So, youâve opened your business, and youâre starting to rack up a lot of sales. Youâve even signed up for a merchant account so your customers can use their credit cards. Things seem to be going great â until you notice something a little unsettling.
You knew when you opened your merchant account that youâd have to pay for credit (and debit) card processing, but $0.15 or $0.20 per transaction (in addition to the percentage charge) didnât seem like it would be a big deal. Unfortunately, a lot of your customers come in and only buy a single item, maybe something for $3.00 or less. They donât carry any cash and want to use their credit card. However, your margins are so thin on low-priced items that the fixed per-transaction fee you pay for processing can wipe out your profit. In fact, you might even lose money on some sales if the customer uses a credit card.
Naturally, youâd like to avoid this situation altogether. You remember being in other stores that had a policy of only accepting âplasticâ if the total sale was at least a certain amount (say, $10.00, for example). Youâd like to implement a policy like this yourself, but youâre not sure if itâs legal.
In this article, weâll review the laws and agreements that govern setting a minimum amount on credit and debit card transactions. Weâll also discuss the pros and cons of doing so, even in situations where itâs perfectly legal. After all, you donât want to risk losing sales when customers either canât or donât want to buy enough items to meet your required minimum. Finally, weâll review the differences between setting a minimum purchase requirement on credit card and debit card transactions.
Can You Implement A Minimum Charge On Credit Card Purchases?
Hereâs the short answer: Yes, you can set a minimum charge on credit card purchases. However, there are several legal and contractual limitations on doing this, so keep reading! Youâll want to understand all the applicable restrictions on this practice before you try to implement it in your business.
Prior to 2010, setting a minimum credit card charge was governed entirely by the processing agreements set forth by the major credit card associations (i.e., Visa, Mastercard, etc.). Every major card brand prohibited the practice, because they wanted to make money off credit card usage and they simply didnât care if merchants lost money on small-ticket transactions.
However, in 2010, the Federal government weighed in on the issue. When the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed by Congress in the aftermath of the Great Recession of 2008, it took many steps to rein in the reckless behavior of the big banks that had contributed to the recession. Part of this legislation, the Durbin Amendment, contains the following provision:
(3) NO RESTRICTIONS ON SETTING TRANSACTION MINIMUMS OR MAXIMUMS.âA payment card network shall not, directly or through any agent, processor, or licensed member of the network, by contract, requirement, condition, penalty, or otherwise, inhibit the ability of any person to set a minimum or maximum dollar value for the acceptance by that person of any form of payment.
In other words, the Federal government has effectively overruled the previous contractual limitations imposed by the credit card associations. Merchants are now free to set a minimum purchase requirement if they want to. However, their ability to do so is not unlimited. A separate provision in the Durbin Amendment authorizes the Federal Reserve to define the highest allowable minimum purchase requirement that may be imposed, and they can change this limit from time to time if they see fit. As of this writing, the highest allowable minimum purchase requirement that merchants can set is $10.00. Youâre free to set a lower requirement if you want to, but you cannot set a limit above this amount.
While the credit card associations can no longer stop you from setting a minimum purchase requirement, they have modified their processing agreements to ensure that any minimum imposed is fair and equitable. Visa, Mastercard, and Discovery all have several stipulations on setting minimum charges in their processing agreements. The gist of these stipulations is that a minimum purchase requirement, if imposed, must treat all credit cards and all issuing banks equally. In other words, you canât require a minimum purchase for Visa, but not Mastercard. You also canât set a minimum purchase for one issuing bank, but not another. Having different minimum purchase amounts for different cards or issuing banks is also not allowed. American Express is a little different, as they donât mention minimum purchase requirements at all in their processing agreements. We recommend that you apply the same minimum purchase requirements for American Express cards as you do for any other card brand.
Can You Implement A Debit Card Minimum Purchase Amount?
Now that weâve established how you can set a minimum purchase requirement for credit cards, youâll probably want to know if the rules are the same for debit cards. Of course, theyâre not. That would be too easy, right?
With few exceptions, the general rule is that you cannot impose a minimum purchase requirement for debit card transactions. Why not? Well, the Durbin Amendment also placed some strict limits on the interchange fees (and PIN debit network fees) that banks could charge for processing debit transactions. However, the Amendment doesnât prohibit the credit card associations from imposing their own restrictions on minimum purchases the way it does for credit cards. Naturally, the card networks responded to this change in the law by immediately strengthening their prohibitions against minimum purchase requirements for debit cards. While this might seem unfair to merchants, realize that the new limits on debit card processing fees cut deeply into the card networksâ revenue. Being able to prevent merchants from imposing minimum purchase requirements has the effect of partially compensating the card networks for this loss of income.
How will these changes affect your business? As usual, there isnât a simple answer, and the impact on your processing costs will depend on what type of processing rate plan you have, among other factors. If your merchant account uses an interchange-plus or membership-based processing rate plan, the inability to set a minimum purchase requirement wonât be a problem. Thatâs because both of these types of plans pass interchange and PIN debit network fees directly onto you. Interchange fees and PIN debit network fees for debit card transactions are very low, thanks in part to the Durbin Amendment and also because these types of transactions cost very little to process and involve a very low degree of risk to the processor. In other words, you wonât need to set a minimum purchase requirement in the first place, because processing small-ticket sales wonât have an impact on your profitability.
What Happens If My Processor Treats Debit Cards As Credit?
Of course, things are never simple in the processing world. Merchants who are on a flat-rate or tiered pricing plan have several other factors to consider. Flat-rate pricing, such as that offered by Square (see our review), charges the same rate for both credit and debit cards, essentially treating debit card transactions as if they were credit card transactions. While this makes your costs much more predictable and easy to understand, it also means that youâre paying far more than necessary to process debit card transactions.
Tiered pricing, on the other hand, varies depending on your processor and how they structure their tiered rate plans. Some processors have separate (and usually much lower) tiers for debit card transactions, while others lump both debit and credit card transactions together and treat them identically.
Why is there a difference in how debit card transactions can be treated? The answer usually depends on how the transaction is verified at the point of sale. Briefly, debit card transactions can be verified using either the PIN debit method or the signature debit method. With PIN debit, the customer verifies their identity by inputting their 4-digit Personal Identification Number (PIN) when making a purchase. This routes the transaction to a PIN debit network rather than a credit card network. Because this type of transaction is considered to be more secure, PIN debit network fees are very low.
Signature debit transactions, on the other hand, require the customer to sign their receipt to verify their identity. With this verification method, the transaction will be routed to a credit card processing network and regular interchange fees will be assessed. Remember, published interchange fees for debit transactions are also very low. However, your merchant account provider may or may not pass those lower rates onto you. If you have a flat-rate pricing plan or a tiered plan that doesnât include a separate tier for debit transactions, youâll end up paying the same processing rates as you would for credit card transactions. For more details on how debit card transactions are processed, please see our article, The True Cost Of Debit Card Transactions.
If youâre paying the same processing rates for both debit and credit card transactions, can you still impose a minimum purchase requirement that applies to both types of transactions? You would certainly be justified in doing so since youâre paying an artificially high amount for accepting debit cards. The answer is that it will depend on your processing agreements with the major credit card associations and your contract with your merchant account provider. We recommend that you refer to those documents before setting a minimum purchase requirement. You might also consider imposing a minimum purchase requirement that only applies to credit card transactions, especially if youâre paying fair market rates for debit card transactions through your processor.
Now that weâve thoroughly discussed the legalities of minimum purchase requirements, letâs consider whether you should go ahead with doing so. Yes, youâll avoid losing money on small purchases. At the same time, you run the risk of losing sales when customers canât use their credit cards and donât have any cash on them. Like it or not, most consumers are oblivious to the fact that accepting credit and debit cards costs you money.
There are several options you should consider if small-ticket sales are costing you too much in processing fees. Your first option is to review your merchant account contract and confirm that youâre on an interchange-plus or membership-based pricing plan. These two types of plans give you the lowest per-transaction processing costs, and you shouldnât need to implement a minimum purchase requirement at all. If youâre on a flat-rate or tiered pricing plan, on the other hand, youâll want to check a few things. Does your plan have a lower rate for debit cards, or does it treat both debit and credit cards the same? If youâre on a flat-rate plan, does the lack of monthly and annual account fees compensate for the higher processing rates? Many small businesses sign up for a flat-rate service like Square due to the low up-front costs, but fail to realize that once they reach a certain processing volume (typically around $5,000 per month), it actually costs more to use Square (or any other flat-rate service) than a traditional merchant account.
Another option to lower your processing costs is surcharging. This is the practice of passing your processing costs onto your customers by adding a surcharge to credit and debit card purchases. We recommend you exercise caution in considering this option. While surcharging is now legal in most (but not all) jurisdictions, it can result in lost sales unless youâre in an industry where the practice is common and accepted. For more details, please see our article, Your Complete Guide to Credit Card Surcharges.
If you do decide to implement a minimum purchase requirement, make sure that you set it as low as possible to reduce the frequency of lost sales and frustrated customers. Under no circumstances should you implement a minimum that exceeds $10.00 â customers can report you to the credit card associations, and youâll probably have your merchant account shut down. You might even end up on the Terminated Merchant File (TMF, or MATCH list), making it that much more difficult to find a new processor.
Implementing a minimum purchase requirement also means that youâll have to educate your employees to enforce it. Make sure they understand the difference between a credit card and a debit card. This isnât as obvious as it sounds, as most debit cards are sponsored by either Visa or Mastercard. Theyâll also need to understand the difference between PIN debit and signature debit, as you usually wonât be able to enforce a minimum purchase requirement on PIN debit transactions.
If youâve read this far and come to the conclusion that your best option is to switch to a different merchant account provider, we can help. Check out our Merchant Account Comparison Chart for a side-by-side comparison of the best providers in the industry.
In 2018, Massachusetts was the fastest-growing state in the Northeast, with its population growing by over 5%. As its population grows, so does the stateâs economy. Once known for agriculture, trade, and fishing, this state has grown to become a global leader in finance, biotechnology, and other modern industries. Massachusetts has even been named by as the most innovative state by Bloomberg.
With a strong economy and new opportunities always on the horizon, thereâs no better time than now to launch or expand your own small business. Whether youâre the owner of an established business or youâve only flirted with the idea of entrepreneurship, the state of Massachusetts has small business financing and resources available to you.
If youâre ready to launch your business or take your existing business to the next level, keep reading! Instead of poring through hundreds of small business lenders and resources, weâve handpicked the best options for you. Whether youâre seeking low-interest loans, fast financing, or free business tools, this guide has you covered. Read on to find out more about the small business resources available to Bay Staters.
Online Business Lenders For Massachusetts Businesses
Running your own business keeps your schedule full. When you need extra capital for your business, it seems like there arenât enough hours in the day to head to your local lender. Fortunately, there is a solution that allows you to get the financing you need without spending hours at the bank. That solution is to work with an online business lender.
Through online lenders, you can apply for your loan, submit documentation, and even receive funds all without ever leaving your office. With online lending, you have more choices than ever and many online lenders also have less stringent requirements than traditional lenders. This means that you can access capital even if you have credit score challenges, havenât been in business for long, or donât meet typical revenue requirements.
On the one hand, having so many lenders to choose from is great because you can shop around your options. On the other hand, knowing where to even start can be a challenge. Instead of scouring the internet alone, check out what these online lenders have to offer.
Must be in business at least 2 years.
Must have a personal credit score of 650 or above.
Must have a business credit score of 150 or above.
Borrower requirements (click to expand)
You donât have to go to your local bank to get a low-interest, long-term loan. Small Business Administration loans not only have competitive interest rates but are also easier to qualify for than traditional business financing. While you can visit a lender in person to apply for an SBA loan, smart business owners know that SmartBiz is the way to go.
SmartBiz is an online marketplace that has helped small business owners receive more than $1 billion via SBA loan programs. Through SmartBiz, you may qualify for a loan is as little as 5 minutes and receive your funding in just 7 days. The application process is streamlined so you can get the funding you need as quickly and easily as possible.
There are two loan products to consider. The first option is SmartBizâs SBA Working Capital and Debt Refinancing Loans. These loans can be used to refinance business debt, expand your business, pay for a marketing campaign, hire employees, purchase equipment, or increase your inventory.
Through this program, you could receive $30,000 to $350,000. Interest rates are 8.25% to 9.25% with repayment terms up to 10 years.
To qualify for this loan, you must meet these requirements:
U.S. citizen or permanent resident
At least 2 years in business
Personal credit score of 640 or above
Sufficient cash flow for loan payments
No bankruptcies or foreclosures in the last 3 years
No defaults on government-backed loans
No outstanding tax liens
The second SBA loan program available through SmartBiz is the SBA 7(a) Commercial Real Estate Loan. With this loan, you can receive between $500,000 to $5 million to purchase commercial real estate or refinance your existing commercial mortgage. Interest rates are 7% to 8.25% with repayment terms up to 25 years.
