Welcome to another week of Merchant Maverickâs essential news roundup for small business owners.
This week, JPMorgan Chase announced its own mobile payments reader while a survey hinted that office spaces will shrink in the future. Read on through for the weekâs top five must-know stories for small business owners.
JPMorgan Chase Announced A Mobile Card Reader
In an effort to broaden its business services, JPMorgan Chase announced the launch of a new card reader that can take payments on the go. Dubbed QuickAccept, this mobile payments platform will allow merchants to ring up credit card payments via a mobile app or a contactless card reader — much like tools offered already by Square and PayPal. Unlike those other services, however, Chase’s new platform will deliver merchants the money made from sales on the same day for free (Square, for comparison, charges ~1.5% for instant transfers).
To work alongside the new payments platform, Chase also announced a business checking account called Business Complete Banking. Nothing is really special about this checking account, although you will need to open one if you want to take advantage of QuickAccept.
Why this matters to you: Competition is almost always welcome, and Chase’s new platform could provide some spark to the world of mobile payments. If QuickAccept’s free same-day funding takes off, merchants might wind up with more avenues for taking credit card payments cheaply in the future.
Over 75% of CEOs Expect Office Space To Shrink In The Future
In a survey of 171 CEOs across America, Fortune magazine and Deloitte found that 76% of those polled expect their company will need less office space in the future. Growing acceptance of smaller office space could be because many are finding remote work isn’t so bad after all — 40% of CEOs in the survey said employee productivity has gone up due to remote work.
Interestingly, Fortune/Deloitte’s survey comes on the heels of a different study about returning to work by workplace technology startup Envoy. That survey found that 73% of US-based employees worry about their health and safety at work. So even if some companies are ready to fully return to the office, most employees may be less keen to follow suit.
Why this matters to you: The COVID-19 pandemic will almost certainly shape how humans work together in the future. And while shrinking office spaces will impact commercial real estate negatively, there are some benefits to smaller office footprints worth noting. For instance, Americans are still driving less on the roads, even as more and more places are reopening. Remote work can also help reduce overhead costs.
Facebook Revealed Plans To Beef Up WhatsApp Business
In an effort to squeeze money out of its WhatsApp messaging platform, Facebook is set to make several additions to the business side of the service. To start, businesses will be able to sell products to customers within chats. Facebook didn’t say how exactly the in-chat shopping feature might be implemented, but it is supposed to work alongside businesses’ “existing commerce and customer solutions.”
Facebook is also launching a hosting service in “the coming months” that will include the ability for businesses to manage their WhatsApp messages. Finally, Facebook noted that some WhatsApp services for business customers will cost money, although specifics haven’t been revealed yet.
Why this matters to you: WhatsApp is a messaging platform that reaches over two billion people worldwide. The upcoming features for WhatsApp will especially be a boon for small businesses that sell online — in fact, Facebook says that the in-chat shopping experience is meant to “help many small businesses who have been most impacted in this time.”
Further reading: Has Facebook Finally Broken WhatsAppâRadical New Update Now Confirmed, Forbes
Outlook For Restaurant Isn’t As Bleak As Previously Thought
Despite the damage the pandemic has done to restaurants, there is hope yet. Moody’s moved its outlook rating for the restaurant industry from “negative” to “stable” last week. The investor service predicted that there will be “slowly improving business conditions” during the next 12 to 18 months and that the industry’s operating profit will grow by around 15% in 2021.
However, restaurants aren’t out of the woods yet. A recent Bloomberg report discussed restaurants that have opened up outdoor dining during the pandemic must innovate once again to survive the cold winter months. For many, winterizing an outdoor space may be too expensive — outdoor headers often cost between $1,000 and $1,500 a pop.
Why this matters to you: A glimmer of hope for the restaurant industry shines a beacon across the entire economy — businesses that serve food have been hit hard during lockdowns. Still, it’s important to stay vigilant. COVID-19 remains a deadly virus, and coming up with safe protocols while remaining profitable will be a tall order for many small businesses, including those beyond the restaurant space.
Further reading: Off-Premise Sales and Non-Traditional Payment Options are Top of Mind for Restaurant Franchisees in COVID-19 Landscape, TD Bank
Entrepreneurship Is On The Rise
Alongside a rise in joblessness has come a rise in entrepreneurship. According to data by the U.S. Census Bureau, new businesses filed 1.5 million Employer Identification Number applications in the third quarter of this year — an 82% jump year-over-year. The Midwest and the South both saw steep rises in particular.
MBA applications are also soaring as people look to boost their professional skill set. A survey of the top 25 US business schools by Poets & Quants found that the number of applications is up an average of 22.6%. USCâs Marshall School of Business leads the pack with a 66.4% increase in applications.
Why this matters to you: The drastic unemployment stemming from the COVID-generated recession is almost certainly encouraging more and more to try their hand at running a business. If you’ve recently started your own business, or are seeking an MBA to help with a business venture, you are not alone. There are plenty of others out there who will (hopefully) succeed right along with you.
Further reading: Entrepreneurship Is the Vaccine for Urban Economies, Bloomberg
The Latest From Merchant Maverick
The Paycheck Protection Program and Economic Injury Disaster Loans struggled to adequately help many small businesses during the early stages of the pandemic. Learn what exactly went wrong from our readers’ perspectives:
Top 5 Reasons Why Small Businesses Were Denied Government Funding During The COVID Crisis
Something Good…
A Texas farm has been in the news recently for helping special-needs children play and hang out with animals that require special needs, too.
Run as a non-profit organization called Safe in Austin, the farm is home to over 150 animals who are injured or need some type of additional support. Among the residents include a rescued turkey born with a claw abnormality and a calf with a birth defect that fused its legs and spine together.
“There is something absolutely magical about watching a child with differences come out here and say, ‘Theyâre just like me,’ ” said Safe in Austin founder Jamie Wallace-Griner. She added: “We have animals that are blind or deaf, have diabetes, cerebral palsy, deformities, missing limbs, broken spines ⦠they all become part of our family.”
Do you have a story idea, tip, or press release for the Merchant Maverick news team? Shoot us an email: [email protected]
The post Chaseâs New Mobile Card Reader Takes Aim At Square & 5 More Small Business News Stories You Need To Know appeared first on Merchant Maverick.
By now, you’ve probably heard of Facebook Pay — yet another new way of sending and receiving money. People use it most often to transfer funds between family and friends, but can it also be a good option for online businesses?
