners find key sections + information
Bold important phrases and key information
Use bullets / icons to break up text-heavy sections (see what I did here?)
What to Avoid:
Don’t sacrifice clarity for creativity
Don’t bury key information “below the fold” (AKA don’t make people dig and scroll endlessly for it).
What to Learn:
If you want a page-by-page breakdown, check out our guides on…
Homepage best practices
About Us page best practices
FAQ page best practices
Contact Us page best practices
Product page best practices
Examples to Copy:
Step Four: Lock in functionality
After you have a general layout in mind for your pages, it’s time to think about functionality on each page.
When we’re dealing with website design, remember that sometimes less is more, especially if you’re just trying to get your site up and running.
Having a minimally viable website can be more effective than having some juggernaut with bells and whistles that confuses people or costs you a fortune to get up and running.
Think through the minimum functionality each page needs.
For example, your services page probably doesn’t need social media icons / social sharing. However, you may want to include links to your social channels on your Contact Page, or bring in your Instagram feed on your About page if it’s applicable to your overall site goals.
A well-designed website isn’t about how advanced the functionality is. It’s about how quickly and easily can you give people the key information they need to accomplish their goals on a certain page.
What to Consider:
Think about the functions that would actually enhance your users’ experience.
What functionality is a must-have right now, and what’s a nice-to-have down the line?
Functionality isn’t built in a template — it’s supported by your software (AKA your website builder).
What to Avoid:
Functionality for the sake of functionality. You don’t want to overload your site or confuse your users.
Biting off more than you can chew. Having the ability to upload your latest YouTube episode is great, until you have to keep up with it.
What to Learn:
Which website builder will fit your functionality needs
Examples to Copy:
Cumberland Community Church
Step Five: Pick Your Template
So you’ve done the planning, you’ve sketched out your site, and you even know how the site needs to function. It’s time to finally, FINALLY start looking for a template (or creating your own)!
What to Consider:
Templates are really just HTML and CSS… which means they can be recreated almost anywhere. If you see a Wix template you love but want to use WordPress, you can easily recreate it.
Keep your layout needs in mind that you defined earlier, and remember that most templates are fairly customizable.
Look beyond the homepage. Look at how the subpages and unique pages are presented.
What to Avoid:
Again, functionality is NOT something that comes with a template.
Don’t judge a template based on the photography and logo designs. Often, a template will only look a certain way due to the mock-up creative assets.
What to Learn:
How to create your web design color palette
How to write effective website copy
Examples to Copy:
You’re all set! Just follow the step-by-step process outline above to design a website layout that’s clear, easy to navigate, and gets your users the right information at the right time!
The post How To Design a Website Layout w/ Best Practices & Examples appeared first on ShivarWeb.
So you’re looking to take advantage of everything that online commerce has to offer and enter the world of ecommerce? Good for you! Of course, this will require you to be able to accept online credit card payments. To do this, you’ll need an internet merchant account.
Sounds simple enough, right? If only! Not all merchant accounts are created equal. When choosing an internet merchant account for your ecommerce business, you’ll need to understand how a merchant account interacts with the other elements necessary for selling online, like payment gateways, payment processors, and shopping carts (not the kind you push around). Some services combine one or more of these elements, but it’s still important to distinguish these elements from one another.
Confused yet? Don’t worry — we’ll spell it all out for you!
What Is A Merchant Account?
A merchant account is a specific type of business account into which your customers’ money is deposited after they use their credit or debit card to make a purchase from you. After these payments are verified, the money is transferred to your own business bank account, which is entirely separate from your merchant account. You have no control over the merchant account — it is merely the middleman between your customers’ money and your business bank account.
So, why include this middleman at all? Wouldn’t it be easier to simply accept credit and debit card payments directly and get the funds deposited directly into your business bank account?
Unfortunately, credit card processing doesn’t work that way. When your customer pays you, the transaction ultimately still involves two other major parties: the issuing bank (which grants the customer cards and is responsible for collecting any payments from the customer) and the acquiring bank (which requests and then collects payments from the issuing bank and then releases them to the merchant). Because the payment process is so complicated — the acquiring bank has to ask for the funds from the issuing bank, which has to verify that the customer has those funds available and then transfer them — the merchant account essentially functions as a holding space or even as a sort of line of credit.
Merchant Account VS Third-Party Processor
When selecting a service to process your customers’ card payments, you’ll be choosing from between two different categories of services: direct processors (the providers of merchant accounts like the kind described above) and third-party processors (also called aggregators) like PayPal, Stripe, and Square.
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Setting up an account with a third-party processor is simpler and less time-consuming than setting up a merchant account. This is because third party processors don’t set you up with your own unique merchant account. Instead, the third-party processor aggregates all of its merchants into one enormous merchant account.
What do these differences mean for you, the merchant? For starters, the merchant accounts offered by direct processors typically provide you with a higher level of account stability. This is due to the extensive underwriting and risk assessment you have to undergo to get your merchant account. With third party processors, you are subjected to very little underwriting beforehand. Therefore, the processor scrutinizes your activities much more intensely, making it more likely that you’ll experience an account hold or termination.
The flip side of this is the cost advantage of third party processors. These services typically feature flat-rate pricing and pay-as-you-go agreements. There are few (if any) monthly or annual fees to pay, and you don’t need to meet a monthly minimum in card transactions, making it easy to start taking credit card payments with no established business history.
With direct processors, you’ll be paying monthly and potentially annual fees, you’ll need to be processing at least $5,000 to $10,000 per month in card transactions, and the pricing is not normally flat-rate — your rates may vary depending on the nature of your business model and your industry. Many merchant accounts still require you to sign a multi-year contract. (That said, many of the best processors in the industry have done away with these 3-year contracts and early termination fees in favor of month-to-month agreements, and we recommend that you not settle for a multi-year contract until you’ve explored all your options.) Still, above that $10,000/month mark, merchant accounts do offer cost savings and as your volume increases you’ll qualify for even more discounts.
For more on third-party processors and how they stack up against traditional merchant accounts, check out these articles:
The Best Online Credit Card Processing Companies
The Truth About Third-Party Payment Processing
What’s A Payment Gateway?
We’ve established what a merchant account is, so let’s move on to payment gateways.
While a merchant account is the account into which your payment processor sends your customers’ payments before they are transferred to your business bank account, a payment gateway connects your online store to your payment processor, facilitating your customers’ online transactions.
Payment gateways enable online transactions like so: the gateway integrates with your ecommerce store to securely capture the payment details for customer transactions. The gateway then routes that information to your payment processor or acquiring bank, which assumes control of the payment process. The gateway will then send an approval or decline message back to the merchant based on whether or not the processor/acquiring bank accepts the payment.
When you use a third-party processor, a payment gateway is typically included in the service. With direct merchant accounts, a gateway service may or may not be included for an additional fee. Some processors do offer gateways as part of their services, at no additional cost. Ultimately you’ll need to check with the processor to find out.
PCI Compliance With Online Merchant Accounts
What is PCI compliance, and how do you achieve it?
PCI compliance refers to a set of safety practices established by a council (the Payment Card Industry, or PCI) sponsored by the major credit card companies to ensure that a consumer’s payment information is secure when making a purchase using a credit or debit card. These standards, which apply to all businesses that accept credit and/or debit cards, are meant to standardize the securing, processing, and transmission of cardholder data.
If your merchant account provider deems you to be PCI non-compliant, you’ll be subject to a PCI non-compliance fee of around $30 per month until your account is compliant. What’s more, if your non-compliance results in a data breach, you can be fined anywhere from $5,000 to $500,000!
You’ve probably gathered by now that it’s a good idea for your business to be PCI compliant. For most small businesses, that means being Level 4 PCI compliant. Level 4 is the PCI standard that applies to businesses up to a certain size — it’s essentially the lowest bar to clear. Larger businesses must comply with higher PCI standards, with Level 1 standards applying to both the largest businesses and businesses that have suffered a data breach.
When choosing a payment processor, you’ll want to make sure your provider offers features such as PCI compliant processing hardware and software, quarterly network vulnerability scans, and assistance with completing and filing a Self-Assessment Questionnaire (SAQ).
Most third-party processors handle the entire process of PCI compliance for you, but with a merchant account, you should be expected at minimum to have to complete the SAQ.
If you’re running a brick-and-mortar business with no ecommerce component, you might think PCI compliance has nothing to do with you. However, if your business accepts credit cards, it almost certainly utilizes the internet to do so at some point in the process, so you’ll still need to be PCI compliant. It’s easier for physical-only businesses to establish PCI compliance than it is for online businesses, though.
Some PCI best practices are no-brainers. For instance, you don’t want to store your customers’ card data on your own hard drive or server, you should never use default passwords, and you’ll need to use a firewall on your network and computers. There’s more to PCI compliance than these obvious measures, however. For a detailed explanation of what PCI compliance means for your business, I highly recommend reading our comprehensive article on the subject, The Quick Guide To PCI Compliance For Small Businesses.
How Much Does An Internet Merchant Account Cost?
When choosing a merchant account, it’s important to know the different pricing models offered by payment processors:
Flat-Rate Pricing: This pricing model has the advantage of being predictable. You’ll pay a fixed rate for each transaction, making it easier to predict your processing costs. While you’ll usually pay more on a per-transaction basis than with other pricing models (and you donât know how much the processor is making off a transaction), you probably won’t have to pay monthly fees or other types of fees charged by processors offering other pricing models. Third-party processors like PayPal, Square, and Stripe use this pricing model. To learn more about flat-rate pricing, check out our flat-rate credit card processing explainer.
Interchange-Plus Pricing: Also known as cost-plus pricing, interchange-plus pricing is the pricing model preferred by Merchant Maverick. Why? Because it’s the most transparent model and it makes rate comparisons between processors easy. With interchange pricing, the processor passes on the interchange fees (fees charged to the merchant’s bank account and paid to the bank that issued the card) and assessments (fees paid directly to Visa or Mastercard etc.) while charging a small markup above that (often a percentage and a flat fee). Check out this article for more on how interchange-plus pricing works and why we prefer it.
Membership Pricing: This is the pricing model used by subscription-based payment processors like Fattmerchant and Payment Depot. Under this pricing model, you’re charged a single monthly subscription fee instead of the assortment of fees other pricing models feature. You’ll also likely pay a flat fee of between $0.08 and $0.15 per transaction as well as interchange fees. Higher-volume businesses can find themselves saving money under this pricing scheme.