The following are the requirements for receiving this loan:
U.S. citizen or permanent resident
Property must be at least 51% owner-occupied
Purchase price must be greater than $500,000
No new construction or investment properties
At least 3 years in business
Personal credit score of 675 or above
No bankruptcies or foreclosures in the last 3 years
No defaults on government-backed loans
No outstanding tax liens
If an SBA loan doesnât seem like the right option for you at this time, you can also apply for a bank term loan from one of SmartBizâs lending partners. You may qualify for $30,000 to $200,000 with repayment terms up to 5 years and fixed interest rates starting at 6.99%.
Time in business: 6 months
Business revenue: $10,000 per month
Personal credit score: 550
Borrower requirements (click to expand)
No time to send out applications to multiple lenders? Give Lendio a try. With Lendio, you can get offers from multiple lenders through just one application. Lendio is a loan aggregator that has partnered with over 75 lenders, making it easier than ever to compare your financing options.
Through Lendio, you can apply for nearly any type of business financing, including:
SBA Loans: $50,000 to $5 million
Term Loans: $5,000 to $2 million
Short-Term Loans: $2,500 to $500,000
Lines Of Credit: $1,000 to $500,000
Equipment Financing: $5,000 to $5 million
Startup Loans: $500 to $750,000
Accounts Receivable Financing: Up to 80% of receivables
Commercial Mortgages: $250,000 to $5 million
Business Credit Cards: $1,000 to $500,000
Merchant Cash Advances: $5,000 to $200,000
Rates, terms, and requirements vary by product and lender. Time to funding also varies, but some products are available in as little as 24 hours. There is no obligation to accept an offer, and receiving your offers will not impact your credit.
Unsure of which business loan is best for you? Learn more about the different types of small business loans.
Time in business: 12 months
Business revenue: $100,000 per year
Business industry: Must not be in aÂ restricted industry
Personal credit score: 600
Borrower requirements (click to expand)
OnDeck has provided $10 billion to businesses around the world, and you could be the next business to get the capital you need. Through OnDeck, you can apply for one of two financing options: term loans and lines of credit.
A term loan provides you with a lump sum of capital in amounts up to $500,000. Short-term loan options come with 3- to 12-month terms and are best for purchases that deliver an immediate return on investment, such inventory or a new marketing campaign. The long-term option gives you 15 to 36 months to repay your loan and is best for larger purchases such as expanding your business or buying equipment.
OnDeckâs short-term loans have simple interest rates starting at 9%. This is the total amount of interest you will pay and is a percentage of your borrowing amount. Long-term loans have a 9.99% annual interest rate. OnDeck also charges an origination fee of 0% to 4% of your loan amount for short- and long-term loans. Payments are made daily or weekly and are automatically deducted from your checking account.
To receive a small business loan from OnDeck, you must have:
Time in business of at least 1 year
At least $100,000 in annual revenue
Personal credit score of 600 or above
If you need a more flexible financing option, consider applying for an OnDeck line of credit. You can receive up to $100,000 to cover unexpected expenses, make up for gaps in income, or for any business purpose. Rates start at 13.99% and payments are automatically deducted from your checking account each week. A $20 monthly maintenance fee will also be applied, but the lender will waive the fee for 6 months if you draw at least $5,000 within 5 days of opening your account.
To qualify for this option, you must have:
Time in business of at least 1 year
At least $100,000 in annual revenue
Personal credit score of 600 or above
No time in business requirements, but must have used a compatible accounting or invoicing software for at least 2 months, or a compatible business bank account for at least 3 months.
Business revenue: $50,000 per year
No specific personal credit score requirement
Borrower requirements (click to expand)
What do you do if your business is performing well, but you donât have an excellent credit score? There are options open to you, including a line of credit from Fundbox.
Fundbox bases its approval decision on the performance of your business, so you donât have to have perfect credit to qualify. Through Fundbox, you may be eligible to receive a revolving line of credit with limits up to $100,000. Youâll repay the lender over a period of 12 or 24 weeks. Fees start at just 4.66% of the draw amount.
If you donât use your line of credit, you wonât pay a dime. If you do make a draw, you can pay your balance off early and save since Fundbox waives all remaining fees. Payments are automatically deducted from your business checking account each week. As you pay down your balance, funds will become available for you to use whenever you need them.
To qualify for a Fundbox line of credit, you must have:
A U.S.-based business
At least $50,000 in annual revenue
A business checking account
At least 3 months of transactions in a business banking account OR at least 2 months of activity in supported accounting software
For invoice factoring:
Time in business: 3 months
Business revenue: $100,000 per year
Business type: Business-to-business
Personal credit score: 530
For business lines of credit:
Time in business: 6 months
Business revenue: $120,000 per year
Personal credit score: 600
Borrower requirements (click to expand)
If youâre seeking a higher limit for a line of credit, you can receive up to $250,000 through BlueVine. Rates start at 4.8% for the most creditworthy borrowers. There are no fees if you donât use your line of credit. Repayments are made on a monthly or weekly schedule over 6 to 12 months.
To qualify for BlueVineâs line of credit, you must have:
Personal credit score of 600 or above
Time in business of at least 6 months
At least $100,000 in annual revenue
If unpaid invoices are causing your cash woes, BlueVine offers an invoice factoring service that could provide you with up to $5 million. You can receive up to 90% of the balance of your unpaid invoices up front. Then, once the customer pays the invoice, youâll receive the remaining balance, minus fees. Fees start at 0.25% per week.
To qualify for invoice factoring, you must be a B2B business that meets these requirements:
Personal credit score of 530 or above
Time in business of at least 3 months
At least $100,000 in annual revenue
Amex Business Loans
Time in business: 24 months
Business revenue: $50,000 per year
Personal credit score: Good to excellent
Other: Must accept Amex cards or have an Amex business credit card (depends on the type of financing you are applying for)
Borrower requirements (click to expand)
Worried that applying for financing will harm your credit score? If youâre an American Express cardholder, there may be an option available for you that has no impact to your credit score.
American Express Business Loans provide you with $3,500 to $50,000 in capital for your small business. You can repay your loan over 12, 24, or 36 months. These loans come with fixed APRs of 6.98% to 19.97%.
This offer is available only to select American Express Business cardholders. By logging into your Amex account, you can find out if youâve been preapproved. This preapproval will provide the maximum borrowing amount and your maximum rate. After providing some information about your business, you could receive your funds in as little as 3 business days if youâre approved.
Because American Express uses the information it has on file for you, thereâs no impact to your credit to apply. To qualify, you must meet these requirements:
Hold a Basic Card or Business Card
Be in good standing with American Express
U.S. citizen or permanent resident
Be at least 18 years old
Amex Merchant Financing
Time in business: 24 months
Business revenue: $50,000 per year, at least $12,000 per year from debit and credit card sales
Personal credit score: Good to excellent
Other: Must accept Amex cards
Borrower requirements (click to expand)
If you donât qualify for American Express Business Loans, you may be able to get the capital your business needs through Amex Merchant Financing. If your business accepts American Express cards, you could qualify for this funding option.
Amex Merchant Financing provides $5,000 to $2 million to qualified business owners. Repayments are made over 6, 12, or 24 months. Youâll pay one fixed fee of 1.75% to 20% to take advantage of Amex Merchant Financing. Repay early and you can receive a rebate of up to 25% of your fixed fee.
Daily payments are automatically deducted to pay off the lender. You can opt to have a fixed amount taken from your business bank account, or you can choose to get a percentage of your daily receivables withdrawn.
To qualify for Amex Merchant Financing, you must have:
A business that accepts American Express cards
At least $50,000 in annual revenue
At least $12,000 in annual debit and credit receivables
Time in business of at least 24 months
Time in business: N/A
Personal credit score: Minimum 620
Business revenue: N/A
Borrower requirements (click to expand)
Many of the previous options listed require at least a few months in business, but what do you do if youâre looking for capital to launch your business? Time in business requirements could bar you from receiving small business financing. However, you could qualify for a personal loan to use for business expenses.
Because this isnât a business loan, time in business, annual revenue, and business credit history arenât considered. Instead, your personal credit score and annual income are used to qualify you for a loan through a lender such as Upstart.
Upstart offers qualified borrowers $1,000 to $50,000. These funds can be used to fund your startup costs or cover other business expenses. Upstartâs APRs range from 7.54% to 35.99% based on creditworthiness. Repayment terms are 36 to 60 months.
To qualify for an Upstart loan, you must:
Be a U.S. citizen or permanent resident
Be at least 18 years old
Have a valid email account and a verifiable name, date of birth, and SSN
Have a source of income
Have a personal bank account
Have a personal credit score of at least 620
In addition to your credit score, Upstart will consider other factors of your personal credit profile. Additional qualifying requirements include:
No bankruptcies or public records
No delinquent account
Less than 6 inquiries over the last 6 months
Solid debt-to-income ratio
Banks, Credit Unions, & Nonprofit Lenders In Massachusetts
While online lenders make borrowing easier and more convenient than ever, you may still prefer to go the traditional route with a local bank, credit union, or nonprofit lender. If you havenât already established a relationship with a local institution, consider one of these lenders that serve small business owners in Massachusetts.
Eastern Bank was founded in 1818 and has its headquarters in Boston. Today, there are over 120 locations throughout Massachusetts and New Hampshire in cities including Boston, Burlington, Reading, and Lowell.
Eastern Bank offers multiple financial services for small business owners. The institution not only offers business checking and savings accounts, but entrepreneurs can also take advantage of the following services:
Eastern Express Business Loan: Up to $100,000
SBA 7(a) Loans: Up to $5 million
SBA 504 Loans: Up to $5 million
Cash Reserves: Up to $10,000 to protect against overdrafts
Business Term Loans
Lines Of Credit
Business Credit Cards
Eastern Bank also has commercial financing options, including industrial lines of credit, commercial real estate loans, and asset-based lending.
You can learn more by visiting your local Eastern Bank branch or applying for your chosen financial product online.
Metro Credit Union
If you want a more personalized experience, consider joining a local credit union, such as Metro Credit Union. This institution has locations throughout the state of Massachusetts to best serve more than 200,000 members. Metro Credit Union branches are located in cities including Boston, Lawrence, Framingham, and Salem.
As a member of Metro Credit Union, you may be eligible to receive small business financing through one of its lending programs including:
Commercial Real Estate Loans
Business Lines Of Credit
Business Term Loans
Unsecured & Secured Business Credit Cards
Metro Credit Union also provides merchant credit card services, payroll services, and additional services to small business owners in Massachusetts.
To apply for financing, you must be a Metro Credit Union member. To become a member, you must:
Live, work, or own a business in one of the following counties: Barnstable, Bristol, Essex, Middlesex, Norfolk, Plymouth, Suffolk, Worcester
Open a Metro Regular Savings account with a $5 deposit
Common Capital is a community loan fund and nonprofit organization that provides tools, resources, and financing to small businesses and community projects in order to strengthen communities.
Through Common Capital, small business owners can apply for fixed and variable rate loans and lines of credit. Funding of up to $300,000 is available and can be used for the following purposes:
Inventory & Supplies
Business Acquisitions Or Expansion
Leasehold Improvements Or Real Estate
Repayment terms are up to 10 years. Payments can be structured to account for seasonal fluctuations in revenue. To qualify, you must own a business in the counties of Berkshire, Franklin, Hampshire, or Hampden. If you reside in Worcester County, you may be eligible to apply for the Fast Track Program, which provides up to $50,000 with a fast turnaround.
Loan applications are available online. You must provide historical financial statements and/or three years of future financial projections with your application. Startups must also include a business plan. The typical time to underwrite and close the loan is 4 to 6 weeks after the completed application package has been received.
Small Business Grants In Massachusetts
Grants are another source of financing you can use to start or grow your business. The good thing about grants is that these arenât loans, so you wonât incur debt. You wonât have to repay the grant or worry about interest or fees.
However, this free money isnât available to just anyone. Most of the time, you have to meet very specific requirements for small business grants, such as being in a particular industry or being a minority, woman, or veteran business owner. Even if you do qualify, most grants have many applicants.
While it isnât guaranteed that youâll receive a small business grant, thereâs no harm in applying if you meet all of the requirements. There are a variety of state and federal resources available to help you locate small business grants, but you can kick off your search with these options.
State Trade Expansion Program Grant
The State Trade Expansion Program (STEP) grant is offered through the Massachusetts Office of International Trade and Investment in partnership with the Massachusetts Small Business Development Center Network, the Small Business Administration, and the Massachusetts Export Center. This grant is designed to help offset the costs of international business development and associated marketing costs.
Through this program, eligible small businesses can receive reimbursements of up to $12,000 for expenses including:
Compliance testing products for entry into an export market
Design of export market-specific marketing media
Overseas trade show or conference expenses
To qualify for STEP funding, an online application must be submitted. Proof of payment for the project, service, or activity must also be submitted for consideration. Applicants are also required to match 25% to 40% of funding.
Office Of Safety Workplace Safety Training Grant
The Office of Safety Workplace Safety Training Grant is a reimbursement program for businesses located in Massachusetts. This grant is provided through the Department of Industrial Accidents. Qualifying businesses can receive up to $25,000 to pay for training and education promoting workplace safety.
Businesses of all sizes are eligible to apply provided they are operating within the Commonwealth of Massachusetts and are covered under the stateâs Workersâ Compensation Law.