The answer is yes, it can. Read on to learn more about Facebook Pay, then decide whether it’s right for your own small business.
What Is Facebook Pay?
Let’s face it: People are doing more and more of their shopping online. And anything that makes it easier for them to find and pay for the things they need sounds mighty attractive.
Launched in 2019, Facebook Pay is still a relatively small service â but one with big plans for growth. Right now, it’s available in the United States on Facebook, Messenger, and Instagram, and it’s also available, primarily through Facebook, in some other countries in Africa, Europe, Asia, Latin America, and the Middle East as well as Canada. Plans are underway to add Facebook Pay to WhatsApp soon.
If you’re already using Facebook or Instagram as a part of your online sales strategy, it’s worth taking a look at Facebook Pay. After all, the more payment options you give your customers, the easier it can be to make sales to them.
How Does Facebook Pay Work?
Facebook Pay works in a fashion similar to other friend-to-friend payment options, like Venmo and Zelle. The difference (right now at least) is that Facebook Pay is available only to people who use Facebook, Messenger, and Instagram.
When people sign up for Facebook Pay, they agree to let Facebook store their credit or debit card information. That means they won’t have to pull out their wallet and enter all those numbers each time they want to make a purchase or donation within a Facebook setting. Facebook Pay works for:
Friend-to-friend payments
Donations to charity and friends’ fundraisers
Purchases on Instagram
Purchases on Facebook’s Marketplace
In-app game purchases
Tickets for events
When you sign up for Facebook Pay and enter a valid credit card, debit card, or Facebook gift card, you’ll be able to exchange payments with people in your network and make contributions to their fundraisers. And they can do the same with you, all without leaving the Facebook or Messenger app or having to enter their information each time they want to buy.
Does Facebook Pay Cost A Fee?
If you’re tired of watching processing fees from third-party providers eat away at your profit margin, you’re going to love Facebook Pay. You’ll never pay any fees to send or receive payments this way.
When Should You Use Facebook Pay?
Facebook Pay is a simple, seamless, and secure payment option for anyone who uses Facebook or Instagram to pay for purchases, donate, or send money to friends and connections. It makes sense to use Facebook Pay when:
1) When You Have Something To Sell
List your handmade items or the unique things you offer for sale through your business. Post pictures and information on your Facebook or Instagram page, then invite your friends and followers to send you payment via Facebook Pay.
Post a link to your online store. Let your friends and followers know the kinds of things you’re offering, then tell them where they can go to get more details. Tell them how they can contact you to place an order â direct message and posting a reply on your page are two easy options â and let them know Facebook Pay is an easy way to exchange payment.
2) If You See Something You Want To Buy
You’ve been browsing through Facebook Marketplace and found something you can’t resist. Message the seller and ask if he or she accepts Facebook Pay, then send payment quickly and conveniently, for free.
A page you follow posts an announcement about a new item for sale. Send a direct message or post a reply indicating your interest, and ask if you can send payment via Facebook Pay. It’s a fast, free, and safe way to complete your purchase.
3) When You Want To Support A Fundraiser
A Facebook or Instagram friend posts information about a birthday fundraiser for a worthy cause. Don’t worry about finding your wallet. If you’ve signed up for Facebook Pay, your credit or debit card information is already stored, so you can support your friend and the good cause without going to any trouble.
A nonprofit you follow posts on its page about a special need or donation drive. Or maybe you are just feeling generous and want to make a donation even when the group isn’t asking for anything right now. It’s easy to support the causes you care about when you are signed up for Facebook Pay.
4) If You Owe Money To A Friend
You went out for dinner and split the check? No problem. If your friend is on Instagram or Facebook, you can use Facebook Pay to transfer cash to cover your share of the bill before you’ve even left the restaurant.
Sending Money Via Facebook Pay
Using Facebook Pay is pretty easy, whether you’re the one sending or receiving money. The first thing you’ll need to do is sign up for the service. So head on over to your Facebook account settings â you can get there by clicking on the triangle at the top right of your screen. (It’s probably right next to the notifications icon.) Next, click Settings and then scroll down until you see Facebook Pay in the menu on the left side of the screen. If you want to use Facebook Pay on Instagram, go to Settings, then Orders and Payments, to enter your payment method. If you’ve already saved payment information to either Facebook or Instagram, that payment method will be available to Facebook Pay right away.
Facebook says that more than 99% of payments are processed immediately, and any payments that don’t process are reviewed within 24 hours.
Receiving Money Via Facebook Pay
If you want to set up your own account so that you can receive payments via Facebook Pay, the first step is to sign up for the service yourself. Your next steps will depend on how you’re using your social media account to sell.
If You Sell Only To Your Contacts…
Many small businesses sell successfully on Facebook and Instagram using simple techniques. If your sales plan involves posting information and photos about items you have for sale and then connecting with your friends and followers who indicate interest, you can ask them to pay via Facebook Pay.
If You Sell On Facebook Marketplace…
Once you connect with someone who is interested in purchasing an item from you via Facebook Marketplace, you can use Messenger to set up payment using Facebook Pay.
If You Have A Facebook Or Instagram Store…
Facebook Pay is designed for individual use, according to a Facebook representative. So it’s not available as an official payment option for your online store. However, you can connect with your customers through your page or via Messenger to set up payment using Facebook Pay.
No matter how you arrive at the point of sale, once you have someone interested in buying something from you online, let the buyer know that you can accept Facebook Pay. The buyer can arrange payment via Messenger.
And once your buyer sends payment via Facebook Pay, how long will it take until you receive the money? Facebook says that more than 99% of payments are processed immediately, and any payments that don’t process are reviewed within 24 hours. The money will be transferred to your registered account right away, although it’s up to your bank to post funds to your account.
Is It Safe To Send & Receive Payments With Facebook?
Facebook Pay links with affiliate partners and third parties to facilitate payment transfers. However, Facebook Pay’s privacy policy emphasizes that only limited personal information from users will be shared. Specifically, Facebook Pay can share your card numbers and other payment method information, your transaction history, or a copy of your identification, according to legal requirements, or to prevent fraud.
Beyond that, these measures have been put in place to protect Facebook Pay users’ information:
Anti-Fraud Technology Monitoring: You’ll be alerted if unauthorized activity is detected.
Customer Support: Report unauthorized transactions via email 24/7 or by live chat between 6 a.m. and 6 p.m., Pacific Time.