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Tiered Pricing: Tiered pricing is an older pricing model not commonly used by modern businesses. We don’t recommend it. All transactions are grouped into two or three tiers of transactions, ranging from the lowest-priced transactions to the highest-priced transactions. Essentially, the problem with tiered pricing is that processors can categorize transactions assumed to be in a lower-priced tier as higher-priced transactions, thus charging you more and leaving you little recourse. You should avoid tiered pricing arrangements.
For most small businesses, using a third-party processor with flat-rate pricing like Square or PayPal may be more affordable than using a full-service merchant account. Of course, this entails a much greater risk of having your account frozen or terminated, which is, in itself, a very costly thing to happen to any business.
One thing that affects what your internet merchant account will charge you is the fact that CNP (card not present) transactions, including online purchases, cost more to process than do in-person transactions. This is due to the fact that the chance of chargebacks and fraud is higher with transactions where the card is not present, and this is factored into the cost of processing the payment.
Other fees you may (or may not) have to pay include PCI compliance fees, payment gateway fees, and fees for ACH acceptance if you want to offer customers the ability to pay with their bank accounts in addition to cards. To learn more about the complex and relatively opaque world of internet merchant account pricing, read through our Complete Guide To Credit Card Processing Rates & Fees.
Features To Look For In An Internet Merchant Account
Let’s go through some of the features that may be included in your internet merchant account package.
One benefit of third-party processors like Square is that a payment gateway is included as part of the service so you won’t have to go looking for one yourself. Of course, third party processors have their drawbacks as well, so you’ll be glad to know that some direct processors include a payment gateway in their services as well.
Remember, if you plan to do business online, whether it be through selling goods, offering SaaS, or what have you, you’ll need to be able to accept online credit card payments. To do that, a payment gateway is an absolute requirement.
Multiple Payment Methods
We’ve established that you’ll want to be able to accept credit and debit cards. However, there are other payment methods your customers may want to use, and you want to be able to accommodate them. From mobile wallets like Apple Pay on the web to ACH payments, the more payment methods your payment gateway (and payment processor) supports, the better.
Global Payment Support
With some merchant accounts, you can only accept payments in USD. If you expect to be able to attract any international business, that’s obviously not going to be good enough. Thankfully, many merchant account providers can set you up with a multi-currency ecommerce merchant account so you can expand your global reach. Just be aware that you’ll likely pay currency conversion fees (if they aren’t passed to your customers). PayPal and Stripe do very well in this regard, and Stripe actually supports many localized payment methods across Europe and Asia.
As an added note — some processors offer a feature usually referred to as dynamic currency conversion or localized currency displays. This means that your website will automatically convert the price from USD (or your default currency) to whatever currency is most common in the customer’s region. This can improve the shopping experience for international customers and potentially increase your sales.
Included Shopping Cart (Or Other Software)
An online shopping cart integrates with your website to facilitate ecommerce. The shopping cart enables your customers to look through your available products, select different options for each product (size, color, etc.), select the quantity of the products they want to order, and more.
Most merchant accounts can be integrated with major shopping carts, but if you can find one that includes a good shopping cart already, that’s even better, as you’ll be saving money.
Other handy features to look for include a customer credit card vault that allows you to securely store your customers’ card information while keeping it off your own equipment and subscription tools that let you create and manage customer subscriptions. Stripe is an example of a processor with built-in subscription tools and a card vault. However, you can also opt for a third-party provider to get recurring billing functions.
Processors with integrated developer tools, like Stripe, allow developers to use APIs (application programming interfaces) to integrate the payment platform using a variety of different programming languages. For the business with developer talent, integrated developer tools can help you build custom solutions for your ecommerce outfit.
Good customer service and availability is critical in an internet merchant account. Your ability to do business is reliant on all your systems working correctly 24/7, so reliability and quick response times are crucial. Do some research on merchant account providers to weigh the experiences of other merchants when dealing with any issues that pop up, and make sure that the available support channels jibe with your preferences.
How To Choose The Right Provider For You
That was a lot to take in, wasn’t it? If you’re feeling overwhelmed, don’t worry! Merchant accounts are Merchant Maverick’s original specialty, and we’re here to help you delve into the nitty-gritty of merchant account pricing, features, and provider options.
Here are some links to help you learn more about merchant account options, features, and more:
The Best Online Credit Card Payment Processing Companies
How To Choose An eCommerce Merchant Account
The Complete Guide To Online Credit Card Processing With A Payment Gateway
How To Accept Credit Cards Online
The post The Complete Guide To Finding An Internet Merchant Account appeared first on Merchant Maverick.
When it comes to payment processing, security matters. After all, every time you handle a credit card, your customer is trusting you with their financial information. By now, you have probably come across the term PCI compliance on your monthly processing statements, and you know it’s a data-security related term. A little digging on the internet reveals that PCI compliance is complicated and the subject matter is full of acronyms and industry jargon.
One term often associated with PCI compliance is cardholder data. Even though the term is a small part of the overall PCI compliance scheme, it is a fundamental building block term. Understanding what cardholder data encompasses will help you navigate more smoothly as you learn more about the complicated world of PCI compliance.
Each of these companies provides excellent customer service and fair pricing.
See more data
What Does Cardholder Data Include?
Even from its plain meaning, cardholder data suggests that the data includes information on both the front and the back of a credit or debit card. Formally, cardholder data is defined as:
The primary account number (PAN).
And may include:
Other sensitive authentication data used to authenticate cardholders and/or authorize payment card transactions, including, but not limited to, card validation codes/values, full track data from the magnetic stripe or chip on a card, PINs, and PIN blocks.
Cardholder data, therefore, could include most of the information on the payment card itself, whether plainly visible like the PAN or stored in the magnetic strip or on the chip of the card.
Cardholder Data & Maintaining PCI Compliance
Knowing the definition of cardholder data is one thing, but this knowledge is useless without understanding how cardholder data fits into the overall scheme of PCI compliance.
Basically, cardholder data includes all the information on a credit or debit card thatâs needed to transfer money from one party to another. Unfortunately, where there is money, there are thieves. So, some years ago, the larger credit card companies banded together to form the PCI Security Standards Council. The Councilâs job is to formulate data security rules and best practices so that the storage and transmission of credit and debit card information from the cardholder to the merchant to the banks — and everywhere in between — can be secure.
How Cardholder Data PCI Compliance Rules Affect Merchants
As a small business merchant, not all of the PCI compliance rules apply to you. For the rules that do apply, failure to follow them means getting a fine, usually from your processor. However, note that there are other country- or state-specific data security and privacy laws that might apply to merchants as well. Often, the laws require the holder of the information to take reasonable steps to keep the information safe. Failure to comply with the laws often results in a fine, but sometimes can result in heavier punishments like an injunction. Since the PCI Security Standards Councilâs rules are typically more stringent and detailed, it is easier for a merchant to simply follow the PCI Security Standards Councilâs compliance rules and best practice suggestions. Requirement 3 of the Payment Card Industry’s Data Security Standard (PCI DSS) specifically addresses cardholder data.
Different Rules For Storing Or Not Storing Cardholder Data After A Transaction
There are several ways a merchant could choose to handle cardholder data. As a threshold matter, we assume that you already use PCI compliant card readers, point of sale terminals, and encryption software for transmitting the cardholder data to your processor.
A customer might pay in person, pay over the phone, or pay through a web interface. As long as you do not keep the cardholder data on file (whether stored electronically or even just temporarily scribbled on a piece of paper), then you are in compliance with PCI requirements for cardholder data. If, however, you do wish to keep cardholder data on file so you can, for instance, provide your customers a faster checkout, then there are additional PCI rules and best practices you must follow.
To keep the cardholder data on file, a merchant has two basic choices: keep the cardholder data in a computer system at the business (all the while making sure everything is PCI compliant), or hire a third-party service to keep the data on their server while only keeping a token at the business.
With the former, the merchant must follow additional complex requirements for both hardware and software set out by the PCI Security Standards Council. Typically, this method is only employed by larger businesses that have the money and personnel to maintain the hardware and software. With the latter, it is possible to keep the cardholder data with a third-party service provider that is already PCI compliant. Rather than the cardholder data, you only keep a token that can eventually be matched to the cardholder data. Recently, credit card tokenization has become a more popular choice because a token is not cardholder data so is not subject to the same PCI compliance rules as cardholder data.
Protect Cardholder Data With Tokenization
We have an article explaining the details of tokenization, but, briefly, payment card tokenization is a process that takes the cardholder data and assigns it a random series of numbers and (sometimes) letters called the token. The cardholder data is stored in a highly secure electronic vault using PCI compliant hardware and software. Only the owner of the vault has the ability to match the token with a specific cardholder data.
As a business owner, all you have stored in your system is the token. In order to access the rest of the payment card information, you must send the token to the vault holder to retrieve the actual cardholder data before sending the information onward for further payment processing. If you experience a data breach, then all you have to do is notify your storage company so they can assign new tokens to you. The cardholder data should be secure as long as you quickly find and notify the storage company of the breach.
From a practical standpoint, with tokenization, you wonât have to worry about PCI compliance because you donât have the cardholder data on your premises. All the encryption and data security required to be PCI compliant are farmed out to a third party, leaving you time to concentrate on running your business.
Protecting Cardholder Data Protects Your Business
If you are a merchant who accepts credit or debit cards, then you will be handling cardholder data. If you wish to store this information, both industry rules and public laws require you to handle this information in a highly secure manner and in very specific ways. Failure to protect cardholder data could subject you to fines or even harsher penalties under the law. Not only that, because the law requires you to report data breaches and notify your customers, you would have to fight the bad publicity associated with such a breach, and your business’s reputation will suffer. Protecting cardholder data, therefore, translates directly to protecting your business.
Fortunately, there are payment processors and third-party tokenization providers who can help you simplify PCI compliance and make it easy for you to protect cardholder data with secure, easy-to-use software. Reputable payment processors and tokenization providers are also mindful of their own practices on who can access cardholder data and stand behind their practices.
Whatâs your experience with handling cardholder information? Do you keep the information in-house, or do you take advantage of third party storage services?
Want to get a business credit card, but are worried that doing so may hurt your personal credit score? Then this guide is for you!
Business credit cards are often a great idea — they help separate business expenses from personal purchases and rewards are usually built with business spending in mind. Plus, they often incorporate extra benefits targeted towards business users.
However, in some cases card issuers report activity on a business credit card to one of the three major personal credit bureaus — Equifax, Experian, and TransUnion (these bureaus collect and sell data regarding the credit history of individuals, and problematic usage can impact your ability to get loans and apply for credit cards). This means that negative actions like missing payments or high credit utilization may indeed affect you personal credit.
It isn’t all gloomy, of course. By staying on top of payments and using your business credit card wisely, you should only save money in the long term. Plus, depending on the issuer, you may actually help your personal credit score.