To qualify, you must submit a grant package. Your package must include the grant application, a description of your business, training goals, a budget narrative and summary, qualifications of training providers, and a Department of Revenue Certificate of Good Standing.
Workforce Training Fund
The Workforce Training Fund provides business grants to support the training needs of businesses throughout the state of Massachusetts. There are two grant programs available.
The General Program is open to businesses of all sizes. Businesses can receive a training grant up to $250,000 through this program. Training grants must be matched dollar-for-dollar by the grant recipient.
This program is open to businesses with 100 or fewer employees. Grants of up to $30,000 per company and $3,000 per employee per course are available through this program. Companies will be reimbursed up to 50% of training costs.
Grants can be used to pay for training for current and new employees. An online application can be submitted along with a cover letter, Certificate of Good Standing from the Department of Revenue, and a description of training modules and courses.
Loans & Resources For Startups In Massachusetts
Finding the loans and resources you need for your startup business doesnât have to be challenging. If youâre a small business owner in the Bay State, consider putting the following resources to work for you.
The SBAâs SCORE program provides free and low-cost services and resources to small business owners. Through SCORE, you can take advantage of free business counseling and mentoring online or at a SCORE location near you.
SCORE also offers local workshops on a variety of small business topics such as accounting, management, and marketing. These events allow you to educate yourself on these topics while networking with other local business owners.
SCORE also has additional tools and resources available on its website. This includes business guides, free templates, and blogs that offer helpful tips and tricks to business owners.
There are multiple SCORE branches located throughout the state of Massachusetts in cities including Boston, Springfield, Amherst, and Salem.
Massachusetts Small Business Development Center Network
Since 1980, the Massachusetts Small Business Development Center (MSBDC) has provided free and low-cost resources to startups and established businesses. Through MSBDC, you can receive free one-on-one business counseling.
MSBDC also hosts free and low-cost seminars and events throughout the state. You can learn more about business topics such as developing your business plan, cash flow analysis, and financing options.
MSBDC offices can be found throughout the state in cities including Springfield, Fall River, Boston, and Salem.
What To Consider When Choosing A Lender
Weâve given you a list of lenders to finance your small business. Maybe youâve even done your own research and have your own list. Now, itâs time to make a difficult decision: which lender should you work with? Itâs important to weigh out all of your options and not just stick with the first lender that gives you an approval. You want to make sure that you make the wisest financial decision for your business. Do this by asking yourself the following:
Why Does My Business Need Money?
What is the purpose of your business loan? Not only will you have to put this on your loan application, but knowing exactly how you plan to use your funds can help narrow down your lender options. Letâs say that you want a flexible line of credit for emergency expenses. If a lender specializes in SBA loans, short-term business loans, or other financing that provides a lump sum, move on to the next lender.
How Much Money Does My Business Need?
Again, this is something you will need to include on your application. But you can also use this information to sort through lenders. If you need financing of at least $100,000, lenders that have lower maximum borrowing limits can be crossed off your list.
Can My Business Afford The Loan?
Lenders will look at a variety of factors to determine if you can afford a loan or other financial product. If you canât, your application will be denied or you may be approved for a smaller amount. Donât rely solely on the lender to determine the affordability of your loan. Consider your incoming revenue, your current expenses, and any fluctuations in income. Then, shop around with lenders that not only offer the amount of financing you need but also have the lowest rates and best terms for your situation.
Do I Meet All Requirements?
Do you meet all the requirements of your chosen lender? If a lender requires an excellent credit score, borrowers with scores below this requirement will be declined.
Have bad credit thatâs preventing you from getting an affordable loan? If your need isnât urgent, take the time to boost your credit. Obtain your free credit score, review your report, and take a few easy steps to raise your credit score. This will help you receive higher borrowing amounts, lower rates, and better terms.
Make sure you meet all other requirements, including time in business, annual revenue, and business credit history.
Starting or growing your small business can be a challenge. However, with the right resources and a source of capital, youâll increase your chances for success. The state of Massachusetts offers multiple resources and financing options for your small business. You just need to take the time to evaluate the needs of your business and choose which resources offer the most benefits to you.
The post The Best Business Loan And Financing Resources For Massachusetts Small Businesses 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.
While tokenization in the payment security space may be relatively new, evolving, and even somewhat complicated, the concept of substituting one bit of information for another to protect something is anything but new. Tokenizing protects sensitive or personal data by replacing it with a “token” — a code word, essentially, though that might be oversimplifying the matter. Because the token is a substitute for the actual data, it holds no value if intercepted by fraudsters. You would need a way to decode the token in order for it to have any value.Â
In this post, we are going to focus on credit card tokenization, but you should also know that tokenizing other types of highly sensitive data like social security numbers and personal records may become commonplace across markets â and very soon.
But back to the payment industry. As of late, the idea of tokenization is typically linked to digital wallets like Apple Pay and Android Pay, and for good reason. But there are many implementations of tokenization technology including:
Card-on-file subscription billing
One-click checkouts on eCommerce sites
All NFC mobile wallets (contactless payments)
Whether you are a brick-and-mortar shop wanting to implement contactless payment options for your customers, you have an online shop, you use an app to support your business, or you have regulars you know and love, you could start taking advantage of credit card tokenization.
And if youâve boughtanything via those methods listed above (who hasnât?) in the last couple of years, the chances pretty good that your data was tokenized. So what is tokenization?
When we define tokenization, itâs worth mentioning that while the main crux of the matter is consistent, no one-size-fits-all definition is universally accepted among the big payment security organizations like PCI and EMV. However, here is a simplified version, as given by the PCI Council, that gets to the heart of the matter:
Tokenization is a process by which the Primary Account Number (PAN) is replaced with a surrogate value called a token.
When we look at the PAN, which is the actual account number on your credit card, remember that other sensitive pieces of data connect to it â including your personal information and expiration date of the card. When we tokenize, we place all of that information farther from merchants, cashiers, and other players in the payment process. And because the data is no longer recognizable in its token form, we protect it across the payment process. A tokenâs life can be for just one interaction to get coffee, or a store could tokenize payment data for a specific customer for a limited amount of time.
Also, notice in the definition I shared in bold above, that there is no defined âhow,â because it depends on how you implement the tokenization process and what application your business needs. Here are a few examples to help shed some light on how sensitive data gets tokenized.
How The Account Number Gets Tokenized
There are two ways to tokenize data: partial or total. They each have their advantages but may not be right for all situations.
First up, let’s talk about partial tokenization. In some cases, the middle six digits of a customerâs credit card get replaced with a token. The first group of numbers doesnât get tokenized so that the processor knows what type of card they are dealing with (Visa and MasterCard have unique identifying numbers). Additionally, the last four digits of the PAN also remain intact for customer reference. This type of partialized tokenization is also backward compatible, meaning the token has the same amount of numbers as the real PAN. It âlooks like a real card and acts like a real cardâ when a merchant enters it into their own POS system. If a merchant wants to tokenize data and keep their legacy system, this is one way to do it.
The other way to tokenize the PAN is to completely randomize all of the numbers. All of this is done by a third-party, and may include vault storage to keep the payment card data. In either case, the same general thing happens in a sale; the tokenized number is de-tokenized and matched with the real card data. More on that below.
What Happens During A Tokenized Sale?
When it comes time to process a payment, whether that is through an eCommerce site, an app, or a mobile wallet, the payment processing steps are generally similar. Here is a simplified process for your perusal below.
The customer initiates payment for a product or service.
Next, the merchant sends the token to the acquirer.
Acquirer routes the token to Visaâs network.
Visa sends a token to the card issuer.
Issuer returns token and authorization.
Viola! A sale is complete.
Check out the screenshot below for a visual example of tokenization, courtesy of Visaâs Infographic, How Tokens Are Used.
As weâve discussed, tokenization relies on a completely random, traceless value as the surrogate. This process is unlike encryption which relies on a mathematical algorithm. Letâs take a look at how tokenization and encryption compare.
Tokenization vs. Encryption
Tokenization and encryption are similar in that the data is âhiddenâ from would-be interceptors, but the process of each is totally different. In tokenization, the customer data gets replaced with a token â a completely random number. In tokenization, typically a vault stores all of the actual data on a âtable.â After de-tokenization, this random string of digits (sometimes alphanumeric) are matched up with the real account. The main takeaway here is that the token gets passed to the merchant and eventually back to the table, without exposing the real payment card information to the merchant.
With encryption, the payment card information runs through an algorithm, a mathematical process, to transform the original data into something indecipherable until unlocked with the âkeyâ during processing. Since the process isnât randomized, the algorithm is somewhat vulnerable to hackers trying to crack the code.
In short, encryption is mathematically reversible, and tokenization is not. Additionally, encryption is not a complete, end-to-end security method, like tokenization. Payment processing costs can be a bit higher with encryption as it requires more computational power (e.g., rotation of âkeysâ) than tokenization throughout the payment processing cycle.
Considering The Pros & Cons
While tokenization can be cheaper to implement per transaction than encryption, and it isnât mathematically reversible, there are some issues to consider. Because vaulted tokenization requires central management, there is a lot of pressure to maintain a wholly secured vault (however, sometimes the issuer (e.g., Visa) hosts the vault, too).
Additionally, tokenization does significantly reduce PCI scope for merchants, meaning there is less pressure on the merchant for payment security overall. That means less work for you to do in order to remain PCI compliant. While encryption is a generally accepted security measure, it does not do anything to reduce your PCI scope or lessen the work you must do to stay PCI compliant.Â
However, tokenization is still a relatively young whippersnapper in the world of payment security. Encryption has been around for a while, and consumers regard it well. But tokenization has become more attractive to those who understand that the payment security industry must stay a step ahead.
Tokenizationâs Protective Role In Payment Processing
There are a few ways that tokenization protects information during payment processing. As mentioned before, customer data is made useless to a would-be interceptor because itâs no longer the actual information; it is a token that substitutes the actual data. The other way that tokenization protects data is that in the case of digital wallets, the credit card number isnât stored on the customerâs device, either. That means thieves canât retrieve credit card numbers from a phone, tablet, watch, or connected device when a customer and a merchant utilizes a digital wallet.
As the payment security industry evolves, weâll continue to move further away from sharing a physical card and any identifying information that comes with it. Tokenization successfully separates our sensitive data from the transaction by taking the physical card out of the equation entirely, and it does this by tokenizing parts or all of the credit card number.
Because tokenization also removes the merchant from the equation when it comes to transmitting highly sensitive data, it also significantly reduces a merchantâs risk to fraud â from both internal and external threats. That being said, there are some things to consider depending on how you implement tokenization.
How Can Merchants Adopt Tokenization?
There are several ways that you can adopt tokenization into payment processing for your physical, eCommerce shop, or your mobile app! The simplest way for the brick-and-mortar shop to tokenize payments is to get a contactless, NFC-capable reader. Mobile wallets already tokenize the data so as long as you can accept payments from these mobile wallets without having to do anything yourself. As far as tokenizing other transactions, you can ask your existing payment processor about tokenization options for your POS. If you are an eCommerce shop or you have an app, MasterCard and Visa both offer solutions, too.
Mastercard offers a free, optional service called Digital Secure Remote Payment (DSRP), and all you need to do is contact your acquirer to see if they support DSRP, and then integrate the mobile app with the digital wallet partner. You can also look into the Visa Developer Platform â a program offered by Visa where their team works with you to create your mobile payment application with Visa Token Service SDK. Â
Sometimes, there is more to the whole tokenization shift than patch-on solutions, however. If your business has a tremendous legacy system with other data to consider, a more complex, third-party solution may be necessary. While we wonât get into all the nitty gritty in this post, here are a few things to consider below.
Companies Specializing In Tokenization
If you inherently deal with sensitive information as a part of your business model and you need to create a custom solution, you will need to find a PCI compliant company with a trustworthy, highly secure tokenization method and vault. Here are some things to ask:
How are tokens randomized? How protected is the âkeyâ that de-tokenizes?
Is a reversible algorithm used? If so, how protected is that software?
And ultimately, how protected is the table holding the data and the vault protecting it?
While it becomes a bit more tricky to ensure that all of the right security measures are in place, tokenization can still reduce your risk as a merchant and help protect data from a breach. However, youâll need to ensure due diligence when it comes to new or legacy systems. The PCI Council says it best in the PCI DSS Tokenization Guidelines Document:
Tokenization solutions can vary greatly across different implementations, including differences in deployment models, tokenization and de-tokenization methods, technologies, and processes. Merchants considering the use of tokenization should perform a thorough evaluation and risk analysis to identify and document the unique characteristics of their particular implementation, including all interactions with payment card data and the particular tokenization systems and processes.
Do You Need Tokenization To Process Credit Cards?
Keep in mind that at this point, there are no hard and fast rules as to exactly how to implement tokenization, so if you are a merchant, the ball is in your court to make the best decision for your business needs. That being said, tokenization can significantly reduce the merchantâs liability when it comes to payment security. And keep in mind: You donât have to carry the burden of tokenization yourself. There are ways to utilize the expertise of other companies and hardware to get the job done. If your business is just looking to improve payment processing and you donât need or want to store sensitive payment card or personal data, using the solutions discussed in this post provide a much simpler way to navigate tokenization.