Data Security: Payment data is encrypted for storage, and payment methods are not shared with buyers, sellers, or merchants without consent, and payment information is stored separately from account data.
Verification Methods: Use a PIN or biometric devices like fingerprints or facial recognition, whatever you use to protect your device.
Transaction Notifications: Receive in-app notifications when transactions process.
Privacy Related To Purchases: Transactions are confidential and not shared to users’ Newsfeeds, unless they choose to share
Facebook Pay VS PayPal
Facebook Pay can be a convenient payment option under some circumstances. However, compared to a bigger payment processing system like PayPal, Facebook Pay is probably best suited for small online businesses without an official storefront who rely on one-on-one contact with buyers through social media or who sell at least occasionally in person (at craft fairs or farmer’s markets, for instance) and want a fast, convenient, and no-fee way to accept money from customers.
Of course, there are other no-fee options you can use, too. An online service like Venmo or Zelle offers many of the same benefits â quick, secure, and free payment with fast delivery â without limiting your audience to those who use Facebook and Instagram.
For bigger businesses or for those that want to open an online store, choosing an option like PayPal may be a better move for you. Of course, if you start taking payments through PayPal, be aware that you’ll have to give PayPal a portion of each sale.
Should You Use Facebook Pay For Your Business?
With so many easy and convenient options for taking payments online, it can be hard to decide which one is best for you. The good news is, you really don’t have to choose just one. Because you can set up a free account on Facebook Pay, and you can receive payments with no fees, you don’t really have anything to lose by trying it out.
If you regularly connect with customers on Facebook or Instagram, let them know about all the payment methods you can accommodate. After all, the easier you make it for the customer to pay, the more likely you are to complete the sale and pocket the money.
The post What Is Facebook Pay & How Does It Work? appeared first on Merchant Maverick.
Signing up to sell online through Square is fast, free, and easy. But is it a move you should consider making?
Square has been a game-changing player in the mobile payments arena since it was launched by Jim McKelvey and Jack Dorsey in 2009. Today, the Square application has been download more than 33 million times, making the company a POS (point of sale) giant. Since 2019, Square has been using software from online website builder Weebly to offer users an easy-to-use, all-in-one eCommerce solution called Square Online.
Whether you’re new to online sales or looking to jump from another eCommerce platform, we’ll show you how to get started with Square Online and how to make the most of your store.
What You’ll Need To Start Your Square Store Online
The one thing you won’t need when you set up a store is a credit card or any other payment method. That’s because it’s a free service, at least for starters. You can add on extras later, if you decide they’re worth paying for. To get started with Square Online, all you need is the following:
Your Business Name
Tax ID Number: You can enter this later, if you don’t have it ready
Estimated Annual Revenue: Choose from a range, if you know it, or skip this step.
How To Start An Online Store Through Square
The first thing to know about setting up an online store with Square is that it’s easy to do, even if you don’t know much about eCommerce or setting up websites. Read on to find our step-by-step instructions on how to start an online store through Square.
Sign up for Square eCommerce
When you’re ready to start, head to the Square Online signup page and press the blue button that reads Start a free online store.
You’ll be prompted to enter your name and email address, and to create a password. You’ll also be asked to check a box noting that you agree to Square’s terms, privacy policies, and e-sign consent. Be sure to click the links so you can read what you’re agreeing to. Once you enter that information, you’ll be asked to enter your business name, your tax ID number, and your estimated annual sales. All you really need to enter at this point is a business name, however; the other two items are either optional or can be entered later through your Square Dashboard.
Enter Business Information
The next page you arrive at will ask you to describe your business. The choices given are limited:
Clothing & Accessories
Specialty Shop: Retail
Specialty Shop: Food & Drink
Outdoor Markets
Art, Photo, & Film
Furniture/Home Goods
Food Truck/Cart
Outdoor Markets: Food & Drink
Jewelry & Watches
Events/Festivals
General Contracting
Charitable Organization
Independent Stylist/Barber
Consulting
Hair or Beauty Salon, or Barbershop
Automotive Services
Membership Organization
If your business doesn’t fall into those categories, don’t worry. At the bottom of the page is a button that says I Don’t See My Business Type. When you hit that button, you will go to a new page that offers more choices, including narrow categories like Beauty and Personal Care as well as catch-alls like Retail. Select the category that most closely meets your business type, and then choose a subcategory to narrow it down further.
For example, under Home and Repair, you can choose from a wide variety of businesses, from automotive services to watch and jewelry repair.
Screenshot of Square webpage, captured 8/25/2020
Explore Products & Features
Before you can go further, Square will ask you to enter a physical address for your business, to verify your identity. Check the box if this is also your home address. After you do that, you’ll be taken to your Square Online Dashboard, where there’s a setup guide you can use to help you explore. If it doesn’t pop up automatically, look for the Tour your Dashboard option under the My Business tab at the top right. Take a look at the admin panel on the left side of your screen. This is where you’ll list products, take orders, and manage inventory and payments.
Take your time while exploring, but don’t worry if you can’t take everything in at once. You can always revisit areas where you need to spend more time.
Activate Payments
Compared to other eCommerce platforms, the Square Online setup process definitely is more focused on payment, possibly because of Square’s origins in POS. If you want to skip the financial information for now and move on to setting up your store, you can always come back to it later.
On the other hand, if you’re ready to activate the Setup Guide, just click the green button at the top of the page to move through the steps needed to get your finances up and running. This guide covers three key areas:
Activate your account to take payments. You can verify your identity, link your bank account so you can transfer funds, and take your first payment with Square.
Set up your account. You’ll be able to customize the way receipts look and what they say, set up taxes for individual items or at checkout, add a business location or merge multiple locations, and explore Square’s software tools. One of those tools is the Dashboard app, which lets you manage our business through a mobile device.
Get started with Square Point of Sale. You can choose to order hardware and devices to take payments in person, or download an app for Android or iOS devices.
Set Up Your Store
Once you have the business end straight, it’s time for the fun part: setting up your store! From the Dashboard, click the Online button, and you’ll be able to choose from three general page types:
Single Ordering Page
Full Website Plus Ordering Page
Checkout Links
Screenshot of Square webpage, captured 8/26/2020
If you’re not sure which page type you should choose, there’s a Help button that takes you through a list of questions about your business and makes a suggestion. Next, you’ll be asked how you plan to fulfill orders: by shipping, by customer pickup, or by delivery. You can choose more than one, or you can skip for now if you’re not sure.