To get the full picture on just how a business credit might be able to harm your personal credit score, read on below!
How Business Credit Cards Can Affect Personal Credit
Unfortunately for those that want to keep business credit entirely separate from personal credit, you’ll often be required to back up your business credit card with a personal guarantee. Should your credit card require this, you’ll be on the hook if your business’s account defaults. Note that in some cases, issuers won’t report your activity to personal credit bureaus while other may only report when your account is seriously delinquent.
As always, it’s helpful to monitor your credit score. That way you can track any changes and potentially stop harmful practices before things get out of hand. Don’t know your credit score? Find out with one of these free tools.
Here are a few key reasons why your personal credit score may be affected by business credit card usage:
Credit Inquiry For Your Application
When you apply for a business credit card, the issuer may look at both your business credit and your personal credit history. If this is the case, you’ll receive a hard pull on your credit.
Hard pulls will drop your credit score by a few points. However, they shouldn’t be damaging to your credit in the long term (unless you apply for numerous cards in rapid succession).
If you are using a high amount of your available credit, and your card’s issuer reports all your activity to personal credit bureaus, you may see a negative impact on your credit score. Credit utilization is based off the amount of credit you’re using and the amount of available credit you have.
In general, it’s best to only utilize up to 30% of your available credit. It’s even better if you can keep the amount below 10%. Luckily, business credit cards usually include higher credit limits than those that fall under the personal variety.
Failure To Make Payments On Time
This is the big one. Late payments make up a big part of your credit score and can stay on your history for up to seven years. Plus, some issuers will only report info to personal credit bureaus if your business credit is seriously late on payments. This means that while you may be safe utilizing a lot of credit, you will still be dinged for operating a delinquent account.
Besides potentially affecting your personal credit, a delinquent account costs you more money, too. For starters, you’ll likely need to pay a penalty APR (generally around 29.99%) and may be further subject to other late fees.
Issuers That Report Spending To Personal Credit Bureaus
Some issuers will send information to credit bureaus and others won’t. We’ve outlined how some of the major issuers handle credit report below.
These issuers will report your activity to personal credit bureaus:
American Express (but only negative activity)
Barclays (depends on the situation)
These issuers won’t report your activity to personal credit bureaus unless your account becomes delinquent:
Bank of America
These issuers generally won’t report your activity to personal credit bureaus:
Note that all the above issuers do report activity to commercial credit bureaus, with the exception of BBVA (which does no reporting at all).
Can Employee Spending Affect Personal Credit?
Employee spending won’t directly affect your personal credit. However, if your employees spend more than you can pay off in a payment period, or their spending constantly utilizes too much of your available credit, you could see dings on your credit report. To avoid these potential problems, be sure to frequently monitor charges to your account and set up the spending tools that come with your card. For all the ins and outs of employee cards, read up on our guide.
It’s also worth mentioning that employees who are authorized users may see an effect on their own personal credit scores. If you are on top of payments and manage spending efficiently, you could help boost their credit scores. On the flip side, if you’re struggling with payments, it may be worth double-checking that employees are okay with being authorized users — otherwise, they could have their credit unknowingly damaged.
Should I Get A Business Credit Card That Wonât Affect Personal Credit?
When it comes time to choose, you should look for cards that offer rewards that best fit your business’s spending profile. However, if you anticipate that you’ll constantly be behind on payments, then you may want a card that doesn’t report to personal credit bureaus. Of course, that’s not a very savvy way to plan to get a credit card; instead, you should try to follow some of these best practices for credit cards.
One way you can ensure your personal credit won’t be affected is by applying for a corporate credit card. Because corporate card liability is placed on the business level, you’ll be able to avoid any personal guarantees. However, corporate cards are only available for larger companies; for instance, you’ll likely need to make at least $4 million in annual revenue.
Get a complete breakdown of the differences between corporate and business cards.
Maintaining Good Credit: Best Practices
The number one best thing you can do to maintain (or even build) good credit is pay off your card in full every month. By doing so, issuers won’t have a reason to report negative activity to credit bureaus. Plus, you’ll save money by not paying extra for interest or on late fees.
On top of this, you’ll want to keep your credit utilization low. This means that you should only use up to 30% of your allotted credit line — and, ideally, between 1% and 10%.
Get more tips on how you can boost your credit score with a credit card.
While business credit cards can affect your personal credit history, your score should be fine as long as you stay on top of payments and don’t utilize too much credit.
Ultimately, smart use of a business credit card can only be a good thing. By boosting your business’ credit score, you’ll be able to apply for better credit cards and lower interest loans, helping your business grow faster.
The post Can Business Credit Cards Affect Your Personal Credit Score? appeared first on Merchant Maverick.
When a merchant signs up for a new Square account to start processing payments, many times the focus isnât on the other features; itâs on getting paid â and rightfully so. But after signing into your account for the first time, it may become evident to you that there is a lot more to Square than just payment processing.
For those of you who are new to Square or if you are shopping around and checking out your options to make a final decision â youâre in the right place. We are going to take a look at what is available in the free Square POS app. We’ve discussed both Square (read our review) and Square POS (read our review) in depth, so check out their respective reviews for a more comprehensive look. Don’t forget, when you sign up with Square Payments, you get access to the POS app, the online selling tools, invoicing, and a whole lot more.Â
But before we dig into all that, letâs quickly review Squareâs payment processing costs for the price savvy among us. Square has very upfront pricing, but keep in mind that your processing costs change with the Square hardware you use. With the free Square POS and your own smartphone or tablet, youâll pay a flat rate of 2.75% per swipe, dip, or tap. Check out How Much Does Square Charge? for a thorough explanation of any other fees you might incur with Square, including software.Â
While itâs true that Squareâs fee for payment processing may seem a bit higher on the face of things, keep a few things in mind: Square doesnât charge any additional monthly account fees, and you can expect the same flat rate for all of the cards you process, even American Express. You can also close your account any time with no cancellation fees whatsoever. However, one of the more notable reasons we like Square here at Merchant Maverick is that merchants get end-to-end, PCI compliant payment security included with every account, without paying a dime for it.
While Square may not be as packed with features as a traditional POS, there are still a wide range of features waiting if you take advantage of them. In addition to features within the app itself, Square’s back-end management tools (centralized in the web Dashboard) are powerful.Â
We have much to cover, so letâs discover the most noteworthy POS features you can start using to manage customer engagement, employees, inventory, and take charge of your business like the pro you are!
If you have an existing customer list, you can migrate that over via CSV right into the directory and get started. Every time you complete a sale, your customer directory grows to include your customerâs name, purchase history, location, and credit card (save this only with their permission). If your customer enters their email for an e-receipt, that gets added to the directory, too!
The customer directory builds automatically with each sale, but you can also manually add customer information from the Square POS or the Square dashboard. (See Why We Like Squareâs Online Dashboard and Analytics App for a primer on the dashboard.) In the Customer Directory, you can add an email, birthday, make notes about their order history, or add their company, for instance.
As your customers continue to shop with you, Square builds reports on customer behavior patterns, too. You can find out things like visiting frequency and when they purchased something from you last. You can view some reports from the in-app reporting in the Square Point of Sale, but to access all of the reporting features, youâll need to get to the Square dashboard.
A lesser-known Square feature is the private feedback you can gather after a sale. Giving your customers this opportunity to share their opinions with you directly (and right from their receipt) helps keep the lines of communication open. When your customer leaves feedback, you can respond to them directly and offer to comp their item if you wish. In this way, you can hopefully also avoid negative public reviews â and keep your customers happier while youâre at it.
Keeping up with inventory changes and accurately ordering the stock you need is probably one of the most critical business matters there is. Not only does good inventory management build loyalty and trust with your customers, but you can also avoid some unneeded expenses surrounding both excess and deficient stock. The great news is that basic inventory management comes along with your free Square POS software.
Have a large amount of inventory? You can easily import any existing stock with a CSV spreadsheet. You can also add items manually through your dashboard or Square POS. Either way, you can quickly update product names, prices, and quantities as needed. Setting up low stock alerts is easy â set alerts to send when inventory gets to the amount you decide. In the screenshot below, you can see that this shop has 20 prints in stock and the alert will be sent when there are three left.
Have different sizes or other variables of the same item? Square supports setting up different price points and variants, too. Square does not support partial quantities â but donât lose heart! If you sell in partial quantities, you can work around this issue by setting up a Variation, as seen in the screenshot below.
Whether youâre a micro shop or you move hundreds of items a day, you can set Square up for what makes sense for your business. However, if your business has several hundreds of items, youâre likely going to find the inventory navigation a bit unwieldy. Thatâs because you have to scroll to find the item manually; you canât just type the name in a search bar. Square does offer a more robust solution with Square for Retail (See our review), starting at $60/month/register/location.
To keep up with inventory and track customer spending, you can also assign your products to specific categories. Keep in mind that all of the initial work you do to distinguish your inventory through categories, variations, and accurate item descriptions pays you back with richer insights when it comes time to check out your reports. Square creates free basic reports such as Sales Summary, Sales Trends, and Category Sales, to name a few.
Itâs worth it to mention that if you are in a time crunch or you donât have an item already in your inventory, you can still ring it up easily in quick sale mode â simply punch in the amount, and youâre ready to take payment!
The proof is in the pudding â loyalty programs lead to more customer spending. This fact is proven time and again in retail spending statistics, but Square also reports that customers spend over 30% more after joining their loyalty program. Thatâs a nice chunk of change, but making the loyalty program work for your business is the key to profitability.
The Square Loyalty Program is not free â it starts at $45 and the prices scale with the number of loyalty visits. That means that you wonât be paying for what you donât use, but we still suggest checking your reports to track success. However, you really are in charge of the program and its success in your business. Thatâs because everything is highly customizable. From a classic digital punch card to earning points each visit, you control what â and how â your customers earn rewards with you.
According to Square, merchants get the best responses with their loyalty program by offering a meaningful reward, making the reward happen sooner rather than later (about 30 days from enrollment), and limiting the rules when it comes to earning rewards.
When you ask your customer to join your loyalty program, they enter with their phone number, which you can then promote via text messages. The other cool thing about the loyalty program is that the add-on software gives you even more data about your customerâs purchase history and buying behavior. All of this information makes it easier to personalize customer service or even plan your next promotion.
The optional employee management software can make a significant impact on your business if you have multiple locations or many employees. From customizing permissions to timekeeping, performance tracking, and advanced reports, there is a lot of potential here.
With your basic Square account, you can let employees take payments as Mobile Staff and allow or disallow issuing refunds. Beyond these two functions, you are limited unless you opt for Employee Management at $5 / month per employee, however.