While itâs not mandatory — and is undoubtedly flexible in implementation –, tokenization remains one of the fastest growing ways to keep data more secure and shift the risk of fraud away from the merchant while protecting the transaction from end to end.
The post What Is Credit Card Tokenization? appeared first on Merchant Maverick.
We all know and love our Short Messaging Service (SMS) — better known simply as the text message. But did you know that you can start taking SMS payments for your business? And that it is relatively easy to get started?
In the United States, we are just now warming up to the idea of sending and receiving payments by text, but businesses throughout the world have already adopted SMS payments for everything from mass transit tickets to lattes.
While Americans are less likely to pay by text for everyday purchases, text payments are still an undeniably growing trend. You may already be familiar with payments by text when it comes to charitable donations, but home service providers (e.g., AT&T) are starting to offer SMS payments for their customers as well.
Text payments offer potential growth for many other types of businesses, too. Pizza shops, salons, or any business that has âregularsâ could benefit from text payments. SMS payment services are probably not for everyone, however, so letâs take a look at how text-to-pay works and if itâs right for your business.
How Do SMS Payments Work?
When it comes to the nuts and bolts of how SMS payments work, itâs pretty simple, really. While there may be some variations with each company that offers text messaging payment services, generally you can expect the following elements when it comes time to pay:
A business sends a text to their customerâs phone number or the customer texts a shortcode number to the business to initiate the sale.
After communicating what product or service the customer wishes to purchase, the business sends the customer a link to a secure, mobile-friendly payment form.
The customer enters their payment information and can typically approve saving the card on file for recurring payments or a future purchase.
The customer may get a unique code to complete the purchase.
The customer may also get another verification text from the payment processing company to confirm their intent to buy. As stated above, the exact process may vary by company, but you can expect a similar procedure to complete the sale.
Mobile Carriers Vs. Payment Processors for Text Payments
Many people associate text message payments with charity donations (often the amount is added to their phone bill). What is lesser known is that phone carriers generally only allow organizations to accept donated amounts in $5 or $10 increments. By setting up these limits, phone carriers reduce their own risk from non-paying customers. While the phone carrier setup can work great for flash-giving campaigns and allow an organization to avoid paying some payment processing fees, it isnât a viable solution for businesses.
Enter companies like Relay, Pagato, and Sonar. These companies, and those like them, support SMS payments by integrating their messaging services with secure, PCI-compliant payment processing.
What Do You Need to Accept SMS Payments?
To get started accepting SMS payments, youâll need to choose the company with the services that fit your needs best. There are some differences between the ways companies like Relay, Pagato, and Sonar price their services. Letâs briefly take a look at each of these three examples.
Relay (formerly Rhombus):
Relay charges $50/month for 250 âticketsâ which refers to completed conversations. With that, you also get 1000 free SMS texts. All plans include automated responses, unlimited contacts, customer segmentation, and other engagement tools. Donât forget about the actual credit card processing fees, however! Relay integrates with Stripe, and you pay 2.9% + $0.30 per successful transaction. You can accept every major card at the same rate with Stripe processing. (If you arenât familiar with Stripe, check out our Stripe Payments Review.)
Pagato integrates with Stripe, Braintree (read our review), and Quickbooks Payments (read our review). In addition to the payment processing fees of your merchant account, youâll pay 1% per transaction with a minimum of $0.20 per transaction. With Pagato, you can accept payments through SMS and social media channels like Instagram and Facebook, too. You wonât have additional setup, monthly, or hidden fees.
Sonar offers packages starting at $24.67/month and $0.025 per SMS message. You can send automated messages, track customer data, set up campaigns and even A/B test them as well. Sonar integrates with Stripe, and your payment processing fees are 2.9% + $0.30 per transaction.
These are examples of some lesser-known companies, but the more prominent players like Square and PayPal allow you to send a text with a link to pay individual customers, too. The Square Cash App and PayPal donât have the muscle to do much beyond sending a link to pay, however. You canât A/B test marketing campaigns for an offer that you send out with Square or PayPal, for instance.
Keep in mind that most of the SMS messaging platforms mentioned above offer a free trial period and a demo to learn more about the exact features. So donât hesitate to ask a lot of questions to get the information you need. Itâs also a good idea to meet with your team and discuss the benefits of each platform, and of course, determine if your sales team has the bandwidth to have multiple open text conversations with customers. Text can be a powerful way to connect to your customers, but it is definitely not suited for every business model.
Which Types of Businesses Benefit Most From SMS Payments?
Without a doubt, there is value in using SMS messaging to build a marketing campaign and nurture those ongoing relationships with your customers. When you consider that the global average open rate on a text is more than 90%, it makes sense to start building your phone list and reaching out that way.
As far as what businesses benefit from adding SMS payments to the mix, consider this:
If your business model provides delivery, your revenue depends on recurring payments, or you target a ârepeatâ customer base, SMS payments can make a lot of business sense. However, you need to have the staff and time to support the nurturing of customers via text. Text conversations can be a bit longer than a phone call if there is a specific issue, so training your team on escalation procedures can help you both save time and money with SMS texts.
All this connection can be great, but not all customers are going to love texting or getting âsalesyâ texts from you. While SMS texting and payments can help your sales team if you use it the right way, some may find automated sales messages impersonal. Keep in mind who your customers are and what supports their journey with you when you set up your SMS services.
Another significant benefit to SMS payments is the secure and compliant payment processing services that you can integrate with, such as Stripe. Because you donât transmit the credit card data or store it on your servers, you can significantly reduce your liability when it comes to fraud risks. Not to mention that your customer has a fast and easy way to pay you, and all of it happens from their phone!
Are SMS Payments Right For You?
Being able to take payments by text offers potential â as long as the benefits outweigh the costs. Features vary by company, so do compare service packages before making a decision. One company may find a lot of value in the extra capabilities to target and segment lists, while another may be more focused on cutting down telephone orders. What services you choose mainly depends on your business model. Because text messaging offers a clear path to your customers’ hands, it may be worth finding the right balance to connect, engage, and encourage your customers to pay by text, too.
If you are discovering what else is out there in payment processing, be sure to check out our resources here at Merchant Maverick. Our Merchant Account Comparison ChartÂ is a great starting point for payment providers!Â
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In the world of fashion, trends come and go, but a few select pieces stand the test of time. One piece of clothing thatâs found in almost any wardrobe is the t-shirt. From comfy shirts made for the gym to shirts with trendy designs worn for a night out with friends, t-shirts are a staple for men, women, and children.
T-shirts are here to stay, so why not capitalize on this fashion staple? Whether you have a degree in fashion design or you just want to become an entrepreneur, starting your own t-shirt business could be the opportunity youâve been looking for.
In this guide, weâll take a look at what it takes to get your own t-shirt business off the ground. Weâll start with basics such as designing and printing your shirts. Weâll discuss the importance of registering your business. Then, weâll look at startup costs, as well as how you can get the capital you need to start your business and keep it operating. Finally, weâll look at ways you can advertise your business to bring in customers and revenue.
Ready to take the leap into entrepreneurship? Read on to find more.
Design Your Shirts
Before you begin selling t-shirts to the masses, you have to create designs that people want to buy. The first step is identifying your target market. Are you going to sell t-shirts to men, women, children, or a combination of the three? Are your t-shirts going to be more fashionable, or are they better suited for lounging around the house or hitting up the gym?
Once youâve identified your target market, itâs time to think about the designs youâll use. Letâs say that your t-shirts are aimed at the active man or woman. Your designs should incorporate fitness or motivational graphics. You can also determine other features of your shirts based on your target audience, such as the type of material used. If your shirts are designed for the fitness-minded consumer, for example, select a moisture-wicking fabric.
Your t-shirt designs donât have to be overcomplicated as long as they appeal to your target audience. The key, though, is to make sure your designs are completely original. Not only does ripping off other designs make you look like a copycat, but you could face some serious legal issues if you use the artwork or designs of others without permission.
Itâs also important to remember that sometimes a design may be a complete flop. Even the most well-known fashion designers in the world have released items that werenât a hit with their devoted fans. If one design isnât doing the job, try something else until you find what works best for your target audience.
Also, it doesnât matter whether or not you have any design experience. As long as you have some ideas, you can hire a designer to bring your visions to life.
Decide How To Print Your Shirts
Once you have your designs, itâs time to think about how youâre going to bring the design from your computer or tablet screen to the front of a t-shirt. In other words, you need to decide how to print your shirts.
First, you’ll need to determine the method youâll use to print your shirts. Screen printing is one option; it is a tried-and-true method that allows you to add long-lasting graphics to t-shirts. Screen printing is best for creating large batches of shirts since the initial setup is so time-consuming. Printing smaller batches is not cost-efficient with this method.
Another thing to note is that screen printing is best for very simple designs. Complex designs or multiple colors in one design can be problematic. If you have a more complicated design or pattern, consider direct-to-garment printing.
Direct-to-garment printing works similar to your color printer at home or at the office. The DTG printer prints directly on the t-shirt. With this method, you can use multiple colors and print complicated designs and patterns. Shirts printed with a DTG printer can be extremely detailed.
Setting up a DTG printer isnât difficult or time-consuming. However, the actual printing process does take some time, so this method is best for smaller batches of t-shirts.
Another option to consider for printing your t-shirts is using a heat transfer machine. These machines transfer designs from heat transfer paper to the t-shirt. Full-color images can be printed using the heat transfer method, and you can easily print shirts on-demand. However, the quality is often lower and the design far less durable than using the other printing methods.
Regardless of which method you choose, there are two ways you can go about printing your shirts. You can use a third-party printing service or you can purchase the equipment and do it yourself. Letâs review the benefits and drawbacks of each.
Hiring A Third-Party Printer
Many t-shirt businesses do not do the printing themselves. Instead, these businesses hire a third-party service to handle the printing for them. There are a few benefits to hiring a third party to print your shirts. The first is that you wonât have to make an upfront investment in expensive printing equipment. You also wonât have to learn how to use the equipment or spend time running it.
However, there are some drawbacks to using a third party. You’ll have to shop around to find a printing company that provides high-quality workmanship. You donât want your customers receiving t-shirts with graphics that fade or crack or that fall apart after the first wash. Many companies offer low-cost samples so you can check the quality before placing a larger order.
You also need to shop around and compare the pricing of different t-shirt printing companies. Some companies only fill bulk orders, which could put you at a disadvantage if you want smaller batches.
If you plan to only sell your designs online, you can work with an on-demand dropshipper. Once an order is placed on your website, the dropshipper will print and ship out the order to your customer. Before choosing a dropshipper, itâs necessary to place your own order to check out the quality of the shirts. You also need to evaluate pricing to make sure youâre getting the most bang for your buck. The major disadvantage to using a dropshipper is that if an order is wrong, slow to ship, or not printed correctly, the blame will fall on your shoulders, even if you donât have control over any of these issues.
Purchasing Your Own Equipment
The alternative is to purchase equipment and print your own t-shirts. The advantage of this is that you have total control over both the quality and the number of shirts that are printed.
The major drawback, of course, is that t-shirt printing equipment is very expensive. Expect to spend at least a few hundred dollars for a heat transfer machine. If you want a DTG printer, expect to pay tens of thousands of dollars. You will have to pay for ink and maintenance of your machine. In some instances, you may be able to lease equipment to save on upfront costs.
You also have to take the time to learn how to properly use the equipment or train someone else to take on the job.
Decide How To Sell Your Shirts
Now that youâre closer to getting your shirts designed and printed, itâs time to decide how you plan to sell your items. You can set up an online shop, open your own brick-and-mortar store, or bring your designs to local stores in your area. You may also maximize profits by combining these selling tactics.
One of the easiest sales methods is to open an online shop. Customers can browse your designs and make their purchases directly online. You can ship out the orders yourself, or you can work with a dropshipper to make t-shirts on-demand when an order is placed. This option has low startup and overhead costs.
You can also open your own brick-and-mortar store. While youâll be able to reach customers in your local area, this option has muchÂ higher startup and operating costs. Expenses may include rent for your commercial property, utilities, fees for business licenses and permits, and equipment. Youâll also have to purchase inventory to keep in stock. If you go this route, make sure to consider your local area. For example, if you live in a remote area, you may not have a large customer base. However, if you live in a thriving city or popular tourist destination, opening your own brick-and-mortar store may be a profitable venture.
The third option is to print out smaller batches of your t-shirts and network with local boutique and business owners in your area. With this method, you wonât have to pay for your own commercial space, but you will have to give the business owner a cut of your profits.
To determine what is right for your business, keep a few things in mind. Is this going to be your full-time job, or are you just trying to make a little extra money on the side? If you donât plan on devoting yourself full time to your t-shirt business, stick to an online shop or sell your t-shirts through other businesses and boutiques.
Calculate Startup Costs
Once you have an idea of the direction you want your t-shirt business to take, you can start thinking about startup costs. The route youâve chosen with your business will determine how much your startup costs will be.