Next, you can access several Setup Guides that will help you design your website, add products, and connect a domain. When you choose website design, you get your first look at the page Square Online suggests for you. You may or may not like what you see, but don’t worry — it’s meant to be customized. And although your choices are limited, compared to other eCommerce platforms, it’s very easy to change the look of your Square Online webpage using the Page Sections choices on the left side of your screen.
Screenshot of Square webpage, captured 8/26/2020
For example, if you click the Header edit button, you can change the layout, logo, navigation options, action button, cart and search icon, and the overall section style. You will still have the same general layout, but you should put your personal touch and your own business message on it. It’s easy to use, though not as flexible as the drag-and-drop editing available on other website builders. Take your time filling in all the available fields, as this will be your main point of contact with potential customers.
Add Items For Sale
Once you have tinkered with the look of your webpage and improved its functionality to meet your needs, it’s time to add products to sell. Near the top of the dashboard, you’ll see a blue button that says Add. Click on that to access a dropdown menu that includes Item, and you can start to build your store’s inventory.
Screenshot of Square webpage, captured 8/26/2020
You can add a physical item, prepared food or drink, donation, event, or membership. Just pick the right item type, then add an item title and its price. You should include a description of your item, including materials, origin, special details, size, and specifications. Add images and check the right box to indicate how you’ll fulfill orders, including shipping, in-store pickup, or local delivery. That’s all it takes! Repeat as necessary until your store is ready to take live.
Take Your Store Online
You should see a blue button near the top right of your screen that says Publish. When you push that, your site will be live and ready for shoppers to visit. It’s probably a good idea to Preview your site first, though. There’s a button for that just to the left of the Publish button.
Square will assign you an automatic domain name that probably will read Your-Store-Name.square.site. Fortunately, you’re given an option immediately to improve on that no-frills URL. You can link to a domain you already own or, if you want to upgrade to a paid plan, you can build your brand with a professional web address. It’s worth noting that all Square Online plans, including the free one, include a shopping cart, inventory management, tax calculator, coupon codes, and gift cards, and allow you to accept payments through Square. If you’re interested in adding a paid plan, you’ll add features to that list.
Tips For Selling With Square
That’s all it takes to build a basic website for eCommerce using a Square Online store. Of course, if you want to make the most of your site, you have a few more items on your to-do list.
Look Into Paid Plans
There’s absolutely nothing wrong â and many things right! â with using the free option for your Square Online store. However, once you’ve gotten to know the site and perhaps solidified your eCommerce goals, there’s nothing wrong, either, with taking a look at what paying for a plan can get you. Square Online paid plans run from $12 to $72 per month when billed annually.
Screenshot of Square page, captured 8/26/2020
What do you gain for that cash outlay? The first bump-up in service means you can publish to a custom domain, use custom fonts on your page, and ditch the Square branding and ads on your store. For $26, you add the ability to accept PayPal payments, integrate shipping apps, and email to recover abandoned shopping carts. The top-tier plan lowers your transaction fees, delivers shipping rate discounts, and gives you a tool to calculate shipping rates more accurately.
The free plan gives you more than what you need to set up a basic store. As your sales and your goals increase, you may want to upgrade.
Upgrade Your Product Photos
When customers shop online, they can’t actually see or touch the items you have for sale. All they have to rely on as they make buying decisions is an image on their screen. So it’s important to have high-quality images that show off your products in the best light. Square Online offers an interesting feature called Photo Studio. Find it through your admin, and you’ll have a chance to order professional product photos at a low price. At just $9.95 for three multi-angle, high-resolution photos optimized for eCommerce, or $29.95 for an interactive 360-degree image, it could be an investment that pays you back with increased sales.
Connect With Customers
Square Marketing helps you send out a one-time or automated marketing email campaign. You can send out a discount code to first-time buyers who left without placing an order, for example, or make a special offer to previous buyers who haven’t visited in a while. You can also ask for customers’ birthdays and then send them a special offer on their special day. If you’re active on Facebook, or if you’d like to build your presence there, you can send customers a link and ask them to leave feedback on your Facebook page. You can customize Square’s campaign templates with your branding elements or product photos to help you meet your marketing goals.
Play Around With Pop-Ups
From the Marketing tab on the admin, you can build a pop-up ad that grabs customers’ attention. There are templates you can customize for collecting email addresses, offering coupons, making announcements, or verifying shoppers’ age, if you’re selling age-restricted products. It’s an easy process, with help if you need it. Don’t overdo the popups, as customers often find them annoying. However, since they’re easy and free to add, it’s worth experimenting with them to see if you can use popups to increase sales or meet marketing goals.
Confirm Payment Options
Your Square Online store comes equipped to handle Square transactions. You don’t need to add a third-party payment gateway. You’re even set up to accept Square gift cards. If you look under the Checkout tab on your admin, you’ll see two other options: Accept Apple Pay and Accept Google Pay. You can decide whether or not you want to add either or both of those options. Don’t overlook the fact that you’ll be charged fees of 2.9% plus $0.30 per transaction. If you want to accept PayPal, you’ll need to upgrade to the Performance plan, at $26 per month. Again, it’s fine to stick with the free plan for now and revisit your options when sales start coming in.
Getting Your Square Online Store Up & Running
Square Online offers an all-in-one solution that allows small businesses to jump into eCommerce with no cash upfront and very little ongoing financial investment. Especially if you’re already using Square to process payments, a Square Online store will help you to quickly bring your products to the wide world of online selling. Great things await you there, so get started!
The post How To Create An Online Store Through Square appeared first on Merchant Maverick.
If you are looking to expand fundraising possibilities for your charity and are considering Square to process payments for your nonprofit, you may have a lot of questions. Fortunately, you’ve come to the right place; this post covers all the information you’ll need to make an educated decision. We’ll look at the costs, fees, and all of the features that wait for you behind the curtain of Square’s processing. Square constantly updates what they offer, so there’s a good chance that within the next year, Square will offer even more features for nonprofits. That’s not to say that Square isn’t already a viable option for charities to take paymentsâyou’ll find that from setting up a free online shop to engaging your donors throughout the year, Square provides all the tools you need to get going, with options to integrate or add features as you need them. Let’s get started!
How Do Nonprofits Benefit From Using Square?
One of the biggest reasons I have a sweet spot for Square is that they have competitively-priced processing rates, and your nonprofit organization won’t face any surprise fees or markups on the backend. In addition to a straightforward fee structure, Square offers a considerable amount of free software.