For example, employee-specific reporting only comes with advanced Employee Management. In the screenshot below, you can see what types of insights are available under the Employee Sales reports that come along with Employee Management.
In addition to gaining better insights regarding your employeeâs performance, you also have much more control over employee permissions. Choose who has access to cash drawer reports, assign individual access codes, and choose other custom permission settings both at your Point of Sale and in your Dashboard.
Cash Drawer Management
From the Square Point of Sale app, you can enable cash drawer management to promote greater accountability across the board. Take note that you can only manage your cash drawer from an iPad or Android tablet â you canât track and manage with your smartphone. Basic information about your cash drawer session includes:
Cash paid in and out
Expected cash amount in drawer
Cash Drawer Management lets you know exactly how much cash you start with and what to expect in the drawer at the end of the session. You can set up cash drawer reports to be auto-emailed at the end of the business day. Because the reporting is specific to the device connected to your cash drawer, youâll have to run a separate report for each device. You can view your drawer history at any time from your Square app, too. All you need to do is select the date and the drawer session to see details.
If you have Employee Management software, you can also control employee access to your in-app cash drawer reports. Grant your manager access while restricting other employees from accessing cash reports you may not want to make privy to everyone.
For days when even the Internet canât seem to work correctly, being able to accept payments offline prevents losing customers and sales. Offline Mode is also a game changer for the many businesses who arenât bound to four walls. Whether you have set up shop in a more remote location or you are a mobile business traveling across the country, you can use your offline mode to swipe your card and securely accept payments. There are a few things to keep in mind when it comes to Offline Mode, however:
Offline Mode only works with a magstripe swipe card, and you must swipe it.
You have to connect to the Internet within 72 hours of the sale, or it expires.
Offline transactions automatically process when you get connected with the Internet again.
If payment doesnât go through after connection, you are responsible for the cost of goods or services.
The good news is that thereâs no additional charge for Offline Mode, just the standard rate of 2.75% per swipe. And there are a few things you can do to protect yourself from the issues listed above. When you take a sale in Offline Mode, be sure to check for the signature on the back of the card and have your customer sign so you can compare signatures. Checking your customerâs ID is also recommended, of course. Youâll also want to double check the cardâs expiration date. If you remember these simple best practices, you can still accept offline payments with a reasonable amount of assurance that your sale is good to go.
Is Square Right For You? Â
Square offers a wide range of features to support a growing small business. If you are adding employees and locations, Square is ready with advanced software that grows with you, including Employee Management and the highly customizable Loyalty Program. (Not to mention the less glamorous but just as important features like cash drawer permissions, inventory management, and offline support.)
Want to find out even more about Square? Check out our Square POS review for more insights on the Square Point of Sale or visit our full Square Review for more helpful insights. If youâre ready to try Square out and see for yourself, head over and set up your free Square account to start processing your first payments!
The post 6 Square POS Features To Run Your Small Business Like a Pro appeared first on Merchant Maverick.
So youâve decided your business needs a new credit card. Unfortunately, youâve heard that the credit card application process can negatively impact your credit score, and since credit history can impact your business’s ability to make financial moves in the future, you donât want to apply for a card unless youâre sure youâll be approved.
Luckily, many issuers offer checks to see if youâre prequalified for their credit card offers. This will give you a chance to see if you should go through with applying for a card. Once youâre prequalified, youâll have the confidence needed to go through the full-on application process.
For everything you need to know about prequalification, keep reading. Weâve got you covered!
What Does âPrequalifiedâ Mean?
Prequalified means that youâve been selected as potentially âqualifiedâ by a credit card issuer for a particular card offer. Usually, the issuer has done a soft pull on your credit score and found that youâve met the certain criteria necessary to qualify for the credit card. This soft pull should not affect your credit score.
In some cases, you may also be deemed prequalified because an issuer bought your information via a marketing list from a credit bureau. In this case, the issuer may check if you are on their list to see if you are prequalified.
If you are prequalified for a credit card, you have an 80% to 90% chance of actually qualifying for the card should you go through the application process. Itâs worth adding that you donât need to be prequalified in order to apply for a cardâyou can still be approved without prequalification. This process just gives you extra confidence before actually applying.
Note that by actually applying for a card, the issuer will likely perform a hard pull on your credit history. This will show up on your credit history. In most cases, a hard pull wonât be a problem long-term because having a credit card should only help your credit into the future (as long as you follow the best practices for a credit card). However, youâll want to avoid applying for too many cards in quick succession as frequent hard pulls in a short span may lower your credit score.
How To Get Prequalified For A Credit Card
There are several ways to get prequalified for a credit card. Here are the most common:
Online: By far, the best option is to go to an issuerâs site and check for prequalification via their own checking tools. In most cases, this will take only a few minutes. Plus, youâll be able to see if you qualify for a card offered by an issuer you already like. In addition, some of our favorite credit scoring-checking websites also have prequalification tools readily available for you to use.
By mail: Issuers frequently send out credit card offers to people who have met their prequalification criteria already. As such, if youâre looking for your next card, simply opening up your mail might be a quick and easy option. Of course, this method doesnât offer much flexibility when it comes to what youâre preapproved for.
In-Person: Many physical bank branches offer prequalification checks. Note that you may already need to be a member of the bank beforehand, however. Additionally, you might be able to go to a retail store and find out during check-out if youâre prequalified for that storeâs co-branded credit card.
Most major credit card issuers let anyone check online for prequalification:
Bank of America
Other issuersâlike Synchrony Bank, Wells Fargo, or USAAâeither donât have an online prequalification serviceÂ or only let current members check online.
FAQs About Prequalified Credit Card Offers
Will getting prequalified hurt my credit score?
In almost all cases, no. This is because issuers do a soft pull on your credit history, which does not impact credit scores. Note that actually applying for a card (which causes a hard pull) will affect your credit history.
Can I get prequalified if I have bad credit?
Yes. Different issuers have different requirements when it comes to prequalifying someone for a credit card. So just because you werenât prequalified for a particular card doesnât mean you wonât be prequalified for another one.
Curious which credit cards are aimed towards people with bad credit? Merchant Maverick has your back.
Is there a difference between being pre-approved and prequalified?
Yes, although the difference is very slight. If youâve been prequalified for an offer, it means that your credit score likely falls within the recommended range for a particular card. If youâve been pre-approved, however, the issuer has targeted you more specifically for an offer.
Do I have to get prequalified before applying for a credit card?
No, becoming prequalified just gives you extra confidence before actually applying. You can still be approved for a credit card without being prequalified.
Prequalification processes can help give you peace of mind before applying for a credit card. They can potentially shield your credit score from an unnecessary hard pull and save you hassle, letting you focus on what mattersâyour business.
Did a check but didnât get prequalified? Find out how to improve your credit score. Did get prequalified but want to know if that card is the right choice? Read up onÂ our favorite business credit cards.
The post How To Find Out If You Are Prequalified For A Credit Card appeared first on Merchant Maverick.
It’s safe to say that nothing is ever free in payment processing (and if it claims to be, you should be very suspicious). But trying to understand why some types of transactions cost more than others to process can be aÂ confusingÂ and sometimes overwhelming process. For example, why does Square charge 3.5% + $0.15 for keyed transactions and just 2.75% for swiped, dipped, and tapped transactions, even though they both go through the Point of Sale app? Why do invoices and online orders cost more than payments processed with a POS app and credit card reader? The answer is that itÂ matters whether a transaction is deemed “card-present” or “card-not-present” (CNP)Â — in fact, it is a critical factor in payment processing costs.
A card-not-present sale is any transaction where the cardholder does not present their card to the merchant. While that general definition may seem pretty cut and dry, the reality is a bit muddier. Hereâs what I mean: Even if your customer takes out their physical credit card, the transaction is not considered a âcard-present saleâ unless they actually swipe, dip, or tap it. Manually entering a card number throws the transaction into card-not-present territory.
And when a customer taps a credit card terminal with their phone at a coffee shop? That transaction is actually considered a card-present sale even though the merchant technically never sees a physical credit card!
Confused? Donât worry. Keep reading; below, we’ll break down some more examples of card-not-present transactions and help you understand why they cost more to process. We’ll also talk about what â if anything â you need to change in your payment processing setup to protect your business.
The reality is, whether you have a brick-and-mortar store or you run an eCommerce business, you need to understand how CNP transactions affect your business, your customers, and your bottom line. Thereâs much more than meets the eye when it comes to distinguishing from a card-not-present and a card-present transaction, including how much it costs you and the security risks involved. Letâs dive in!
Card-Present VS Card-Not-Present Transactions
Let’s start by talking about what a card-not-present sale actually entails. Once we do that, these transactions will be a little easier for you to identify (and help your sales team navigate the whole issue as well.) A card-not-present sale is any sale processed that does not capture the electronic data of the card at the time of the sale. Â
Itâs not always super cut and dry. Sometimes merchants donât understand that being handed a credit card doesnât automatically qualify the transaction as a card-present sale. It all depends on how it is processed. For instance, say you are at a festival and decide to buy one-of-a-kind art from a vendor. You hand her your card, and she breaks out a little manual machine and makes a carbon copy. Even though you physically handed the vendor your card, this still counts as a card-not-present transaction. No electronic data was captured.
Another example involves Visa and Apple Pay. You can consider any in-store purchase made with Apple Pay a card-present sale, but any payments made using Apple Pay in-app are considered card-not-present. Thatâs because when a customer uses a digital wallet by tapping or scanning a QR in the store, the electronic data of the card is captured in real time. In-app purchases do not capture the electronic data at the time of the sale.
For the most part, the main thing to understand is that transaction categorization ultimately boils down to whether electronic data was captured.
Common Card-Not-Present Transactions:
Invoicing a client
eCommerce / online shopping
Recurring payments that are automatically billed (subscriptions)
Common Card-Present Transactions:
Countertop credit card terminals
Tapping or scanning digital wallets
Swiping via a card reader on a tablet or smartphone (e.g., Square)
If your revenue depends on processing payments with anything other than a POS app and credit card terminal or mobile card reader, it is worth your time to understand how to keep your transactions safe. Processing credit cards costs money whether you process in person or online, but you will face slightly higher fees for processing card-not-present transactions.Â
Understanding The Cost Of Card-Not-Present Transactions
Why are you charged more for card-not-present transactions?Â It’s pretty simple, actually. Card-not-present transactions cost more because there are simply more ways for them to fail. From chargebacks, friendly fraud, and malicious fraud, there is more vulnerability and subsequent cost when things go wrong.Â Â Granted, all credit card processing poses some risk — that’s why businesses have contracts with processors, and why high-risk merchant accounts exist. It comes down to which methods of payment processing (and sometimes even which businesses) present the most risk.Â
With a merchant account that offers interchange-plus pricing, you will pay a higher interchange rate for card-not-present transactions because the card networks want a return in exchange for accepting some of the risk. Even third-party processors, which don’t overtly pass interchange costs directly to you, still build the costs in by adding a markup to their base rate.