If you plan to open a brick-and-mortar business, youâll have expenses including a rent or lease payment, equipment and furnishings, utilities, a point-of-sale system, and inventory. Unless you plan to do all of the work yourself, you also have to hire employees. If your business will be based solely online, your costs will be much lower — think shipping costs, plus the price of a website, software, and ecommerce platform subscription fees.
Startup costs vary significantly based on the goals of your business. You can start big with a brick-and-mortar shop and may pay tens (or even hundreds) of thousands of dollars to launch your business. Start a smaller online shop, and you can get started for as little as a few hundred dollars to launch your website and register your business.
Register Your Business
Youâve started laying the groundwork for your t-shirt business, and now itâs time to make everything legal. The first step is to determineÂ what type of business structure you will form. The business structure you select will determine how much you pay in taxes, as well as whether or not you will be personally liable for the debts and obligations of the business.
Sole proprietorships have one owner. These are the fastest and most inexpensive business entities to form and do not require registering with the state. The drawback is that sole proprietorships are not separate legal entities, so you will be personally responsible for the liabilities of the business. It may also be difficult to obtain a loan or raise capital as a sole proprietor.
A partnership has two or more owners. A general partnership is the simplest form and does not require registration. General partners will be held liable for the debts, obligations, and liabilities of the business.
You may also consider starting a limited partnership, which has a general partner and limited partners. Limited partners are not responsible for the liabilities of the business.
Finally, you may choose a limited liability partnership, where all partners are limited partners and are not responsible for the liabilities of the business.
A corporation is the most complex business structure. As a corporation, you will pay taxes at the corporate rate. Shareholders also pay taxes on dividends, resulting in double taxation. Corporations have ongoing requirements, such as electing a board of directors and holding annual meetings.
While a corporation is more expensive and complicated to form, this is the best structure if you see a large expansion in your future. As a corporation, you can sell stock to shareholders to raise large amounts of capital.
Limited Liability Company
A limited liability company, or LLC, combines benefits of different business entities. Like a corporation, business owners in an LLC are not personally liable for the debts and obligations of the business. However, LLCs do not have to pay corporate tax rates or face double taxation. LLCs also do not have ongoing requirements like corporations.
The type of business structure you select ultimately depends on the needs of your business and your future plans for growth. If you want to build a clothing brand thatâs known around the world, choose a corporation or LLC structure. If you just want a smaller online shop that helps pay your bills, a sole proprietorship may be the way to go.
Once youâve determined your business structure, you may be required to register with your state. Sole proprietorships and partnerships may file for a DBA (“doing business as”) under a fictitious name known as a trade name.
Depending on the type of t-shirt business you plan to operate, you may be required to obtain business licenses and/or permits from state and local agencies. Fees and requirements vary by state. You can contact local agencies including your City Clerk, Department of Consumer and Regulatory Affairs, and state Department of Revenue to learn more about the business licenses and permits required for your business.
Finally, you also need to register for an Employer Identification Number (EIN) from the Internal Revenue Service. This is required if you plan to hire employees now or in the future. Many business lenders may also require an EIN when you apply for funding. If youâre a sole proprietor, you may opt to use your Social Security Number in lieu of an EIN.
Seek Business Funding
âIt takes money to make money,â as the old saying goes. As the owner of a t-shirt business, the amount of money you need to start and operate your business will vary according to your business model. If you have a small online shop, for example, your funding needs wonât be as great as if you’re operating a brick-and-mortar store.
Even if you have startup costs covered, there may come a time when you need additional capital for emergencies or operating expenses. If you canât fund these costs out-of-pocket, itâs time to apply for small business funding. Whether you turn to someone you know or apply with an online lender, there are several financing options available for your business.
Friends & Family
Know a friend, family member, or colleague looking to invest in a new business? Pitch them your business idea. Prepare your presentation carefully to let them know why your idea is a winner. In general, you have two options for getting funded by someone you know. The first is to take out a loan. Your friend or family member provides you with a set sum of money that is repaid over a period of time — along with interest. This is known as debt financing.
The next option is a strategy known as equity financing. With equity financing, an investor provides you with the capital you need to cover startup costs or operational expenses. In exchange, the investor receives ownership in your business. While you may not be required to immediately pay back the investorâs capital, they will be able to take a portion of the profits over time. They may also have some level of control when it comes to important business decisions.
No matter which route you take, always make sure everything is in writing and signed by all parties. Then, uphold your end of the bargain. Nothing can make a good relationship go south faster than a business deal gone wrong.
Small Business Loans
With a small business loan, you can receive a lump sum of money that you repay over time. In addition to repaying your principal loan balance, youâll also pay the lender interest and/or fees. Youâll make regular payments to the lender, which may be daily, weekly, monthly, or on another schedule.
Small business loans can be used for any business purpose, including funding an expansion, purchasing equipment for your business, or for use as working capital.
Recommended Option: LoanBuilder
Time in business: 9 months
Business revenue: $42,000 per year
Personal credit score: 550
Borrower requirements (click to expand)
You can fully customize your small business loan when you work with LoanBuilder. The LoanBuilder Configurator allows you to adjust your repayment terms and borrowing amount to create the right loan for your business.
Through LoanBuilder, you may be eligible to borrow up to $500,000. All loans come with one single fixed fee of 2.9% to 18.72% of the borrowing amount. Your fee is determined by the performance of your business and your credit history. Loans are repaid weekly over terms of 13 to 52 weeks.
To qualify for a LoanBuilder loan, you must meet the following requirements:
Time in business of at least 9 months
At least $42,000 in annual revenue
Personal credit score of 550 or above
As you build your t-shirt business, youâll establish relationships with vendors and suppliers. In an ideal world, youâd always have money in your bank account to cover the costs of your inventory and supplies. However, this isnât always the case. An emergency expense that depleted your account, a seasonal uptick in sales, or some other challenge may leave you struggling to pay your vendors upfront.
Many vendors do not offer their own credit programs, but there are lenders that offer vendor financing. With vendor financing, your vendors will be paid the full amount for their products or services while youâre able to pay off the expense over time. This prevents you from having to pay the full cost out-of-pocket for the inventory, supplies, and services you need to keep your business running smoothly.
Recommended Option: Behalf
No specific time in business, revenue, or credit score requirements.
Borrower requirements (click to expand)
Behalf provides vendor financing of up to $50,000 to qualified borrowers. You can repay your loan on a weekly or monthly schedule for up to 6 months.
Behalf charges a monthly fee for its service. Fees start at 1% and are based on the creditworthiness of the borrower. There are no additional fees to receive financing through Behalf.
There are no minimum credit scores, annual revenues, or time in business requirements, although a soft inquiry will be performed when you apply. You must have a U.S.-based business and a U.S. business bank account to qualify. Funds from Behalf canât be used to fund existing debt, such as credit card bills or payroll.
Lines Of Credit
A line of credit is a flexible financing option that allows you to access capital on demand. Instead of receiving one lump sum, a lender sets a credit limit. You can initiate multiple draws up to and including this credit limit. Once a draw is initiated, the lender will transfer the funds to your business bank account. Then, you will repay the money over time, along with any fees and/or interest charged by the lender.
Since a line of credit is a revolving form of credit, funds will be replenished as you pay off your balance. This allows you to have continuous access to capital when itâs needed. A line of credit can be used for any business purpose, including funding emergency expenses, purchasing inventory, or using as working capital.
Recommended Option: Lendio
Time in business: 6 months
Business revenue: $10,000 per month
Personal credit score: 550
Borrower requirements (click to expand)
Lendio is a loan aggregator that gives you access to over 75 small business lenders with just one application. One of the financing options available through Lendio is a business line of credit.
Through Lendio, you may qualify for a line of credit from $1,000 to $500,000. Rates range from 8% to 24%. You could receive funds in as little as one week after you submit your application.
To qualify for a line of credit, you must meet these requirements:
Time in business of at least 6 months
At least $50,000 in annual revenue
Personal credit score of 560 or above
If a line of credit isnât what youâre looking for, Lendio offers additional financing options, including:
Business Credit Cards
Merchant Cash Advances
If you need working capital and you use a service like PayPal to receive your payments, you may qualify for merchant financing.
Merchant financing is a short-term loan option for ecommerce businesses. Typically, qualifying is based on the performance of your business. The lender will provide you with a loan that is repaid over time with interest and/or fees.
Funds can be used for nearly any business purpose, from covering an emergency expense to buying more inventory or using as working capital.
Recommended Option: PayPal Working Capital
Time in business: 3 months
Business revenue: Minimum $15,000 per year if you have a PayPal Business account, or $20,000 per year if you have a PayPal Premier account
Personal credit score: N/A
Borrower requirements (click to expand)
If you accept payments through PayPal, you may qualify for the PayPal Working Capital program. Through this program, you can receive up to 35% of your annual PayPal sales as a loan. Your first loan can be up to $125,000.
PayPal Working Capital charges one set fee based on your sales history, the repayment percentage of your choice, and the loan amount. On days when no sales are made, no payments will be deducted. However, you must pay at least 5% to 10% of your total loan amount every 90 days.
To qualify for PayPal Working Capital, you must meet these requirements:
Have a PayPal Business or Premier account for at least 3 months
At least $20,000 in annual PayPal sales for Premier accounts or at least $15,000 in annual PayPal sales for Business accounts
No more than $20 million in annual PayPal sales
Business Credit Cards
Business credit cards work exactly like personal credit cards. The lender provides you with a set credit limit. You can use your card anywhere credit cards are accepted up to and including the credit limit.
The lender charges interest and fees on your balance until it is paid off. You do not have to pay off your balance in order to continue using the card provided you havenât met your credit limit. A business credit card is a revolving form of credit, so as you pay down your balance, funds become available to use again.
Business credit cards give you on-demand access to capital whenever you need it. You can use business credit cards to pay for an emergency, purchase inventory, or buy equipment. You can also use your credit card to pay for recurring expenses, such as utility bills or software subscription fees.
Recommended Option: American Express SimplyCash Plus
SimplyCash Plus Business Credit Card from American Express
14.49% – 21.49%, Variable
Required credit: Good, excellent
Bonus offer: None
Purchase intro APR: 0% for the first 9 months
Balance transfer intro APR: N/A
Foreign transaction fee: 2.7%
5% cash back at U.S. office supply stores and on wireless telephone purchases, up to $50,000 per year
3% cash back on a category of your choosing (airfare, hotel rooms, car rentals, gas stations, restaurants, advertising purchases, shipping, or computer hardware, software, and cloud computing), up to $50,000 per year
1% cash back on all other purchases
Notable perks & benefits:
Expanded buying powerÂ â buy above your credit limit with no penalty fees
More card details (click to expand)
The American Express SimplyCash Plus card puts a new spin on credit cards. This is because this card allows you to spend over your credit limit without any fees. You can also receive cash back on all purchases â even if youâre over your limit.
The amount you can spend over your credit limit is based on your usage of the card, payment history, credit profile, and other factors. If you go over your limit, you simply need to pay the amount over the credit limit each month as part of your minimum payment. There are no fees for exceeding your credit limit.
With the SimplyCash Plus card, you can receive up to 5% cash back on your purchases. Wireless phone services and office supply store purchases yield 5% cash back on the first $50,000 spent each calendar year. You can also choose one category to receive 3% cash back on, such as advertising, shipping, hardware, or software purchases for the first $50,000 spent each calendar year. All other purchases receive 1% cash back.
There is no annual fee associated with this card. Youâll also receive a 0% introductory rate for the first 9 months. After that, variable APRs range from 14.49% to 24.19% and are based on creditworthiness.
To qualify for the American Express SimplyCash Plus card, you must have excellent credit.
Recommended Option: Spark Classic For Business
Spark Classic From Capital One
Required credit: Fair
Bonus offer: None
Purchase intro APR: N/A
Balance transfer intro APR: N/A
Foreign transaction fee: None
Unlimited 1% cash back on all purchases
Notable perks & benefits:
Free employee cards
Fraud coverage and alerts
Capital One and Visa business benefits
More card details (click to expand)
Donât have perfect credit? Consider applying for Capital One’s Spark Classic for Business credit card. This rewards card gives you unlimited 1% cash back on all of your business purchases. There is no annual fee, and the card has a variable APR of 25.24%.
Additional benefits of Spark Classic for Business include free employee cards, fraud coverage, and extended warranty protection. This card also allows you to build your business credit so you can qualify for additional financing options in the future.
Applicants must have a fair credit score to qualify for the Spark Classic for Business card.
Choose Business Software
Youâre one step closer to launching your business. Now, itâs time to choose the software you need to run your business effectively and efficiently. Some of the business software programs you may need for your t-shirt business include:
Bookkeeping software allows you to keep an eye on the financials of your business. With this software, you can easily track your business expenses, accounts receivable, and payroll. Many bookkeeping programs also allow you to track other aspects of your business, such as inventory.
With bookkeeping software, youâll always know where your business stands financially. Youâll be able to run and print reports as needed, which may be required when you apply for business financing. Having all transactions reported in bookkeeping software can also help you prevent headaches when tax time rolls around.
No accounting experience? No problem! Check outÂ The Beginner’s Guide to Accounting.