Not only that, Square is so easy to set up that you can get your account up and running to start taking donations, sell merchandise, and even set up your website all on the same day.
While Square for nonprofits offers a plethora of benefits, it’s not without some potential hiccups, however. In the world of payment processing, one merchant’s dream is another’s frustration, so let’s take a look at what Square has to offer and discover if this solution is right for you.
The Limitations Of Using Square for Nonprofits
It’s important to understand that Square isn’t a traditional merchant account provider. As a third-party processor, Square offers greater accessibility to a wider amount of businesses, but there’s inherently a bit more risk involved as far as account stability with this model. When a business or charity raises a red flag, sometimes it’s hard to make things right again.
One of the most important ways to avoid issues is to accurately disclose your type of business and ensure that you don’t sell anything on Square’s prohibited goods and services list that would throw you into the high-risk merchant category.
While representing a very small fraction of all Square’s accounts, the largest complaints against Square involve account freezes and terminations. No matter what processor you go with, you’re going to have this risk, however. That’s why we encourage all of our readers to learn how to reduce their risk of termination or funding freezes.Â
Beyond this, Square offers a lot of useful tools for a very low price, but it’s certainly not all-inclusive. When it comes to SaaS (Software as a Service) for a charity, you can find other options that cover the basics for next to nothing — and there are also more complex solutions that go as high as $15K for mid-sized charitable organizations and above. It really depends on what your organization needs in ancillary tools.
With that in mind, let’s take a look at what to expect with Square, and then look at how your charity can make the most of this low-cost option.
What Are Square’s Fees For Nonprofits?
As I mentioned before, what you see is what you get as far as payment processing costs. You won’t have any other additional monthly fees: no authorization fees, statement fees, refund fees or PCI compliance fees. You’ll also pay the same fee no matter what type of card your customer uses.
Be aware that accepting in-person payments versus web or invoice payments varies slightly, however.
Here are the Square fees for nonprofits:
2.6% + $0.10 for any tapped, dipped or swiped cards you take in person
 3.5% + $0.15 when you enter in a credit card number manually from the SquarePOS app, take payment in your Square Virtual Terminal, and process card-on-file transactions, including recurring invoices.
2.9% + $0.30Â for Square Invoices and eCommerce donations as these are both web-based transactions
You can also learn a bit more about Square’s Pricing in our article, How Much Does Square Charge?
Note that Square’s fees for nonprofit organizations are exactly the same fees that small businesses pay, and they’re designed for organizations that process less than $250,000 per year. Does your charity have higher projected donations coming in? Square may design a custom pricing package for charities and small businesses that process more than $250,000 per year in sales, but they consider that on a case-by-case basis rather than offering any sort of standard pricing for nonprofits.
Now that we’ve got the fees out of the way, let’s see what free goodies and other options await with Square for charities.
8 Ways Your Nonprofit Organization Can Make The Most Out Of Square
Square offers more than just payment processing for the nonprofit organization. Let’s take a look at the free tools Square offers that could support your charity in several ways.
1. Accept Donations Online
You have quite a few options to accept donations online with Square. The easiest option is to create a free Square site with ready-made templates that make it easy to build a simple web storefront. You can create a space that explains your mission and lets your donors contribute to the cause, or make a fully functional eCommerce store that allows you to sell things like t-shirts and other merchandise to support your organization and mission.
To start accepting donations, simply click Donations from your online dashboard and add the details. You can also allow custom donation amounts to let your donors give the amount of their choice, up to $1,000.
If you have multiple focuses for your nonprofit, you can create more than one campaign on your site. Just repeat the process in your dashboard from the donations area. That way if you want a focused fundraiser, you can do so while still maintaining the ability to accept general donations.
Below is an example of a storefront using Square’s free site template. You have a range of colors, but customization is limited. Also, take note that you do not have a custom domain with Square’s free site.
You can also upgrade the free site to a premium option through Weebly â it’s all easy to navigate and choose through your Square dashboard. This way you’ll get a custom domain and other bells and whistles that help you create a site you want for your cause.
If you already have a site, you can choose from one of the plugin integrations for Square at your Dashboard for a pretty easy setup.
If you’ve got some expertise when it comes to code (or have a developer on staff) you can build a branded checkout flow with Square Transactions API that allows you to accept digital wallets, too. Check out How To Accept Online Payments With Square for a full, in-depth explanation of each of these possibilities, and a few more (like in-app purchases).
2. Accept Donations In Person
Hoping people have cash on hand or the even more archaic option â a check â can really limit you. When you set up your Square account, you’ll get the free magstripe reader, but we strongly suggest that you opt for the Square Reader for contactless and chip. Square’s chip reader is the best way to protect yourself from chargebacks and give people more options (and convenience) to donate. That’s because chip readers better meet current security standards. The chip reader is competitively priced under $50.00. This little reader is an important tool to keep your costs down in the long run.
You have even more options in hardware, however. Whether you need something mobile or you need something a little sturdier for a kiosk or desk setup or both, you can find what you need to accept payments in person.
Want even more information on Square’s hardware options? Check out The Complete Beginner’s Guide to Choosing Square POS Credit Card Readers And Cash Register Bundles.
3. Take Donations And Orders Over The Phone
Like most point-of-sale software, Square comes with a virtual terminal right on your dashboard that allows you to take a payment over the phone or manually key in credit card data. What’s important to understand here is that a virtual terminal is really the only way to safely process credit card data. That’s because when you receive credit card information, security has to be considered during transmission and storage.
Jotting credit card information down a piece of paper or worse â keeping this information on a spreadsheet â is a big no-no. You’d be surprised to find out how many organizations store credit card data this way, but in the event of a breach, your business will face expensive fines (not to mention a huge PR issue).
Taking donations for your charity over the phone is really easy with Square. You simply enter in the credit card data on the form. Since the full credit card number isn’t visible once you key it in, you never have to worry about this information being vulnerable.
4. Recurring Donations
As a charity, there is probably nothing that feels better than an ongoing commitment from your supporters. These folks help you keep up your daily operations and allow you to plan for future growth.
Square makes setting up recurring donations super easy for your charity. Whether you’re on your mobile device or at your full Square dashboard on your PC, you can create what you need.
I’ve included the screenshot below so that you can how easy it is to set up and schedule your invoice for delivery on whatever recurring plan you want.