It’s also important to understand that not all card-not-present transactions pose the same risks. For instance, you are generally going to pay a higher cost for a keyed-in entry than for an online transaction because there are typically some built-in security measures (like address and CVV verification) for online purchases, whereas there are no security measures for keyed transactions.
Want to know more about how credit card processing works? Check outÂ The Complete Guide to Credit Card Processing Rates & FeesÂ for an in-depth look.Â
Below we talk more about card-not-present fraud and what you can do to protect your business.Â
The Cost Of Fraud
Unfortunately, when it comes to CNP sales, the industry is currently seeing an increased rate of fraud for online transactions. The rollout of chip cards and the EMV liability shift in the US for card-present salesÂ actually plays a major role in the increase of card-not-present fraud, and it’s something that financial experts predicted would happen based on EMV adoption in other parts of the world.
While we certainly donât want to strike fear or dread into any of our readers, the fact is that card-not-present transactions make you more vulnerable to fraud because the physical card data canât be verified. Not only can a card data breach turn into an embarrassing public relations issue, but the business owner is ultimately responsible for absorbing the cost of any fraudulent charges in a card-not-present sale.
A recent press releaseÂ from LexisNexis demonstrates that the cost of fraud is rising. Last year, every dollar ($1) of fraud cost a merchant $2.77. This year, it’s predicted to cost $2.94 on average. And if you are in the digital space, the cost is even a bit higher.
Small businesses need to stay on guard just as much as any medium or large business. The unfortunate fact is that fraudsters are looking for vulnerabilities like outdated data security practices, and small businesses are very likely to be targeted.
There are some very sobering statistics from UPS Capital:
Nearly 90% of small and medium-sized businesses in the U.S. donât use data protection for company and customer information.
Less than half have secure company email processes to prevent phishing scams.
60% of smaller businesses are out of business within six months of suffering a cyber attack.
It is vitally important to be aware of the risks and know how to protect yourself.
Read on to learn more about fraud and what you can do to protect your business if you accept card-not-present transactions.
Protecting Your Business From Fraud
Taking a proactive approach to preventing fraud is a smart move. In this post, we focus on understanding the risks and cost of card-not-present transactions, but card-present sales are certainly not exempt from fraud. If your business processes both types, check out the Merchantâs Guide to Preventing Card-Present FraudÂ for a great breakdown of information on how to protect your business from card-present security issues.
Your first defense against fraud will always be PCI compliance. PCI DSS is an acronym for Payment Card Industry Data Security Standard, which dictates the industry-standard procedures and security measures a business needs to make to protect customer data.
The good news is that unless you are dealing with homegrown software for your payment processing system, you are likely operating with PCI compliant equipment and software. Thatâs because all payment processing software and equipment vendors go through a strict certification process to ensure their products meet industry standards for security.Â
That being said, you still need to take the time to read your contract and understand if there are any steps you need to take to ensure continued compliance.Â Third-party payment processors such as Square are automatically PCI compliant and do not require you to do anything specific to maintain compliance — at least not as far as the contract is concerned. (As a general rule, you should keep yourself informed on PCI compliance and what constitutes a suspicious transaction that could get your account flagged for fraud.)Â
With merchant accounts, PCI compliance is a lot more varied and partially depends on whether you use the provided software or integrate with a third-party. You may be obligated to complete a scan or assessments, or potentially much more depending on your payment processing setup.
The key takeaway is this: PCI compliance is never a one-time event. Assessment, remediation, and reporting is a continual process with best-practices changing each year. Even if your processor doesn’t require you to do anything to maintain compliance, it’s important to make sure you know what security best practices are.
According to the PCI DSS Quick Reference Guide, some habits can put you and your customers at risk for fraud.Â Within the guide, the PCI cites activities that are common across the board in all types of U.S. and European businesses (page 4):
81% store payment card numbers
73% store payment card expiration dates
71% store payment verification codes
57% store customer data from the payment card magnetic strip
16% store other personal data
Let’s break down that first statistic. The majority of business owners store their customers’ credit card numbers. But where?Â Unless you’re using PCI compliant software with a secure credit card vault, you could be exposing yourself to risk and liability â big time.Â
Following best practices and keeping yourself up-to-date with PCI compliance is one of the most important things you can do to prevent fraud.Â Another thing to remember is that it is up to you to ensure your team knows what not to do, too. A retail employee who keys in the majority of her transactions may be helping others commit fraud — or she may simply have trouble getting the credit card terminal’s card readers to work. But you won’t know until you check up on her.Â
Once your bases are covered with PCI compliance, you can rest easy knowing that your legal and liability concerns have at least been reasonably mitigated.
Additional layers of security may be worth looking into as well, especially if your livelihood involves online sales
Address Verification System (AVS):Â This system checks to see if your customerâs address is the same as the person who owns the credit card. Verifying the billing address or zip code against Visa or MasterCard billing information of the cardholder can prevent misuse and protect your business from fraud.
CVV Checks:Â A CVV check requires your customers to enter in the additional three numbers at the back of the card (four digits for American Express). Since this information can be stored (and also stolen), it alsoÂ makes sense to require customers to re-enter the card code whenever there is an unrecognized device or change to a shipping address.
3-D Secure: This provides an extra layer of security for online transactions. If you have heard of MasterCard SecureCode, Verified by Visa, or American Express Safekey, then you are familiar with 3-D Secure. MasterCard SecureCode, for instance, requires a PIN code to be entered into an inline window that is securely hosted by the issuing bank. The code is never shared with you directly. This authentication step is designed to reduce your liability and improve security. Many processors that cater specifically to online businesses, such as Stripe, offer 3D Secure bundled with their services.
Fully grasping the nuances of credit card processing can be difficult. However, itâs definitely worth taking a bit of time to understand how and why card-not-present transactions are different from card-present payment processing.
Even merchants who run brick-and-mortar shops have to deal with the cost of CNP payments. If you have a storefront shop, taking the time to train your team to spot the difference between the two types of transactions and keeping up with the latest compliant software/EMV readers will go a long way towards keeping your costs down âand your payment security tighter.
If you run an online business, your focus should be on making sure you have the appropriate security measures enabled with a good payment processor â preferably one that does the bulk of the work for you!Â At the end of the day, you will take the hit from chargebacks and fraud if you donât have the right protections.Â
Shopping around for eCommerce businesses solutions? ReadÂ How To Choose An eCommerce Merchant Account.
The post What Is A Card-Not-Present Transaction? appeared first on Merchant Maverick.
As a small business owner who is launching a new shop or exploring your payment processing options, finding the right POS to accept payments is notÂ a decisionÂ to be made lightly. You probably already know that the grocery industry has its own unique rewards and challenges. Keeping up with supply and demand, getting your name out there, competing with the bigger brands, and strengthening your own brand recognition takes time, energy, and a lot of know-how. Fortunately, Square offers a fantastic POS option for markets and grocery stores that goes way beyond just the swipe.
Read on to find out how Square payment processing tools can benefit your business whether you are opening a pop-up shop, have a brick-and-mortar store, or take your culinary delights on the go to farmer’s markets and trade shows.
Squareâs Free Point-Of-Sale Reader & App
Square is best known for the free Square Point of Sale app and the free Square Reader. Square’s iconic white reader plugs into a smartphone or tablet to make mobile payments possible. The Square Point of Sale app allows you to âswipe, dip, or tap paymentsâ whether or not you have an internet signal. If you run into a spotty WiFi connection or have a service interruption, you donât have to worry about a line bottleneck because the app can securely save data offline.
For the smaller to mid-size shop, the Square Point of Sale app has everything you will need and then some. We dive into all of these features below, so keep reading for a closer look at how Square gives you better control over more parts of your business, from inventory management to sales, employees, and even more.
Weâll also take a look at how Square can also help you completely run or supplement your marketing campaigns with an all-in-one solution that can integrate a loyalty program and private customer feedback. Most of these perks (except for the loyalty program option) are all âin-the-boxâ features that you wonât pay anything more to use with your free POS Square reader. Â Letâs dig in!
Free App & Reader
Square for Retail
Square for Restaurants
Free, general-purpose POS software and reader for iOS and Android
Easy integration with popular platforms plus API for customization
Specialized software for more complex retail stores
Specialized software for full-service restaurants
One thing will never change â people love to eat. However, keeping your supply up-to-date can be a challenge when it comes to balancing the ebb and flow of demand. Your customers come in for a specific product or ingredient; making sure itâs always there for them builds loyalty and trust. Managing inventory can be tricky if you donât have the right tools.
Thankfully, Square builds inventory management right into their product, so you donât ever have to think twice about shopping around for a suite of tools. Itâs easy to set up your inventory â you can bulk import all of your products with a CSV spreadsheet and make any adjustments to name, prices, or quantities as needed. Once your inventory is saved, you can also set low-stock alerts so that Square will let you know if you’re running low on a product. The best part is that you can determine what constitutes “low stock,” whether that’s six of an item, or 100! Youâll also always be able to take a peek in real time at what â and how much â of your products are selling.
Square’s inventory also supports variants and modifiers. Variants are helpful if you carry a product that comes in different flavors or sizes — you can keep the item listing centralized, but still track quantities of each flavor or size and see which ones are most popular. You can even set different pricing for each variant, as appropriate. Modifiers are more applicable to restaurants and cafes, but if you run a small boutique store and want to upsell customers on special bundles or extra discounted products, you could add them as modifiers.
Square’s inventory system allows you to upload photos for each product, and on a tablet you can configure the layout of products. However, if you don’t like browsing for the right item, you can also attach a barcode scanner. While the free Point of Sale App doesn’t have native label printing, you can find several viable workarounds.
Also, if you sell products in bulk, it’s important to know that Square doesn’t currently support tracking partial increments of a product, or selling by weight. Again, you can find workarounds for this, one of them being the variable price point feature. With the variable price point, you can create an item and track sales, but the POS app will prompt you to enter an amount for the sale when you select the item.
Finally, if you have more than one shop, you can take advantage of the free multi-location inventory management tools. Square allows you to set up individual preferences for each location, including taxes. You can build your inventory from Square’s centralized item catalog and adjust pricing and availability as appropriate. Plus, you can run reports to see sales by location, POS device, or even by individual employee (you’ll need an Employee Management subscription for that last report.)Â
The best part is that you can control all of this — every location, all of your inventory, all of your devices — from your Square Dashboard, which is a free web portal.Â Below we also cover a little bit more about the dashboard â including how it helps you keep track of employee sales, tips, peak sales times, and more.