Payment Processing Software
If you plan to accept credit cards or other methods of payment, you will need payment processing software. Your payment processor will act as the communicator between your bank and the bank of your customers, allowing you to process credit cards, debit cards, and other forms of payment.
If you want a more sophisticated way to manage your sales, youâll need a point-of-sale (POS) system. A POS system not only includes credit card processing, but it also offers additional features including barcode scanning, inventory tracking, printing receipts, and reports and analytics.
Mobile POS systemsÂ allow you to use your app or smartphone to accept payments and keep your business running efficiently. There are also more advanced systems that include hardware such as monitors, keyboards, printers, cash drawers, and scanners.
Advertise Your Business
Youâre almost to the finish line and ready to open your doors â¦ or your online business. Before you launch, though, itâs time to think about advertising. After all, if no one knows about your t-shirt business, how are you going to make any sales? Donât wait until after you launch to spread the word about your business — start right now with these advertising tactics.
From middle schoolers to your own grandparents, it seems like everyone is on social media these days. Use this to your advantage to let potential customers know about your t-shirt business.
The great thing about social media is that setting up your profiles is absolutely free. You can also get started in just minutes. Set up pages for your business on Facebook, Twitter, Instagram, and/or Pinterest. Include critical information about your business on each profile including your contact information, website and/or online shop link, and photos of your t-shirts. Later, you can use your profile to share news about your business and new products, advertise sales, or host giveaways.
You can also look into advertising on social media. You can purchase ads for any budget and customize your target audience to get your name out to potential customers.
Another option to consider is talking to social media influencers. Social media influencers recommend products to thousands of followers, helping companies drum up new business. If an influencer wears your shirt and links to your website, you could see an influx of customers.
Some businesses will send a free sample of their products to social media influencers. While this does mean some out-of-pocket costs for you, the exposure you could receive could be well worth the small expense.
Want to learn how to take your social media marketing to the next level? Learn more in our Guide to Social Media Marketing.
Build Your Website
In addition to your social media profiles, you also need a website to build your web presence. Website builders make it easier than ever for you to create your own professional website. You can also easily build an online shop with todayâs modern ecommerce platforms.
When you build your website, make sure that it is designed to appeal to your target audience. Donât forget to include information on your website such as contact info, details on your products, and clear photos of what your business offers. As you build up your website, you can include additional information and features such as online chat options, FAQs, news and updates, and reviews and testimonials.
Word Of Mouth
Never underestimate the power of word-of-mouth advertising. The trick to this one is simple: provide high-quality products and exceptional customer service. If someone buys one of your t-shirts and is pleased with the quality, theyâll be proud to wear it and tell others about your business. If the shirt was poorly made or customer service was lacking, theyâll also tell others.
Word of mouth advertising is an easy and free way to get the word out about your new business. And donât be afraid to toot your own horn. If someone gave a great review, share it on social media and your website. Donât be afraid to ask customers to give their feedback, but donât be pushy. Also, learn to accept criticism. Not all of your reviews and feedback will be glowing. Instead of taking offense, learn from it. Where is your business lacking? How can you make sure that each customer that purchases your t-shirts is fully satisfied? Never stop trying to improve your business, and always provide the best products and customer service to keep your customers coming back for more.
Owning and operating your own t-shirt business can be fun, exciting, and lucrative, but donât be fooled â¦ a lot of hard work is necessary to make your business a success. Donât rush the process. Instead, take the time to plan out your business, create unique designs, and provide high-quality products and service that will draw customers to your business.
Want to learn more about starting your own business? Download our small business guides for the information and tips you need to launch your business venture.
The post How To Start And Fund A T-Shirt Business appeared first on Merchant Maverick.
Keeping all of the terms straight when it comes to processing payments can be a bit tricky. And there are so many entities involved in payment processing. So we’re going to start with one of the most important terms and players in credit card processing: the acquiring bank. We’ll start with a general definition of an acquiring bank, and then we are going to explore what it means for your business:
What Is An Acquiring Bank?
The acquiring bank is a financial institution that plays a crucial role for the merchant by creating and managing the bank account. Also referred to as an acquirer or a merchant bank, this financial institution is a licensed member of the card networks, including Visa and MasterCard. When you process a payment with a debit or credit card, the acquiring bank plays a role in approving the sale. The bank makes this determination based on the cardholderâs data (made available at the time of the sale from the issuing bank and the card network). Note that the issuing bank is the bank that provided customerâs credit card.
For instance, let’s say your customer pays you with a Visa card and taps their card to pay. Their cardâs issuing bank makes information available about their credit card account to your merchant bank (acquiring bank). If there are enough funds on the card and everything else is copacetic, the acquiring bank approves the purchase and puts the funds in your account.
Now keep in mind that the term âacquiring bankâ primarily refers to the specific role it plays in the whole credit card processing interchange. A merchantâs acquiring bank can be an actual bank, or it can be another type of financial organization. A large acquiring bank may also issue credit and debit cards to its customers, thus also acting as an âissuing bankâ when a consumer pays with the card (this is the case with Bank of America). An acquiring bank is also sometimes referred to as a payment processor, and it might contract directly with merchants to provide merchants services. That said,Â not all payment processors are acquiring banks.Â
There’s a lot to keep straight, but keep reading as we further de-mystify these terms and give you the tools to understand how money moves from your customer to you.
The Acquiring Bankâs Role In Payment Processing
The acquiring bank plays a pivotal role in processing credit card payments for merchants. When a merchant processes a payment, the acquirerâs purpose is to authorize the card transaction and connect with the issuing bank (the consumerâs bank) on behalf of the merchant.
In a nutshell, the acquiring bank acts as a go-between with the customerâs financial organization to ensure funds are transferred. In doing so, the acquiring bank assumes some financial risk (thatâs where the acquiring bank fees come in.) Weâll talk more about security, disputes, and more in an upcoming section.
Want to know what happens to your funds in a transaction? Here is an overview to help you wrap your mind around the process itself:
1st Step: A cardholder receives a credit card from their issuing bank and visits your shop. When they are ready to buy, they present you with their card to pay for your wares.
2nd Step: The transaction information and the card information passes between the payment processor to the card network, and then to the issuing bank.
3rd Step: The issuing bank charges your customer for the amount of the purchase.
4th Step: The issuing bank transfers the amount to the acquiring bank.
5th Step: The acquiring bank deposits the funds into your account.
Keep in mind that your payment processor may not be the acquiring bank. Read on to find out more about the difference in the roles and how you can find the right solution for your business needs.
Payment Processor VS Acquiring Bank: Whatâs The Difference?
When someone discusses payment transactions, the words payment processor and acquiring bank are sometimes used interchangeably. Some acquirers are themselves also payment processors and you can sign up for a merchant account with them directly. However, not all processors are acquiring banks. In this case, they contract with an acquiring bank to provide services. While they may or may not be two separate entities, the acquirer and payment processor roles are unique.
The payment processor plays more of a direct role with the merchant, as they are obtaining and processing the credit or debit card information during the transaction. Your payment processor handles the lion’s share of the data security as the card information moves from your customer to you. Processors are also the source of the hardware or software you may use. They provide connection to the payment gateway and thus are also integral to the authorization as well.
The acquiring bank is more of a go-between among the card networks, including the issuing bank and the merchant. For example, the acquiring bank essentially mediates any disputed transaction from the issuing bank. When an issuing bank reviews a dispute brought up by a customer, the card network passes the dispute to the acquiring bank, which then conveys the issue to the merchant. The merchantâs response gets passed back to the acquiring bank and so forth. This example is simplified but illustrates where the acquiring bank sits as it relates to you and your customer.
As mentioned earlier, though the role of an acquirer and a payment processor may be unique, sometimes the same organization fulfills both duties. In other cases, payment processors and acquiring banks have contract agreements with one another to perform their separate roles.
Why Does An Acquiring Bank Charge Fees?
As weâve shown, the acquiring bank is the financial institution thatâs involved in each sale and also assumes some financial risk when it comes to funds transfer during credit card processing. The other thing to keep in mind is that just like your payment processor, your acquiring bank is dealing with sensitive customer data and has to follow strict payment security standards. For these reasons, the acquiring bank also charges a fee to cover its own risks and financial investment in the whole process.
For more information on the different types of costs you may incur with processing credit cards, check out What Are Interchange Fees For Credit Card Processing?
How Do Acquiring Banks Affect Merchant Services?
Acquiring banks are essential players in the whole credit card processing landscape. As a merchant, itâs important to at least generally understand who the players are and how they may affect your business. Itâs not always obvious who your acquiring bank is, as some processors and acquiring banks are separate entities, while sometimes youâre dealing with the same organization.
On a similar note, smaller processors that contract with acquiring banks often bring better customer service because of their specialization. They also may have different pricing and contract terms, such as month-to-month agreements. Keep the whole picture in mind when you are shopping around for a merchant account so that you can make the best decision for your business.
Wondering what companies are out there and which one is right for your business? You are in the right place here at Merchant Maverick. If you havenât yet, visit our Merchant Account Comparison page and peruse ourÂ small business resources that cover the gamut when it comes to payment processing and you.
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Subscription-based business models seem to be everywhere these days. Emerging wine clubs, personal care-in-a-box subscriptions, wardrobe-of-the-month sites — even supporting a favorite podcast! Clearly, these types of businesses are finding success as people jump into subscriptions to save money, time, or just for the fun of getting a box in the mail. And it’s not just cheese-of-the-month clubs anymore. Software as a Service (SaaS) subscriptions are booming in both business and personal markets. This environment is ripe for subscription business models, but you need the right tools to process recurring payments while protecting your business from security risks.
Of course, businesses that serve a local market with more traditional recurring products and services like gyms, childcare, or home improvement services also rely on recurring payments for their revenue stream â whether thatâs automatically charging a credit card or manually sending an invoice.
Choosing a payment processor for this type of business is not a light decision, so letâs take a look at what Square has to offer in terms of solutions geared for the recurring payment model.
How To Set Up Recurring Payments With Square eCommerce
If you are about to launch an eCommerce subscription-based business or you are looking for a different payment processing setup than the one you have, Square should be on your radar. While Square doesnât provide complete âout-of-the-boxâ solutions for eCommerce businesses, they offer three main options for you to get your shop live, with some flexibility under each.
Square Payment Form and Transaction API:
If you are a developer or have the in-house developer support, you can create a custom payment experience that resembles the rest of your site. That means you can save a card on file using the Square Payment Form and set up recurring billing using your own subscription logic. Square also has digital wallet support so you can add Apple Pay, Google Pay, or MasterPass for faster checkout. Hereâs more information directly from Square if you opt to embed the payment form:
Square Payment Form provides secure, hosted components for payment data like card number and CVV, while enabling you to make it your own. Itâs designed to help buyers enter their card data accurately and quickly. Card data is collected securely and tokenized, never hitting your servers, so you donât have to worry about PCI compliance.
When you integrate Square Checkout, you can save a card on file safely, and you wonât need as much developer knowledge. This solution is a pre-built workflow that includes digital wallet support, and itâs all hosted on Squareâs servers. You wonât have as much wiggle room in regards to customization, but itâs still going to give you a fast, streamlined checkout experience. Square provides a technical reference guide to assist you in building what you need, including setting up recurring billing.
Choose An Integration:
If you want a simpler solution that doesnât require coding or technical expertise, a plug-in may be just the ticket for you to get up and running quickly. Of all the options available within the Square Dashboard, Chargify jumps out because it seems to offer everything a subscription service would need. According to Chargify:
Chargify bills your customer’s credit card on whatever schedule you define. In addition to processing one-time and recurring transactions, Chargify can handle free trial periods, one-time fees, promotions, refunds, email receipts, and even dunning (reminders for failed credit card payments) management.
Chargify plans startÂ at $99 a month, but you can work your way up the scale when it comes to additional options. In general, Square plug-in selections abound, so you can shop to find the most promising solution for your business right from your Square Dashboard under Apps. Hereâs a screenshot of a few options listed:
No matter which solution you decide on, you can rest assured that the burden of PCI compliance and security with payment processing sits on Squareâs shoulders, not your own. And the free support you get from Squareâs team if there is a chargeback issue also gives some much-needed peace of mind as well.
To find out more and shop eCommerce solutions, head to Square’s website and select eCommerce under the section, Software services to grow your business. If you want to learn more before signing up, read our post, The Best eCommerce Integrations That Work With Square Payments. And if you want to find out more about Square as an eCommerce solution in general, check out our Square Online Store and eCommerce Review.
How To Set Up Square Recurring Invoices
When you’re ready to set up a recurring invoice for your customer, Square makes it easy. You can create an invoice through your Square POS app or from the Square Dashboard. You can then set up the scheduling frequency of your recurring invoice, though you will need your customer to approve their card on file.
Whether you send a one-time or recurring invoice, enable Allow Customer to Save Card on File so your customer can approve. Then you’ll be all set for repeat billing.
Note: If you need to manually save a card on file from your Virtual Terminal at your computer, youâll need to print out the approval form so your customer can sign it first.
Hereâs a screenshot of what the setup looks like for recurring invoices within the Square Dashboard.