If you desire more consistent branding for your charity, you have some options. Check out the full post How To Use Square For Recurring Payments and Invoices for information on integrations or a pre-built workflow.
If you’re wondering about any additional cost regarding invoice scheduling for charitable donations, I have some good news: Setting up recurring donations for your charity doesn’t cost anything extra beyond the processing charge (3.5% + $0.15).
5. Sell Merchandise
Ready to sell merch at your event or want to offer online sales? As mentioned earlier, you have some options when it comes to setting up an online store via Square’s free store or upgrading for more space or design freedom.
Selling in person couldn’t be easier, either. Square’s free Point of Sale app works as a cash register or mobile app, so you can run a gift shop or merch table at a fundraiser. You can even accept payments for charity auction items right then and there (or send an invoice for payment after the event).
Whether you sell merch at an event, through your online store, or you take a phone order through your virtual terminal, Square syncs the sale at your dashboard so everything stays up to date. All your inventory is tracked across all your sales channels. When it’s time for a sale, you simply select the item from your inventory and you’re all set to make a sale. You’re also free to just enter in any amount and charge a card that way as well. After entering their email, your customer receives a digital receipt, and you now have their info.
You can also set up alerts at your dashboard to stay on top of dwindling t-shirts or other fundraising merchandise you offer. That way you can re-order supplies before stock drops to zero!
6. Manage Events And Registration
Planning an event for your charity can help you connect with both your supporters and those who become one. That’s why I’m glad to see that through Square, you can also find what you need to sell tickets for any event you have in the works. You’ll do this through your online store. You can set up your tickets for electronic delivery or you can print for shipping or in-person pickup options. Square gives step-by-step information on how to sell event tickets through their help center.
Square also has a partnership with Eventbrite so it’s that much easier to organize, manage your event, and sell your tickets.
The great thing about selling with Square is that your sales for tickets, merch, and donations all seamlessly sync to improve your record keeping. Whether you take a ticket at the door with your POS or sell a ticket online, everything stays up to date.
And that brings me to my next point: Square’s donation and sales tracking can improve your bookkeeping.
7. Track Your Income And Improve Your Bookkeeping
Square offers simple income tracking. You can download sales history, view deposits, and view everything that’s happening over a set period of time.
View income by categories like merchandise sales, donations, or ticket sales. You can also compare new givers with long-time supporters, as well as average donation size. While you’re not going to see more advanced reporting features with Square Analytics, we feel it delivers more than expected considering these features are completely free.
Need something more? One thing to note is that Square integrates with Quickbooks so you can sync sales data here and get the sales or expense reports you need all in one place. QuickBooks has some specialized accounting features for nonprofits, which can make it a must-have piece of software.
8. Collect Donor Information And Engage
You can export a list of your donations or the details about your donors from your online store at any time. All of this is accessed under Order Management right from your online dashboard.
As you collect donations, you can also manually enter any notes about your supporters. Because electronic receipts are delivered when your customer shares their email, you can also build a robust email list for future marketing.
Square has a few customer engagement features that are completely free. The emails that you collect during transactions are yours to add to a separate email campaign service, of course. You can also create, import, and manage all of your customer profiles within your Customer Directory, which you can then use to get more insights into your donors and plan future giving campaigns based on that information.
You don’t need to find a solution outside of Square for email marketing tools, however. Square Marketing gives you some pre-designed email templates with campaign suggestions and scheduling tools that help you create and manage your email list and marketing campaign. Square Marketing Starts at $15 / month. In the screenshot below, this particular campaign provides those on your list with a special offer. To the right, you can see that you have a selection of templates and themes to create something in line with your branding. Though it’s not fully customizable, you can add your logo, business name, and other images where desired.
Email remains one of the most cost-effective marketing tactics, so it’s nice to see that Square makes it easy to collect emails or opt for this relatively low-cost email marketing tool.
Is Square Right For Your Nonprofit?
Square remains a strong option for most nonprofits. You can start taking donations — and even have access to a few ways to grow — without having to spend any extra money right off the bat. However, for advanced reporting features, marketing, and other integrations you may need, you’re going to pay more each month. And in my mind, that’s okay. Square provides basic reporting features so you can gain insight into patterns of giving as well as set up multiple ways to give on your site and more ways to connect, and that’s all free.
While Square does not offer any special discounts for charities, the processing fees are competitive. And with all of the freebies, it’s a bit remarkable for a processor overall. Be aware that account stability issues exist, however, but they aren’t unique to other processors by any means. Be sure to review each section or check out our full Square Review so that you understand how to make the most of this option.
Not sure if Square is right for you (or already sure it isn’t)? Read Become A Hero & Save Your Charity Money With Discounted Credit Card Processing For Nonprofits or check out the Top 7 Square Alternatives.
Want to get started with Square and open an account? This step-by-step tutorial shows you how to set up an account, navigate your dashboard, start accepting donations or selling merchandise. Have any questions? We’d love to hear from you.
The post Square For Nonprofits: Everything You Need To Know About Seamlessly Accepting Donations, Running Events, & Selling Merch With Squareâs Platform appeared first on Merchant Maverick.
So, youâre all set to launch your new business and make your fortune (well, hopefully). You realize that it would be nice if your customers could pay you using their credit and debit cards. Okay, âniceâ isnât nearly a strong enough word to describe how desirable this option is. In todayâs increasingly cashless society, itâs flat-out essential for most businesses to be able to accept credit cards. Without that ability, retail companies will lose out on sales, and eCommerce businesses will have a hard time making any sales at all.
You realize that youâre going to need a merchant account to process your credit and debit card transactions. But where do you find one? Every provider you talk to wants a ton of information about your business, tells you that they have the lowest rates (without mentioning what they are), and tries to pressure you into signing a lengthy contract before youâve even had a chance to read it. Then you hear about Square (see our review). No lengthy contracts. No endless forms to fill out. No monthly fees. Rates that are published right on their website. What kind of black magic is this? It all seems too good to be true.
Square â and other companies like it â are what are known as third-party processors. Rather than giving you your own merchant account, they oversee a giant merchant account thatâs shared by all their users. In this article, weâll explain how third-party processors work and how they differ from traditional merchant account providers. Weâll also explain the advantages and disadvantages of using a third-party processor rather than signing up for a full-service merchant account. Finally, weâll give you some examples of popular third-party processors that are helping businesses just like yours every day.