The Square dashboard gives you an integrated look at many aspects of your store â and these reporting and analytics features are all free. You can view your stats in real time and see what is going on in your store â or stores â simply by visiting the Sales tab in the dashboard. Whether you want to dig into the data or you just want a quick visual representation of sales, you can find what you need, fast. You can access reports, view all types of transactions, and keep track of deposits all by quickly scanning the three tabs at the top of your dashboard.
The reports tab breaks all of your data down into simple graphs and data to view aspects of your shop, including:
Sales Summary: Your sales summary report is updated in real time and can be viewed by day, month, or year.
Sales Trends: See your sales performance in daily, weekly, or yearly views.
Payments Methods: This report displays how your customers pay and any fees associated with the transaction.
Item Sales: Allows you to find out how well any individual product is selling.
Category Sales: Get a quick pie-chart view of which categories are bringing in the most sales such as appetizers, side dishes, or drinks, for example.
Employee Sales: This report breaks down tips, hours worked, and when an employeeâs sales peaked for the day. (Note: You need to subscribe to Square’s Employee Management to access these features)
Discounts: Running a promotion? This report tells you how often your customers use a discount, coupon, or another offer when they buy. (More about loyalty programs through Square later in the post.)
Taxes: This report breaks all of your tax information down by the type, amount, and records any non-taxable sales in one spot.
Square also allows you to create your own custom reports, so if you want to see certain pieces of information together, you can tell Square to compile that report for you, and even how often to send it.
Don’t forget that the Dashboard is also the centralized management hub for all of your other Square services, including invoicing, employee management or payroll, and any other tools you might be using.
Built-In Marketing Engagement
One of the interesting aspects of Square’s platform is its customer engagement tools, the foundation of which is the customer directory. With Square POS, you can keep a record of all your customers, with their name, phone number, email, purchase history,Â and even card details, if you prefer (and your customers agree to store the card on file). You don’t need to have Square’s loyalty program to activate this feature, and it comes at no charge. It’s a great way to keep notes on regular customers and their preferences, to see who your most loyal customers are and who spends the most money in your store.Â
If you’d like to build marketing campaigns to reach out to your regulars, your new customers, or even lapsed customers, Square has the tools built right in, plus all of the data right at your fingertips. Square’s marketing services start at $15/month, which is a pretty reasonable price. The price will scale with your use of the marketing services.
With the marketing tools, you can segment your customer list and target people automatically with offers to get them in the door. So whether you are welcoming a new customer or re-engaging a customer you havenât seen in a while with a with a special discount, Square lets you tailor your marketing message to people at different spots in the buying journey.
The email tools are simple â you donât have to understand how to set up multiple campaigns because Square streamlines the creation process for you through prompts. They give you a lot of template designs to choose from and even have some holiday and special occasion suggestions. You can send out a one-time email for a birthday or set up recurring email campaigns that encourage more interaction and more opportunities to buy from you — it all depends on how you want to run your business.Â
Finally, when itâs time to review the success of your email campaigns, Square reports show you how many opens and clicks you get, as well as how many people redeem your offer.
Receive & Manage Feedback Privately
The Feedback feature can be helpful if you want a way to take charge of the customer experience and try to eliminate the troubles they encounter. It allows you to personally engage your customers â while keeping everything private. When you enable feedback management, customers who receive digital receipts also receive an invite to provide private feedback about their experience.
You can then resolve any issues between just you and your customer and hopefully make them happier and engaged. The idea behind this is that it is much easier to respond to private feedback than having to keep track of and respond to negative public feedback. Most customers appreciate being acknowledged whether the experience was good or bad, and if you do have an unhappy customer, you can make it right with a full/partial refund or a coupon for a discount on their next purchase. You can check the customer database to see what their purchase history is like and make a determination of the best offer to send.Â
Best of all, the feedback management feature is totally free to use!
Square Loyalty Program
Square encourages customer engagement and sales in yet another way â a loyalty program.Â The pricing structure of Squareâs loyalty program is based on the number of loyalty visits, starting at $25/month. Costs automatically adjust with the participation of your customers, and you can always track the success of any program at your dashboard to see if youâre getting your moneyâs worth.
Square’s loyalty program is very flexible and allows you to tailor rewards to your business and your branding. You can opt for something as simple as aÂ digital punch card, where customers earn a reward after so many purchases, or you can structure a moreÂ advanced reward system that allows your customers to collect points and cash in their rewards when they want. You can even let them choose from multiple tiers — they could opt for two lower-tier rewards, or spend all their points on a single higher-tiered reward.Â
However you choose to structure your rewards program, you can track the performance on your dashboard. You can see how many customers enroll, how often customers redeem rewards, and how many subsequent repeat visits youâre getting.Â
According to Square, customers who join their loyalty programs spend 37% more after they join it. Across the board, loyalty programs continue to work for businesses of every size to encourage repeat business, and we think that itâs definitely worth giving it a try for a while and seeing if it works for your business.
Fully PCI Compliant & Secure
When dealing with credit card processing companies, one of the biggest questions most business owners have has to do with safety and security. You want to know that your data is secure and your customerâs payment information isnât going to be compromised, because when it all boils down, the burden is on you to make sure that you are PCI compliant. “PCI” is shorthand for the Payment Card Industry Data Security Standard (also sometimes called PCI DSS). No matter how big or small your business is, if you accept credit cards, you have to follow the best practices of the industry when it comes to security â and you can face penalties if you donât.
To remain secure and compliant for each credit card you take, you have to follow the security guidelines when you swipe, key in, store, or transmit their card data. For starters, data must be encrypted properly at each stage of processing and storage, and each year the standards change.
The whole security and compliance issue can be expensive for the smaller to midsize business, and for some, the issue is intimidating enough that they avoid credit card payments altogether.
The great news is that when Square offers you their product or service, they are taking the burden of PCI compliance on themselves when it comes to their hardware and app. Square is an industry leader in security and compliance. Their team participates on the PCI board itself and has an inside view into the ever-changing world of data security. What that means for you is that when you use Square, you donât have to jump through any other security hoops â Square maintains PCI compliance and does the work for you. You won’t even need to pay any PCI compliance fees.Â
Cost Per Swipe & Getting Started With Square
Getting started with the Square POS app and the reader you will use to swipe your customerâs cards is entirely free. Square continues to remain a favorite among small business owners because they donât charge sign-on or monthly fees for their free POS reader or app â and they donât make you sign contracts and punish you with charges if you decide itâs not for you.
If you bring your own smartphone or tablet and combine it with one of Square’s mobile card readers, you’ll pay 2.75% for each swiped, dipped, or tapped transaction. If you opt for one of Square’s all-in-one hardware systems, such as Square Terminal or Square Register, you’ll pay slightly different rates. With Square Terminal, swiped, dipped, or tapped transactions process at 2.6% + $0.10 per transaction.Â If you want to know more about all of Square’s different card readers and hardware, check out A Guide to Square’s Credit Card Readers and POS Bundles.
Considering that these are pretty low rates to begin with, and there are so many additional built-in features like dashboard analytics, invoicing, the customer database, and inventory management, we think that is a pretty sweet deal for any grocery store looking to expand.
If you are curious and want to dig even deeper, check out our Square reviewÂ or visit the Square Point of Sale page and sign up for free to see how it all works for yourself!
Free App & Reader
Square for Retail
Square for Restaurants
Free, general-purpose POS software and reader for iOS and Android
Easy integration with popular platforms plus API for customization
Specialized software for more complex retail stores
Specialized software for full-service restaurants
The post Why Square Is A Great Free POS For Markets And Grocery Stores appeared first on Merchant Maverick.
Quora Ads are one of the myriad options for advertising online. Like eBay, Reddit, and LinkedIn, Quora is one of those Web 2.0 properties that feels like it should be dated, but remains surprisingly relevant.
In fact, while Quora is itself has been around since 2009, Quora’s self-serve Ad Platform only rolled out in 2016.
Quora has 300 million active users and some interesting reasons to advertise.
Why Use Quora Ads
First, you have access to both social data and search intent.
Like Pinterest and Reddit, you can reach people based on demographic and psychographic data AND you can reach people who are actively searching for answers OR you can layer both to run hyper-targeted campaigns to people who are both your target customer and actively researching.
Second, you have access to lots of qualified organic traffic. Quora has plenty of internal usage. But their organic search traffic is their secret weapon.
Due to their brand and enormous amount of content, they rank well in Google & Bing for highly qualified search terms. I’ve written how you can use Quora for “barnacle” SEO and content.
But – that approach requires work. With Quora Ads, you can pay to jump to the front of the line. Advertise on pages that rank well for target keywords.
Third, you get to define best practices & deal with lower competition.
Every big brand and agency is on Google & Facebook. Best practices and budgets are well-defined. Quora requires more work and thought to succeed.
I’ll share my experience in this post, but my main takeaway is that there is no “right” answer. Quora is still wide-open and open for testing & experimentation. If you have more time / skills than budget, Quora is a great place to go.
How To Setup Quora Ads
Quora has done an excellent job with self-service. The platform is straightforward and comes with a surprisingly useful email course.
To get started, all you need is some basic business information.
Within your Ads Manager Dashboard, you can Manage Ads, setup a Quora Pixel, manage your retargeting audiences, and setup email reports.
Whether you setup an ad campaign or not, I highly suggest that you immediately implement your Pixel, dabble with Audiences and setup a couple curated Email Reports.
Quora has a the familiar menu of retargeting audiences. Standard setup is for Website Traffic.
In the next step, you’ll setup your Quora Pixel to tag visitors. You can pre-segment your Website Traffic to make retargeting a bit easier.
If you have a lot of educational content on your site, I would start with that segment. Quora is a common research tool, especially with high-consideration purchases. If you can reach users doing intensive research across platforms, you’ll be less likely to lose them.
Additionally, once you’ve built an audience, you can create a Lookalike Audience.
This feature is huge because you can reasonably expand your reach across Quora to reach someone who you *know* is familiar with your brand.
Remember how I mentioned that Quora is hybrid social / search? This is where that power comes in.
For example, imagine you are recruiting entry-level engineers out of college.
You have the ability to tag visitors to your site, and then reach them throughout Quora whenever they are asking career related questions.
Plus – you’ll get insight into the types of questions that you your audience asks. This feeds back into a successful content strategy based on data that *only* you have access to.
Lastly, if you have permission, you can upload a list of current contacts to rebuild your existing customers within Quora.