With Square Invoices, you can also request a deposit, either due immediately or within a specific time-frame. So for you business owners that charge a sign-up or other set-up fee, you can seamlessly add in a deposit request and cover all the bases.
Getting Paid with Square Invoices
When your customer makes a payment, credit card payments update automatically in their invoice. Your customer follows the Pay Now prompt to enter their details and can also approve saving the card on file.
Did your customer send a check or pay you by cash? You can also record payment manually when you open up the invoice. If your customer wants to pay over the phone, you can process the amount on your computer through the Square Virtual Terminal located within the Square Dashboard. And finally, you can process in-person payments and apply them directly to the invoice by swiping, dipping, or tapping your customerâs card to your connected Square Reader. Just make sure you go into Invoices and apply the payment to the existing customer invoice.
Square Invoices (read our review) also makes it easy to track when your customer saw your invoice and any activity within the account. You can quickly send a message to follow up or edit the invoice any time from your Square Dashboard.
How To Use Square Installments For Invoices
Another solution that may boost sales is offering payment plans through Square Installments. Square Installments for Invoices finances the cost for your customer, so there’s no need for you to invoice repeatedly; instead, you are paid upfront and in full by Square. Square Installments is currently only available to select businesses, however. Youâll need to apply, and if you are approved, the Installments option automatically appears as a payment option on your invoices and Square POS.
When your customer chooses Installments (either via their invoice or your Square POS), theyâll apply directly with Square Capital at the time of the sale. If they are approved, the balance is reflected in your account. Also note that after the sale, Square Capital takes on the liability of the charge, so you wonât deal with collecting or processing payments. In fact, Square instructs any merchant to direct all questions or issues your customer may have with their installment payments to Square Installments directly. Find out more about it on our post, How Does Customer Financing Through Square Installment Work?
How Much Do Recurring Payments Cost With Square?
Below is a breakdown of Squareâs payment processing per transaction. When you crunch the numbers, keep in mind that you are getting an all-in-one solution as far as payment security with PCI compliance and chargeback support. Square doesnât charge monthly service fees either, so what you see is what you get as far as costs go.
Invoice paid with card by customer: 2.9% + $0.30
Invoice paid with card on file: 3.5% + $0.15
eCommerce processing: 2.9% + $0.30
Square Installments for Invoices: 2.9% of the purchase price + $0.30
Square Installments at your Point of sale: 3.5% of the purchase price + $0.15
Square online payment API and SKIs: Free for developers to use + eCommerce processing fee
Plug-in apps integrated with Square: Price varies with each software provider
Should You Use Squareâs Recurring Payments Tools?
Setting up recurring payments for your customers takes a little bit more forethought and prep than a one-off charge. However, Square makes recurring invoices accessible by offering a range of solutions for both eCommerce and brick-and-mortar shops.
As far as third-party processors and eCommerce go, Square offers similar solutions as its peers. In other words, youâll likely need the help of a developer with any option you choose, including PayPal or Stripe â unless you opt for a plug-in app. That being said, Square enables you to get eCommerce up and running safely â whether that is through a pre-built workflow, easy integration with a plug-in app, or API developer tools. (If you do have theÂ developer expertise and a bit more wiggle-room in your budget, itâs worth mentioning that Stripe affords greater freedom to customize the whole process, add advanced reporting features, and a lot more. But you canât be shy with code!)
Still curious about Square? Why not give them a try and see for yourself? There is no fee to sign up and no binding contract required, so setting up an account may be the next step for you. You can also head over to our Square Review and read how it compares to the other solutions out there.
The post How to Use Square for Recurring Payments And Invoices appeared first on Merchant Maverick.
If you own a business, you donât need anyone to tell you about the value of time-saving tools. Personally, whenever I uncover something that unexpectedly makes business run more efficiently, it can almost feel like winning the lottery â time is that important to me. If you juggle a lot of responsibilities during your day, you probably feel the same way. Thatâs why I was pretty stoked to pull back the curtain and see whatâs really behind the scenes when it comes to Square — one of the most popular payment processing apps available.Â
In this post, we’ll discuss some of the tools you may not have heard about that are available with any standard Square account. While I also get pretty excited about some of the premium options on offer (like Squareâs email marketing and CRM tools), we are going to stick with the freebies in this post. Keep reading to learn about tools you can start using today that may help you do business a little smarter.
Note:Keep in mind, we’re not touching onÂ all of the free software and tools you get with Square — just some of the most valuable ones. Check out our in-depth Square review for a closer look at everything Square has to offer.
When we talk about what is waiting when you open up a free Square account, one of the most important tools is your inventory management. Good inventory management is so important to keep your customers happy and ultimately help support your bottom line. Understanding what is most popular and identifying your best sellers can help you not only maintain the right amount of stock but support your promotional efforts as well.
So letâs start with the basics. After you enter in an item in your Square dashboard or the POS app, you can add the current stock amount, enable tracking, and set up a low stock alert right from the same screen. Whether you ring up the item from your POS, virtual terminal, or send an invoice, Square adjusts your stock automatically.
You can add item variants as well. Add different price points for sizes, add-ons, or customize however you like. Just name the variant, set the price, and add a unique SKU if needed. And if you sell in bulk, you can use Square’s variable price point feature to leave the price open based on the weight/quantity sold.Â
Need a customizable option like a topping change, a special dietary adjustment, or another type of swap-out? You can create modifiers for that, too! Unlike item variations, modifiers donât decrease inventory accounts. You can opt to assign a price to your modifier, however.
When it comes to managing your physical stock, it is worth mentioning that the free POS account isnât set up to print barcodes for your SKUs. Some business owners use a Dymo label printer as a workaround. If you have a lot of inventory and need a more robust solution for advanced inventory management (including barcode scanning and printing) in one solution, Square for Retail may be worth your while. Check out our full Square for Retail review for pricing and a better look at all the extra inventory-related features included with the POS.Â
When you use Square’s customer directory, the amount of data you have access to automatically builds with each sale. With just a swipe of the card, your list collects data such as your customers’ names, when they visited which location, and their visit frequency. During the sale, your customer may also have entered in their email address with you to get a digital receipt. Of course, if you are feeling bold, you can also ask your customers one-by-one for their email addresses so you can start building a healthy list.
Square’s customer database is accessible through Square Point of Sale or through the Square Dashboard. Under each customer in your directory, you can add a note, upload a file, view any feedback they have left you on their receipts, or create an invoice to send directly (more on that below).
When all of these customer insights build over time, you can start to get a clearer picture of who your loyal customers are, who has visited more than once, and who hasnât visited you in a while. You can also see what their favorite products are — all of which is useful data for your business in general, and especially for marketing purposes.Â
Again, the Square Customer Directory is entirely free to use, and it syncs with all of Square’s other tools — that includes paid software options such as loyalty and email marketing. The Square email marketing tool lets you segment customers,Â then customize email campaigns based on their habits. Square has pay-as-you-go pricing at 10 cents an email, or you can opt for a monthly subscription to send unlimited emails. Square offers a 30-day free trial for an email marketing subscription, and pricing starts at $15/month for up to 500 customers.
Card On File
You can make it easier for your repeat customers to order by phone or for a future invoice by saving your customer’s credit card information using Square’s Card on File feature. Be aware that your customers have to âsign offâ so you can appropriately save their card on file, however. If you are completing a sale on your computer through Squareâs Virtual Terminal, you will be prompted to print out the approval release and have your customer sign it. Keep this document in a safe place, because it proves you received their permission to store their card and can protect you from chargeback issues.
If you are at your free Square POS app, your customer can approve saving the card on file by entering in their zip code at the permission screen. After that, you can process their payments quickly and easily with no need to present the card. While it costs nothing to store a card on file or use the feature regularly, keep in mind that you will pay a little more with each transaction (3.5% + $0.15 per transaction instead of 2.75% per swipe/dip/tap) because they process as card-not-present, rather than card-present.Â Â
Is Card On File Secure?
Square lets you store your customerâs credit card information with their approval, and yes, itâs fully compliant with the payment security standards set up by the PCI-DSS. Thatâs because when you enter credit card data, it is only going through the secure Square app. Also take note that when you enter in credit card data â whether during a sale or saving a card on file, the full number isnât viewable to your or your staff once itâs entered in the system.
Securely saving customer card data is vital to your financial protection as a business and prevents very costly fraudulent risks. For more about Squareâs security, check out our related post, Is Square A Secure Way To Accept Credit Card Payments?
Gift cards may not be the first thing you think of when it comes to business tools, but here are some pretty neat statistics for you: In a 2018 press release, First Data shares a study that found that consumers, on average, spend $59 over the original value of the gift card they receive. Not only that, but shoppers plan to spend 55% of their annual gifting budget on gift cards. That is no small potato when it comes to amping up your revenue.
If Iâve piqued your interest, I have some more good news. Square’s digital gift cards are completely free for you to sell. If you want to offer physical gift cards, you could start with a stock of 20 for $40 or opt for higher quantities with a significantly lower cost with each tier. When your customer pays for the gift card using a credit or debit card, standard processing fees will apply. (There’s no charge for payments made with cash.) When it comes time for the gift recipient to spend with you, you wonât face any additional costs. Square treats this transaction like cash, and they only deduct the amount of the sale from the card. And it’s great that you don’t need to pay any monthly fees to accept gift cards — you just pay the cost of the physical cards (if you want them) and any associated payment processing when purchased.Â
Invoicing & Installments
When it comes to invoicing clients, Square makes it pretty easy. First, you can send an unlimited amount of professional-looking invoices for free. And instead of your customer having to call you with their number or waiting for a paper check, they follow the prompts and pay securely online. You can also send files, images, contracts, or attach information along with the invoice.
If you sell larger ticket items and want to finance your customers, you may also be interested in Square Installments. With this service, you can let your customer pay over time, while getting all of the funds upfront from Square. Thatâs because Square takes the risk by checking their credit and approving or denying the purchase. To find out more about letting your customers pay by installments, check out How Does Customer Financing With Square Installments Work?
If you want to assume more of the risk or set up a layaway program, however, you can also send out a regular invoice to request a down payment or partial payment as well. There is simply a lot of flexibility afforded with invoicing and installments. Read our Square Invoices Review to find out more about this tool and how to use it for your business.
Don’t have a card reader handy? Does a customer want to pay over the phone? You can accept payments securely at your own computer when you log into Square dashboard and go to your Virtual Terminal. There are many scenarios when taking payments at your virtual terminal can empower your business model — and it makes for a great backup if other devices are misbehaving.Â
In any case, you can still take payments quickly via Square’s Virtual Terminal. You can manually enter in the credit card information, or you can pull up a customer in your directory and charge a card you have saved on file. If you have a Mac or Chromebook, you can still connect a basic magstripe reader and swipe the card at your computer, too!Â
Square charges no software fees to use the virtual terminal and it’s included with all free Square accounts, but you will still have to pay transaction costs. With keyed entry, you’ll pay 3.5% + $0.15 per transaction, or 2.75% for swipe transactions.
At first glance, the Square Card may seem like just another line of credit, but it isnât. The Square Card is a debit card that gives you instant access to any of the funds that are in your Square account in real time. So why are so many business owners stoked about the Square Card? For one, it can help manage and organize cash flow. One way to separate business expenses from everything else is to keep all of your business expenses on your Square Card. It makes sense because youâll also always have an itemized list of exactly what you spent at the Square app under âCard Spend.â
Keep in mind that once you get the ball rolling with your Square Card, your funds are automatically going to sit in your Square balance unless you manually transfer funds into a different account. You can do so at any time and Square will deposit funds in the next 1-2 business days. If you want your funds deposited into your main bank account faster, you can also opt for a same-day instant deposit for the fee of 1% of the total amount.
When it comes time to spend your balance, the Square Card is a debit card accepted at any merchant that takes MasterCard. As far as cost, the Square Card is completely free with no annual or usage fees whatsoever. The other cool bonus is that you get a 2.75% discount at all other Square merchant locations. If you have a Square account, you can request your free Square Card under Deposits at the Square Dashboard. Note that Square doesnât automatically send you a card when you open your account.
Is Square Right For You?
There is no doubt that Square offers an abundance of tools and add-on software apps that can help you run your business more efficiently. Utilizing inventory management tools can help you stay on top of the ebb and flow of demand, and payment processing options offer flexibility when you need it.
We’ve only scratched the surface when it comes to Squareâs tools because there are many layers to Square’s solutions. Check out our Square Review to get even more details about features and pricing so you can make the decision thatâs right for you. You can also set up a free Square account and play around in the dashboard and check out the tools yourself.
The post 6 Free Square Tools To Make Running Your Small Business Easier appeared first on Merchant Maverick.
Square has carved out quite a spot for itself in the world of payment processing. When it comes to accessibility, there are few rivals. With no credit checks, sign-up fees, monthly fees, or cancellation fees, and a very transparent pricing model, itâs no wonder why Square remains the go-to option for business owners who want a no-hassle choice.
In fact, itâs so easy to get started, that you can usually start taking payments immediately after setting up your Square account! That being said, it helps to get a bit familiar with the process before ringing up your first customer â and there is more than one way to do it. If you are interested in weighing your options, this post is for you.