How Third-Party Payment Processing Works
First, letâs discuss nomenclature for a moment. The credit card processing industry is notorious for using different, non-standardized terminology to describe the various entities youâll encounter when you set up a merchant account for your business. While there often isnât a single, âcorrectâ term that must be used, youâll find certain terms are more commonly used than others.
The most broadly-defined term you need to know is merchant services provider. This is any business entity that can help you process credit or debit card transactions â regardless of how they do it. Breaking this down a little more, there are two types of merchant services providers:
Merchant Account Providers (MAPs):Â These companies will set you up with a traditional, full-service merchant account. Your account will include a unique merchant identification number that identifies your business to the payment processing networks. There are dozens â if not hundreds â of merchant account providers on the market, many of whom are resellers for a small group of very large direct processors. Examples include Payment Depot and Fattmerchant.
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Payment Service Providers (PSPs):Â These companies provide you with the ability to accept credit and debit card payments, but donât offer a true merchant account with a unique merchant identification number. Instead, your account will be aggregated with that of other businesses using their service. Although there are relatively few PSPs in the industry, theyâve garnered a large share of the processing market in recent years by offering a low-cost solution to small business owners. Examples include Square, PayPal, and Stripe Payments.
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While the term merchant account provider is very commonly used, things get a little fuzzy when it comes to payment service providers (PSPs). Although both Visa and Mastercard officially use the term payment service provider, youâll also commonly hear them called third-party processors, aggregators, and even payment facilitators. You just need to understand that all these terms refer to the same thing: a company that can allow you to process credit and debit card transactions without the need for a full-service merchant account. For a more in-depth look at payment service providers and how they operate, check out our article, What Is A Payment Service Provider?.
Third-Party Processors VS Merchant Accounts
Before you decide that a third-party processor is a good choice for your business, you need to understand how they differ from traditional merchant account providers. Hereâs a rundown of the main differences youâll encounter between these two types of business entities:
Simplified Underwriting: Traditional merchant account providers need to collect an extensive amount of information about your business before they can approve you for an account. This process can take several days â or even weeks. Third-party processors already have an aggregated merchant account that you can be added to, so they donât need nearly as much information upfront. They can usually approve you in fewer than 24 hours, and in many cases, the application process can be completed entirely online. For this reason, third-party processors are often a great choice for new businesses that donât have an established processing history yet.
Account Stability:Â The downside to quick and easy approval is that itâs just as easy for your account to be shut down. Square, in particular, has a bad reputation when it comes to account stability. Account holds, freezes, and terminations can happen unexpectedly for a number of reasons. Perhaps the most common cause is when a business attempts to process a single transaction thatâs much larger than what theyâve averaged previously. Similarly, Square will shut you down quickly if they determine that youâre a high-risk merchant.
No Long-Term Contracts: While your relationship with your processor will always be governed by a contract of some type, Square and other third-party processors don’t require you to keep your account open for a specified length of time. Merchant account providers, in contrast, frequently require you to accept a long-term contract (typically for three years) with an automatic renewal clause that extends your contract for one-year periods and an early termination fee (ETF) that youâll have to pay if you break your contract by closing your account early. While these provisions are more or less the industry standard, theyâre very unpopular with merchants. As a result, there is a growing number of merchant account providers who have ditched the long-term contracts and allow you to maintain your account on a month-to-month basis.
Pay-As-You-Go Billing:Â Unlike merchant account providers, who typically charge a number of monthly and annual fees in addition to your processing charges, third-party providers usually only charge you for the cost of processing your transactions. You usually wonât have to pay a monthly account fee, an annual fee, PCI compliance fees, or gateway fees. The tradeoff is that your processing rates will usually be significantly higher overall than what youâd pay under an interchange-plus pricing plan offered by a traditional merchant account provider.
Simplified Processing Rates: Most third-party processors offer simplified, flat-rate pricing for processing your transactions. Everyone pays the same rates, and theyâre published right on the providerâs website. This makes it much easier to know in advance what your overall costs will be so that you wonât get hit with any sudden surprises on your monthly billing statement. However, you should be aware that flat-rate pricing rates are notably higher than most interchange-plus rates, particularly for PIN debit transactions. At higher monthly processing volumes, this can actually make using a third-party processor more expensive than a traditional merchant account.
Customer Service Options:Â Third-party processors arenât known for offering a full range of ways to contact customer service. Instead, youâll often find yourself rummaging through an FAQ on their website or trying to contact them via email. This situation is gradually getting better, with some third-party processors now offering telephone-based customer support where you can talk to an actual human being.
As weâve noted previously, both third-party processors (or payment service providers) and traditional merchant account providers fall under the term âmerchant services providers,â as theyâre both able to process your transactions and deliver the funds from those transactions to you. However, itâs essential to consider the differences between these two types of entities and to understand how those differences could affect your particular business.
Can I Really Accept Credit Card Payments Without A Merchant Account?
The upshot of the above discussion is that, yes, you can take credit and debit cards without having to sign up for a full-service merchant account. Third-party processors such as Square or PayPal give you the ability to process these types of transactions without the expense and paperwork of setting up a merchant account. For a new business thatâs just getting off the ground, this can be a great option. Youâll save money on fees, and youâll be able to start taking credit card payments much quicker than if you had to go through the full underwriting process that getting a merchant account requires.
However â and we canât emphasize this point enough â third-party processors are not the best choice for every business. Both third-party processors and full-service merchant accounts have their good and bad points, and you need to understand them and determine how they affect your business before deciding on which type of payment processor to use. Below, weâll discuss the advantages and disadvantages of third-party processors, and how you can evaluate which kind of processor is right for your business.
Advantages of Third-Party Payment Processing
Hereâs a look at the benefits of using a third-party processor for your business:
Quick Setup:Â Square and other third-party processors allow you to sign up for an account online, and youâll usually be approved in little or no time. Just download the Square app and log in, and you can start accepting cards instantly. (Note that youâll need to wait for your card reader to arrive in the mail before you can accept card-present transactions.) This feature is in marked contrast to the underwriting procedure that a merchant account requires, which can take days or even weeks to complete. The flip side is that your account wonât be as stable as a true merchant account, and youâll have to be very careful to avoid any account holds, freezes, or terminations.