It’s a lot of work, but for high consideration campaigns, it’s worthwhile.
Like any & all retargeting strategies – Audiences can be creepy, invasive, and sometimes illegal in the European Union without explicit consent.
Most people either consent or live in jurisdictions that do not require explicit consent. These tools do exist and are worthwhile for many businesses. Retargeting is here to stay. The key is to keep it classy. Time, thoughtfulness, and testing creates the best outcome for advertisers, publishers, and customers.
Email Reporting is straightforward. But I would set the settings you like so that you actually view the reports rather than automatically deleting them.
Now you’ll need to set your Quora Pixel, which is the snippet that “fires” on your webpage to track website visitors.
The setup depends on your website, but you’ll need to place it wherever you have your Google Analytics tag.
Now you can get started on a campaign! Head to Manage Ads and select your objective.
If you select Conversions, you’ll need to select a conversion type to pass to your Quora Pixel. You’ll also have to manually tag any actions (like Add to Cart).
Conversion Tracking is accurate and can be worthwhile. But unless you are running large campaigns, some of this Conversion Tracking might not be worth the effort.
For my campaigns (and most advertisers), I use the Traffic objective. But I also tag all of my ads so that I can track conversions within my existing Google Analytics setup.
Once you’ve created your Campaign objectives, you’ll need to set up a new Ad Set.
Ad Sets each have their own targeting and bids. After setting up an Ad Set, you’ll write individual Ads for each ad set.
But Ad Sets are where the fun really happens.
You have 4 primary targeting methods. I’ll cover each below. But the short version is that you can do –
Topic Targeting – Target content that falls within a category regardless of user interest.
Question Targeting – Target specific questions on Quora regardless of topic or user.
Audience Targeting – Target your audiences everywhere on Quora (see above).
Interest Targeting – Target people who are interested in a topic regardless of content.
After that, you can choose several secondary targeting methods. You can focus your ads by Location or Device. You can also exclude specific questions or audiences (ie, people who have successfully purchased from your site).
Topic and Question Targeting are my favorite options. They both target based on content not the user.
When you are looking to expand reach or target based on intent – this is the option that you should use. Topic Targeting lets you quickly target a bunch of questions quickly.
The key to Topic Targeting is to provide Quora with a relevant but broad set of keywords. There’s a bit of an art to it, but be sure to play around with different combinations before committing to a set of Topics.
Additionally, make sure you go and manually explore those Topics to vet the questions, the likely audience, and and related Topics that you are missing.
But if you have time, the best targeting option is Suggested Questions.
With this option, you can advertise with specific ads on specific questions.
From a purely data perspective, this targeting option is the only place to get Weekly Views stats for Quora questions, which can help your content marketing efforts separate from any paid campaigns.
Interest Targeting targets the user rather than the content that they are looking at. This option is great for casting a wide-net to reach your audience everywhere on Quora.
However, note that you’ll reach them even when they are looking at irrelevant questions. This option is great to layer with other options (like exclude questions). Be careful using it alone though.
There are also options for targeting an existing audience and also a Broad Topic option.
After selecting your targeting with exclusions and bids set, you’ll need to create your actual ads.
Quora provides lots of space and encourages “content-like” ads. They want complete sentences that are relevant to your targeting. They are not great for hard-sells, but pair *very* well with custom landing pages or educational content.
Be sure to add UTM parameters to your landing page URL to effectively track visits throughout Google Analytics.
That’s how you setup Quora ads. But keep in mind that the magic is in customized ads, landing pages, targeting and constantly improving each metric.
That said – how do Quora ads perform “out in the wild”? I’ve run a few campaigns for myself and for clients. Here’s the results of my most recent campaign.
My Experience with Quora Ads
Now – I almost exclusively use Question Targeting for my Quora ads. I also commit to spending probably too much time on research for my small campaigns (although some of that research gets re-used for content campaigns).
The campaign highlighted below was a fairly small content promotion campaign. I had a new piece of content that I wanted to promote without traditional, manual outreach.
I found several questions that aligned with the content. I devoted around $100 to promotion.
This campaign aligned with the common takeaways from my Quora campaigns.
The impressions were high for such a niche topic – and surprisingly consistent day to day.
The CTR was uncommonly high for online ads.
Conversions were solid.
Cost per click was a bit higher than expected, but nowhere near Google Ads territory.
Additionally, I did not have to filter or account for a lot of spam (I’m looking at you, Google Display and Facebook…).
My numbers in Google Analytics lined up perfectly with Quora. Engagement was high and as I’d hoped.
All in all, this (and all my campaigns) go back to the same general takeaways for Quora Ads.
Quora Ads are hard to roll out “at scale” but are very effective with the right amount of time devoted to set up & research.
They are great for high consideration ads and great to reach new, smart audiences.
You have to have the right website content to provide good, engaging landing pages.
Often small campaigns are worthwhile simply for the data.
In many ways, they remind me of both Pinterest and Reddit Ads. They aren’t for everyone, but certainly a solid opportunity for the right advertisers.
Quora Ads are not for everyone. There’s not a ton of inventory. To do it well, you really need to spend some time on your research and ad setup.
However, in an increasingly crowded and expensive online ad market, the market represents a solid opportunity.
At the very least, you should go set up an account and grab the Quora Pixel to build an audience.
From there, you can reach you existing users on yet another platform. You can expand your reach based on small tests and the time you have to research interests.
If you found this article useful, please link, share or bookmark. Happy advertising!
The post How To Advertise on Quora Effectively appeared first on ShivarWeb.
Financing any small business is a headache, but acquiring funding for a medical marijuana dispensary can be even more of a challenge. Medical — and recreational — marijuana is legalized in states across the nation, but it is still illegal under federal law. These laws make it more difficult for owners of medical marijuana dispensaries to apply for loans, open merchant accounts, or receive other types of financing to cover operating expenses or to scale their businesses.
However, even though financing may be limited, there are options out there. To fund your business, you have to know where to look and even get a little creative when other options donât pan out. Whether you need money to expand your business or youâre seeking funding for your startup, weâll review the financing options available to you and how to qualify. Read on to learn more and to move toward financing your medical marijuana dispensary.
Must be in business at least 9 months with a revenue of $42,000 per year.
Must have a personal credit score of 550 or above.
Borrower requirements (click to expand)
Medical Marijuana Dispensary Funding Challenges
Obtaining funding for any business is no easy task. You have to find a lender that offers the best rates and terms to receive the most affordable loan. Once youâve identified your lender, you go through the underwriting process, making sure you have all of your paperwork in order to prove that your business is qualified to receive financing. Challenges may pop up throughout the process. Depending on the lender you work with, it may take weeks or even months to receive financing, from start to finish.
With a medical marijuana dispensary, there are even more hurdles you have to clear on the race to financing. Even though more states are legalizing medical marijuana, it remains illegal under federal law. Most lenders want to avoid the potential legal repercussions of working with businesses in the cannabis industry, as these businesses are considered high-risk. Even opening a checking, savings, or merchant account for most medical marijuana dispensaries is a hassle, while receiving financing through traditional lenders is nearly impossible.
And if you do find a financial institution that will allow you to open accounts, there are many associated costs, including fees for background checks and for regular reports to the Treasury Department’s Financial Crimes Enforcement Network. Businesses that donât have merchant accounts and work with cash have additional business expenses to protect their earnings — think high-tech video surveillance systems and reinforced windows and doors.
In other words, medical marijuana dispensaries have the same expenses as regular businesses (utility bills, property leases, etc.) as well as additional expenses to keep their business protected. These expenses pile up quickly, but due to legal issues, traditional financing is often not an option. Therefore, medical marijuana dispensaries either have to make enough capital on their own to keep the business moving forward, or these business owners have to seek out other means of financing.
See our guide on best practices for using personal credit cards for business expenses
Can I Get A Dispensary Loan From A Bank?
Banks are insured by the Federal Deposit Insurance Corporation. A bank that works with companies that violate federal law will not be insured by the FDIC. This includes medical marijuana dispensaries. Instead of taking on this risk, most banks opt to simply avoid working with businesses in the cannabis industry.
There are also legal issues that a bank could potentially face when working with businesses in the cannabis industry. For example, a bank could be charged with money laundering for accepting deposits from a medical marijuana dispensary. Although the odds of this law being enforced are slim, lenders simply donât want to take that risk.
For those reasons, most banks will not loan money to medical marijuana dispensaries or other businesses in the cannabis industry. While a FinCEN report showed that over 400 banks in the U.S. operated accounts with marijuana businesses in early 2018 — up 20% from early 2017 — marijuana businesses still do not have access to a full range of banking and financial services offered to other businesses, such as loans, credit cards, and merchant accounts.
When most business owners canât receive funding from banks, they turn to another great resource: the Small Business Administration. The SBA provides educational materials, training, and low-interest, long-term loan options when small businesses canât receive traditional loans. Do medical marijuana dispensaries receive access to these same loans?
Unfortunately, the SBA does not work with medical marijuana dispensaries. A policy went into effect on April 3, 2018, that prohibits SBA intermediary lenders from providing loans to businesses in the marijuana and hemp industries.
Though this news may be understandably frustrating if youâre seeking an affordable loan, there are financing options available to you. You just wonât find them at a bank or through the SBA.
Equity Financing For Medical Marijuana Dispensaries
One option that you may consider to fund your medical marijuana dispensary is equity financing. With equity financing, an investor or group of investors will provide you with the capital your company needs in exchange for ownership interest in your business.
Debt refinancing — traditional loans, lines of credit, and other financial products — requires you to make regular payments along with interest and fees. With equity financing, youâll receive the money you need without having to make these regular payments. However, the tradeoff is that your investor will own a stake in your company. Once your business becomes profitable and successful, your investor will be able to take a percentage of your profits for the life of your business, unless you buy them out.
The benefit of equity financing is that you wonât have to worry about paying interest or regular payments right away. The drawback is that you are giving up ownership, and in some cases, the investor may be able to have a say in the operations of your business. For example, if later down the road you decide to make a large purchase to expand your business, the equity investor may disagree. With equity financing, you no longer have full control over your business.
The Best Loans For Marijuana Businesses
If equity financing isnât for you and traditional bank financing and SBA loans are off the table, how do you get financing for your medical marijuana business? Alternative lenders have made it easier than ever to receive funding. While rates and terms may not be as favorable as traditional financing, solid revenues and a high credit score can help you score affordable loans to fund operations or expansion of your business.
While you may find alternative lenders are more willing to work with your business, just know ahead of time that some lenders may have restrictions on financing businesses in the cannabis industry. Before applying, do your research to find lenders that work with medical marijuana dispensaries and other high-risk businesses.