We are mainly going to focus on taking payments with physical cards in this post, so if you have an eCommerce shop, you may want to check out ourÂ Square Online Store and eCommerce Review. If, however, you want to know how to ring up your sale and get some important details to help you choose the best options, keep reading.
To start us off, here is a short list of the ways you could accept payment with Square:
Your device + Square Point-of-sale (POS) app + Â Square card reader
Keying in credit card information in the Square POS app
Square POS hardware (e.g., Square Register)
Accessing the Square Virtual Terminal from your laptop
Below, we are going to start by explainingÂ how to accept payments with the Square Reader. After going through some different scenarios, weâll also explore Squareâs POS hardware for those of you with a physical storefront. By the end of this post, you should feel confident navigating your options and finding the best solution (or solutions) for your business processing needs.
But first, a note on Squareâs payment security.
Square & Payment Security
Right out of the gate, we need to take a quick minute to cover payment security. Itâs that important. Regardless of how you accept a payment â whether that is keying in a card, Â swiping with a magstripe reader, a dip or tap, etc. — Square provides secure and PCI compliant payment transactions. That is to say, Square is fully compliant with the latest Payment Card Industry Data Security Standard (PCI-DSS). And that also means you wonât have to pay additional PCI fees or hire a team to manage ongoing compliance, either.
This out-of-the-box payment security is just one reason Square is such a powerhouse for the millions of small business owner who trust it.
Let’s take a look at the Square reader options next.
How To Use A Square Reader For Mobile Payments
We’ll start with the obvious: the Square reader. Assuming you have already downloaded the Square app, itâs effortless to accept payment with your reader.
Step One: Open the app on your device. You will already be at the screen you need to make a charge. No fumbling required!
Step Two: If you have entered inventory into your Items list, find the item and click what you need. The total will automatically update.
Step Three: Tap the Charge button when youâre ready.
Step Four: Swipe or insert the card, or tap your connected reader. You can also manually enter the card number (keyed entry) if necessary.
Step Five: Your customer will sign their name and the sale is complete!
Donât have a connection? Suffering from a spotty connection? Squareâs offline mode helps you avoid losing the sale. Your customerâs data is securely saved in the app and the transaction will process when you connect your device to the internet again (WiFi or cellular connection). You must reconnect within 72 hours, though, or the transaction will cancel.
Itâs really that easy. To see how Square stacks up next to other mobile credit card processors, check out our Mobile Credit Card Processing Comparison table.
Square Transaction Fees & Mobile Reader Costs
As stated at the start of the post, Square offers very transparent pricing. If you use Square Point of Sale on a smartphone or tablet with a mobile card reader, youâll pay the standard processing fee of 2.75% per swipe, dip, or tap. And keep in mind that no matter what type of card your customer hands you, Square charges the same fee per transaction. If for some reason you need to key-in the credit number, you will pay 3.5% + 15 cents for manually-entered transactions. We will revisit the types of card-not-present transactions later in the post.
Letâs talk a little more about the Square Reader, because you do have some choices that go beyond the free magstripe device. The good news is that Square readers work with nearly all Android or iOS devices running the latest updates. If you’re in doubt, Square offers a compatibility tool so you can look up your device and see for yourself.
After signing up for a new Square account, you can choose which free Square reader you would like — and they’ll ship it directly to you for free. Depending on your device needs, you can choose between the lightning adapter for iOS or the standard 3.5mm headphone jack reader. The other option you have is to shell out $49 for the Contactless + Chip reader.
The free magstripe card reader is great for getting started, but I recommend considering the upgraded Contactless + Chip Reader for improved payment security in processing. (It also offers your customers more ways to pay you.)
Square also sells a small charging dock so you can keep your contactless reader fully charged through the day. If you opt for the contactless reader, you can also purchase a specially designed Otterbox case from Square. You can slide the contactless reader on the back of the case if youâre on the go. Unfortunately for Android users, the case only fits an iPhone 7 or 7 plus, but I have a hunch there will be more options for this one when the demand grows.
Can You Use A Square Reader With Multiple Devices?
You may be wondering about the possibility of sharing a reader between different devices — or maybe even switching readers. Good news! You can do either of those things! If you have more than one device, decide to upgrade a device (or reader for that matter), need to swap a device, or hand your Square reader to a different team member for them to plug into their phone, you can do so without an issue.
Thatâs because your account is anchored to your Square POS app, not to a specific reader. When you or your team member signs into the Square POS app, transactions go into the system automatically. You can use the same reader across different accounts, too. So if you have two businesses, or you have more than one Square POS app (like Square Retail or Square Restaurants), the reader works interchangeably with those as well.
Keep in mind that when you choose your reader, you may limit your usage. For example, you can only use the lightning reader with iOS, but the standard 3.5mm headphone jack reader is compatible with multiple devices. Of course, you can always purchase more readers to suit your needs and keep up with a growing team. As long as they are signed into your Square account, all sales will be synced to your account.
How To Use Squareâs Countertop POS Systems
If you are considering how you can use Squareâs countertop POS systems to make business flow, here are your options:
Square Standfor Contactless and Chip:
When you use the Square Stand with the free Square Point of Sale (POS), you will need to bring along your own compatible iPad (most recent model) or purchase an iPad to go into your stand. The magstripe reader is built-in if you must swipe, but we recommend utilizing the Square Reader for contactless and chip payment for the latest payment security protections. The Square Stand also comes with a dock to keep the contactless reader charged and stable.
When it comes time to ring up an order, youâll complete the sale just as you would through your mobile device, as the free Square POS app is still the engine thatâs running the whole thing. The Square Stand for Contactless and Chip makes a great choice if you are looking for a more prominent, bonafide countertop POS option. It has a simplistic design with minimal cords and offers more screen real estate to find inventory and add to your sale. Â
With the Square Stand, you can run your Square POS app or the premium options created just for retail and restaurants. Find out why these might be a better option for you (and see the fee differences) by visiting our Square for Retail or Square for RestaurantsÂ reviews.
The Square Terminal is a great all-in-one choice if you want a little more portability than the Square Stand offers. You can swipe, dip, or tap credit and debit cards, and it even has a receipt printer built right in. Terminal runs the free Square POS app, so itâs easy when it comes to ringing up a sale. You can also access features such as your customer directory, reports, and inventory tools.
If you are running Square for Restaurants, you wonât have access to all of the bells and whistles, but Square Terminal does have limited compatibility with the Restaurants POS. For example, you can pull up an open ticket and settle payments right at the table â complete with a receipt! When all is said and done, The Square Terminal can hold its own as an excellent countertop solution, but itâs also lightweight enough to use as a mobile solution. And because Square POS has an offline mode built right in, you donât have to worry about losing connection. Transaction data is all saved safely with Square and ready to process when your device is back online.
They built the Square Register with both your and your customerâs ease of use in mind. Thereâs one 13.25-inch screen for you, and one for 7-inch display customers, complete with magstripe, chip card, and contactless payment processing built in! Square Register runs Square POS and supports Square Loyalty and other software add-ons. The Square Register also supports the back-end features of the premium Square for Retail software, such as the advanced reporting and inventory features, but can’t run the POS app itself.Â
Not sure what you need? Check out A Guide To Square Credit Card Readers And POS Bundles to compare and explore your options. Below, we’ll break down the cost of the hardware we just talked about, and discuss the transaction fees associated with each.
Square POS Hardware Costs & Transaction Fees
As always, Square pricing is very straightforward. Below weâve listed prices for the hardware and what it will cost you to process payments.
Square Standfor Contactless and Chip: Â The cost for this one is $199.00. If you want to add an iPad, you can do so for $329.00. Note that the stand is only compatible with an iPad (2017, 2018), iPad Pro 9.7â, or iPad Air (1, 2). Youâll pay a flat 2.75% per swipe, dip or tap transaction at the Square Stand so long as you are running the free Square POS. Square For Restaurants and Square for Retail process at different rates — 2.6% + $0.10 for Restaurants and 2.5% + $0.10 for Retail.
Square Terminal: To get your business a Square Terminal, youâll pay $399.00, shipping included. You can also opt to add on 20 rolls of terminal print paper for another $20.00. Your payment processing fee is 2.6% + 10Â¢ per swiped magstripe cards, swiped or inserted chip cards, and contactless payments.
Square Register: Square Register costs $999.00 to purchase it outright. Shipping is free, and it arrives in seven business days or less. Itâs ready to start processing payments right out of the box, so thereâs no fuss when it comes to launch time. Contactless payments, swiped or inserted chip cards, and swiped magstripe cards processed through cost 2.5% + 10Â¢ fee.
If you add on specialized software, such as Square for Restaurants or Square for Retail, you will have an additional monthly charge (both starting at $60/mo). Both of these premium POS systems are geared towards specialized businesses and include features such as advanced reporting (for retail), and table mapping (for restaurants). Â
How To Accept Card-Not-Present Payments with Square POS Â
There may be some situations when you need to take a payment from your customer, and you canât swipe, dip, or tap the card. Maybe you donât have your reader with you, or you want to take an order over the phone. Whether the card is physically present or not, if you manually enter in the card information, itâs considered a card-not-present transaction.
In the next section, we will lay out the payment processing costs for such transactions. But first, letâs discover the ways you can process a card with Square if you donât have your reader (or the card) in hand.
If you log into the Square Dashboard from your computer, you can key in manual payments from your Virtual Terminal (not to be confused with the Square Terminal hardware). You wonât need additional hardware to complete the transaction. You simply go into the terminal and enter the amount, credit card information, and even add a note to describe the sale. Then you hit “Charge,” completing the transaction. You can also take âCard on Fileâ payments from the Virtual Terminal (more on that below).Â If you have a Chromebook or Apple laptop, you can connect a basic magstripe reader to swipe transactions. In that case, you’ll pay the standard swipe rate instead of the keyed entry rate.
Whenever you ring up a sale, you can also opt to save your customerâs card number on file for future use. After that, you always have the option of selecting âcard on fileâ to complete the sale. However, keep in mind that whenever you ring a card-on-file transaction later and donât swipe, dip, or tap, you have entered into âcard-not-presentâ territory and slightly higher processing rates apply.Â
Security Concerns with Card On FileÂ
The Square app only reveals the last four digits of your customerâs credit card on file and does not save CVV card data to remain PCI compliant. Any time you make a transaction with Card on File, Square automatically sends a receipt to the customer so they have a record of the transaction, to help minimize the risk of unauthorized charges.
You should never save your customerâs card data unless it is stored with PCI-compliant software (such as Square). Businesses that store customers’ payment data improperly put everyone in danger of a breach, and the company can be liable for the breach, should it occur. Small businesses are targeted by fraudsters looking for unsecured data, and it is a lot more common than you may think. If you save the card on file through Square POS or Virtual Terminal, keep in mind that Square also requires you to obtain written consent to store the card on files — the site provides a form you print off and store somewhere secure.Â Also, your customer can revoke their consent to keep their card on file with you at any time.
Manually Keying-In Credit Card Information
In addition to the Virtual Terminal included with Square, you can always opt to enter credit card information manually with the Square POS app. Because there is a higher chance of fraud when you donât capture the electronic data, itâs going to cost you a bit more to process. However, sometimes it is necessary to take these types of payments. Use your discretion with these types of transactions, and swipe, dip, or tap the card if at all possible to reduce your fees (and your chargeback risk). However, if a card is particularly worn down, the card reader is just misbehaving, or you don’t have your Square reader handy, it’s good to know you have a backup option to accept payments.Â
If you are looking for yet another workaround when it comes to processing payments, donât have your reader handy, and you don’t want to key in the amount, you always have an option to send an invoice. Your customer will get the invoice via an email right away. From there, they can open their email and follow the prompts to enter in their credit card information from their own device. This is especially good for higher-value transactions where keying in the card number might send up a red flag.Â
Check out our Square Invoices review for a more in-depth look at Square’s free software, but for now, what you need to know is that you can link your inventory to invoices, allow customers to send tips, take down payments, and even enable installment payments.
Square Keyed-Entry Transaction Fees
As we covered above, there are several scenarios in which you may want or need to key in your customerâs credit card information and more than one way to do it. Hereâs how much itâs going to cost you to process these types of payments:
Is Squareâs Credit Card Processing Right For You?
Square offers several solutions for businesses at every stage. That means that if youâre a one-person shop now, you donât really have to worry about finding a new solution when you grow because Square offers so many scaleable hardware options. When it comes to taking payment at your storefront or on the go, there are many ways to go about it. And with a transparent pricing model, there are no surprises on the back end. Because Square offers an all-in-one solution with payment processing and PCI compliant security built right in, you donât need to worry about jumping through hoops to keep up with the latest global payment security regulations.
So is Square right for you? Sometimes the best way to find out is to see for yourself! ConsdierÂ setting up a Square account and playing around with the possibilities. Itâs free to set up a Square account, and there are zero commitments or contracts required.
If you are still weighing all of your options when it comes to processing, check out this Mobile Credit Card Processing Comparison table for a quick side-by-side view of some top-rated companies.
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
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