You also need to consider what type of financing you need for your business. Whether you need a flexible line of credit or financing to purchase new equipment, alternative lenders have options available for you.
Must be in business at least 9 months with a revenue of $42,000 per year.
Must have a personal credit score of 550 or above.
Borrower requirements (click to expand)
When you receive a short-term loan, youâll receive one lump sum that can be used for any business purpose. A short-term loan can be used as working capital, to purchase equipment, for hiring new employees, or for other business expenses.
Although some short-term loans are true to their name and have shorter terms of 12 months or less, some lenders have repayment terms up to 3 years. Depending on the lender you choose, you may have daily, weekly, or monthly payments.
One way that short-term loans differ from other loan options is that most do not have an interest rate. Instead, a multiplier known as a factor rate (or factor fee) is used by the lender. This factor rate is a one-time fee that is added to the cost of the loan and replaces traditional interest. Like interest rates, your factor rate is typically determined by a combination of factors such as the performance of your business and your personal and business credit histories.
One of the benefits of short-term loans is that you often receive money quickly. Some lenders provide funding in as little as 24 hours, while others may approve and fund your loan in 3 to 5 days.
If you need capital to purchase new equipment, equipment financing is an option thatâs available to you. With equipment financing, you can purchase nearly any type of equipment for your business, from vehicles to point-of-sale systems to furniture and fixtures.
There are two types of equipment financing. The first is an equipment loan. When you receive an equipment loan, youâll pay 10% to 20% of the total cost of the equipment. The lender will pay the rest of the costs so that you can take possession and put the equipment into use immediately. If you have good credit, you may qualify for $0 down financing. However, putting at least a small percentage down, even when itâs not required, helps lower the cost of borrowing and your payment amounts.
After youâve received your equipment, youâll pay the borrower on a scheduled basis — typically weekly or monthly. Your payments will go toward the balance of the loan as well as the interest charged by the lender. Once you have made all payments as scheduled, you take full ownership of the equipment.
The second type of equipment financing is an equipment lease. With an equipment lease, you may also have to pay a down payment. Once you make the down payment, you can use the equipment through your lease period. Once the lease period ends, you return the equipment and sign a new lease for updated equipment.
With an equipment lease, you never own the equipment unless you pay the remaining balance at the end of your lease. A lease may be a good idea if you plan to upgrade any of your equipment regularly. Equipment leases may also come with lower down payment requirements and lower monthly payments. However, youâre essentially renting the equipment and you may end up spending much more over the long term with leasing.
Lines Of Credit
If you need a flexible form of financing, a line of credit is an option to consider. With a line of credit, you donât receive just one lump sum. Instead, the lender will set a credit limit for your account. You can make multiple draws from your line of credit up to and including the credit limit.
With a line of credit, interest or a fixed fee will only be charged on the borrowed amount. Fees and interest vary by lender and are usually based on your creditworthiness or business performance.
Even if you have credit challenges, you may qualify for a line of credit. Some lenders base their approvals solely on cash flow and other performance factors.
A line of credit is good for any small business because it is so flexible. Funds can be used for any business purpose, and you wonât have to wait for approval. Once you initiate the draw, the lender typically transfers the funds to your banking account immediately, and you can access your funds as soon as the next business day.
Lines of credit are also flexible in how theyâre used. You can use funds to cover operating expenses, hire new employees, handle an emergency situation, or for any other business purpose.
Merchant Cash Advances
If you havenât been in business long, have a low credit score, or donât qualify for other loan options, you may consider applying for a merchant cash advance.
Even though you can receive funding quickly through a merchant cash advance, these loans often have high interest rates and short repayment terms. This is why itâs more important than ever to do your homework to find a lender with the best rates and terms.
When you take a merchant cash advance, you agree to sell future revenue to the lender. The lender pays you a lump sum amount, and a factoring fee is added to the amount of the loan. Other fees may also be added.
The lender will then withdraw money from your account on a regular basis. Most lenders take payments daily, while others may have weekly or monthly schedules. These withdrawals will be made until the loan balance and all fees have been repaid.
Some merchant cash advances have fixed payments. Others deduct a specific percentage of your sales. When sales are up, your payment is higher. When sales are down, your payments are lower.
The funds from merchant cash advances can be used for any business purpose, including the purchase of supplies, inventory, and equipment or for use as working capital.
Crowdfunding Your Medical Marijuana Dispensary
Another option for financing your medical marijuana dispensary is crowdfunding. With the rapid growth of the internet, crowdfunding has become a popular option for many small businesses, even those in controversial industries.
Crowdfunding is a way to raise money from multiple investors in exchange for equity or rewards. With crowdfunding, youâll promote your campaign online by sharing with friends and family and posting links to social media. Anyone can donate to help you reach your fundraising goal.
There are two types of crowdfunding campaigns. The first is equity crowdfunding, which is when you give up equity in your business in exchange for investments. The second is non-equity crowdfunding. With this type of campaign, you wonât give up ownership of your company but will instead offer a reward or benefit to investors.
The tricky part of crowdfunding is that medical marijuana dispensaries are prohibited from posting on many of the most popular crowdfunding platforms. However, there are a few platforms that allow businesses in the marijuana industry to launch and promote campaigns.
One crowdfunding platform to consider is Fundable. Through Fundable, you have the option of launching a rewards campaign, an equity campaign, or both. Itâs important to note that equity campaigns on Fundable can take years to complete. There is no limitation on the length of your equity campaign. However, you must pay a hosting fee of $179 per month through the duration of your campaign.
The Best Financing Options For Startups
As weâve already established, finding financing for your medical marijuana dispensary can be a challenge. While there are options available for established businesses, what if youâre brand new to the industry or havenât even opened your doors yet?
If you need financing to get your business off the ground, there are funding options for startups. The first step is to determine what expenses youâll have and how much money youâll need before exploring your financing options.
The Costs Of Starting A Medical Marijuana Dispensary
A medical marijuana dispensary has many of the same expenses as any other startup business, with a few added expenses since this is still such a new and controversial industry.
Before you even get your business started, you will have to apply for licenses and permits. Application and licensing fees range from a few hundred dollars to several thousand. In the state of Colorado, for example, licensing fees are $20,000. One of the first things you should do before starting your business is to learn about the laws, requirements, and fees specific to your state.
Because youâll operate a storefront, youâll need to rent, lease, or purchase commercial space. If utilities arenât included in your monthly rent, theseÂ additional expenses will add to your total startup costs. You may have to do some remodeling to make the space suitable for your business, which will add in more costs.
Even if you plan to run a very small dispensary, youâll still need staff. Whether youâre hiring one person or ten, youâll need to consider the costs of hiring and training staff members and managers.
Additional purchases for your dispensary include a POS system, furniture, fixtures, and a high-tech security system. One of the most important expenses is your inventory, which is a recurring cost you should consider when calculating your total business expenses.
When planning how to fund these expenses, there are a few financing options to explore. One option may work well to best fit your needs, or you may consider combining a few options to fully fund your startup business.
Crowdfunding is a way to raise funding for your startup business. For a medical marijuana dispensary, an equity-based campaign is typically the best option. Even so, it may take several months or longer to raise the money you need to start your business.
Unlike other businesses, you canât just go to any crowdfunding site. Marijuana dispensaries are prohibited from using some of the most popular crowdfunding platforms. However, as I mentioned above, Fundable is one option to consider. You can also explore options that are centered solely on the cannabis industry, such as Fundanna and CannaFundr. These are relatively new options, so itâs important to do your research, explore all associated fees, and know what youâre getting into before signing up.
Alternative online lenders could help you receive the money you need to fund your medical marijuana dispensary. These lenders are typically more flexible to work with than traditional lenders, although interest rates and fees may be higher and terms not as favorable. Alternative lenders provide a variety of financing options for you, including short-term loans and lines of credit.
Before applying, make sure that you choose a lender that works with businesses in the cannabis industry and other high-risk businesses. Some lenders have restrictions on lending to medical marijuana dispensaries, so make sure to choose a lender that is willing to work with you. There are even online lenders that specialize in financing businesses in the cannabis industry.
Personal Loans For Business
If you have a solid credit score and steady income, you may qualify for a personal loan that you can use to finance startup expenses.
This is an option that many startups choose because the revenue, time in business, and business credit score arenât taken into consideration for loan approval. However, you do have to disclose how the funds will be used. Some lenders may not loan money due to the industry youâre in, so you may have to shop around for a lender willing to work with your situation.
One way to finance your startup is to find an investor. Seek out private equity firms, venture capitalists, or angel investors that will provide the funds you need in exchange for a stake in your company.
A business credit card is a good option for any business. A credit card can be used to pay recurring expenses, cover an emergency, or pay for startup expenses. There are plenty of great credit card options for good and fair credit borrowers. If you have bad credit, you may also qualify for unsecured or secured credit cards, although your credit limit will be lower and interest rates higher.
What You Need To Qualify For Medical Marijuana Dispensary Business Financing
The requirements needed to qualify for medical marijuana dispensary financing are similar to requirements for any other type of business.
Your requirements will vary based on the lender you select, as well as the type of financing you seek. For example, applying for a business credit card may require basic information, such as your name, the name of your business, contact information, and annual revenue. Applying for a loan or line of credit may require additional information and documentation.
Before you gather your documents, though, there is some prep work that can be done on your end. Calculate how much money you need for your business. Then, figure out if your business is able to afford the loan.
Next, pull your free credit score online. If you have credit challenges, working to build your credit may help you qualify for more options at better rates. If youâre in a time crunch to receive your financing, there are bad credit loan options available, but you should expect higher fees and interest and a more expensive overall cost of borrowing.
Get your credit report and FICO score for $1
Once youâve established how much money you need (and can afford) and where you stand in terms of credit, itâs time to start shopping for lenders. After youâve narrowed down your selection, understand the requirements of each lender. Again, this varies but you should generally expect to present the following:
Personal Information: Name, Social Security Number, and contact information
Business Information: Business name, address, and Federal Tax ID
Business & Personal Credit Score
Personal Background Check
Business Licenses & Permits
Business & Personal Bank Statements
Profit & Loss Statement
Detailed Business Plan
Operating or opening a medical marijuana dispensary comes with its challenges. While many options available to other businesses arenât open to you, this doesnât mean that you wonât be able to find financing. With a little research and creativity, you can find a lender that is willing to work with you to help make your business a success.
Want to get started with a loan for your medical marijuana business right away? Try LoanBuilder.
Must be in business at least 9 months with a revenue of $42,000 per year.
Must have a personal credit score of 550 or above.
Borrower requirements (click to expand)
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