Technology-Driven Platforms: In our experience, there is a fundamental cultural rift between third-party processors and traditional merchant account providers. Third-party processors tend to be established and run by people with computer science degrees and deep tech backgrounds. Merchant account providers, however, are usually run by bankers with business degrees who arenât really experts in modern computer technology. While they offer most of the same software products (such as payment gateways, virtual terminals, etc.) as third-party processors, they often rely on outside contractors to develop them, as they donât have the same level of in-house expertise that youâd find with a third-party processor. This rift is slowly closing, but for now, youâll still find that third-party processors offer products that are more automated, more integrated into cloud-based platforms, and more feature-rich than what most merchant account providers can give you.
Low (Or No) Initial Setup Costs:Â If you just need a payment gateway or a magstripe-only card reader for your smartphone, account setup with Square is essentially free. Although we highly encourage you to part with a few dollars and purchase the companyâs EMV card reader, this cost is still a fraction of what youâll pay to get started with a full-service merchant account. Application fees, account setup fees, and paying for a credit card terminal can all add up to hundreds of dollars, depending on the provider. Fortunately, competition from third-party processors is forcing merchant account providers to lower (or even eliminate) many of the costs associated with establishing a merchant account.
No Monthly Fees:Â Perhaps the most attractive feature of third-party processors to small business owners is that they (usually) donât charge any monthly fees to maintain your account. Monthly account fees, statement fees, PCI compliance fees, and annual fees are all eliminated. You also wonât have a monthly minimum hanging over your head every month. This makes third-party processors particularly affordable to very small businesses that donât have a high monthly processing volume. Also, seasonal companies wonât have to worry about being charged during the months when theyâre not operating at all.
Predictable Flat-Rate Pricing:Â Itâs nice to know in advance what it will cost you to process a transaction, and third-party processors make this easy to do with their simple flat-rate pricing plans. With this type of pricing, you can also more accurately estimate your monthly processing costs, meaning that you shouldnât have any unpleasant surprises waiting for you on your monthly processing statement.
No Long-Term Contracts:Â Third-party processors only charge you for actually using your account, and you wonât be locked into a lengthy contract. You also wonât have to worry about getting hit with an early termination fee if you close your account. Note that an increasing number of traditional merchant account providers are now beginning to offer this feature as well, so you donât necessarily have to sign up with a third-party processor to avoid getting locked into a long-term contract anymore.
Free Hardware: When Square first launched in 2009, one of its most attractive features was that each account came with a free magstripe card reader that plugged into your smartphone or tablet. Together with the Square app (also free), you could log in and start accepting credit card payments right away. In contrast, most merchant account providers at the time would either sell you a credit card terminal for a few hundred dollars or sign you up for an expensive terminal lease that would ultimately cost you even more. While Squareâs magstripe reader is still free, itâs also obsolete. We highly recommend purchasing the companyâs EMV-capable reader, which costs far less than a standalone terminal.
Disadvantages of Third-Party Payment Processing
Okay, if third-party processors are so great, why isnât everyone using them? Why are full-service merchant account providers still in business? The answer, of course, is that third-party processors also come with some significant limitations that make them a poor choice for a lot of businesses. Before you rush out to sign up for your âfreeâ third-party account, consider some of the following disadvantages:
Account Stability Issues:Â Not having to go through the complete underwriting process makes it quicker and easier to get up and running, but it also means that your account isnât as secure as an individual merchant account. While having a full-service merchant account doesnât provide complete protection from account holds, freezes, and terminations, it does make them much less likely. Consider the potential impact of an account freeze on your business before you sign up with a third-party processor. In our experience, these unfortunate incidents usually occur because either (1) the merchant attempted to process a much larger transaction than their average ticket size, or (2) the processor discovered that the merchant was selling something thatâs expressly prohibited by their user agreement. This includes most high-risk businesses, including CBD merchants.
No Specified Processing Limits:Â With a full-service merchant account provider, youâll be required to stay within maximum monthly processing limits and maximum transaction sizes. Third-party processors, unfortunately, tend not to specify what these limits are in advance. Youâll only find out that youâve gone over a limit when you actually exceed it and suddenly have your account shut down. While the majority of merchants using third-party processors never experience this problem, itâs still important to consider it before you sign up.
Limited Acceptance For Specialized Cards:Â Third-party processors generally donât allow you to accept specialized cards such as SNAP/EBT cards or government-issued credit cards. Debit cards are generally accepted, but youâll pay much higher processing rates than you would under an interchange-plus pricing plan offered by a traditional merchant account provider.
Limited Hardware/Software Options:Â With so many credit card terminals, POS systems, payment gateways, and online shopping carts on the market, traditional merchant account providers go to great lengths to ensure that their accounts are compatible with as many of these products as possible. With a third-party processor, youâll usually be limited to using just the hardware and software products that your processor offers â and these are often pretty generic. This might not be much of an issue for a small business owner, but as your business grows, youâll eventually want to add many of the bells and whistles that are available with a full-service merchant account provider.
Expensive Flat-Rate Pricing:Â Wait a minute. Didnât we just say that third-party processors were less costly than full-service merchant accounts? Well, thatâs only true in some circumstances. For a very small business owner, youâll usually save money with a third-party processor because you wonât have to pay all the extra monthly and annual fees that come with a full-service merchant account. However, flat-rate pricing is significantly more expensive than interchange-plus pricing, at least on a per-transaction basis. Debit card transactions, in particular, are dirt cheap under interchange-plus pricing. With a flat-rate pricing plan, however, youâll pay the same high rates for debit cards as you will for credit cards. Youâll want to carefully analyze your overall costs under each type of pricing before deciding which option is best for your business.
Limited Customer Service Options: Square â like many other third-party processors â is notorious for offering limited options for customer support. For a long time, Square didnât even have a phone number that you could call for help! Customer support was often limited to email, which was slow and required a lot of back-and-forth messages to resolve an issue. Merchant account providers, however, usually offer 24/7 telephone support. Unfortunately, the quality of that support can vary widely from one provider to another.
Is Third-Party Payment Processing Right For Me?
By now, it should be quite clear that the choice between a third-party processor and a traditional merchant account will depend on the nature and size of your business. There isnât a single provider on the market that offers a true âone size fits allâ service thatâs suitable for every business. Third-party processors are usually a great choice for very small or seasonal businesses that donât process a lot of credit card transactions, donât have a high monthly processing volume, and donât need any of the fancier bells and whistles that are available with a merchant account.
Ultimately, your overall processing costs will determine whether you should sign up with a third-party processor or go all-in with your own merchant account. Whichever option meets your needs for the lowest cost will, naturally, be the best choice. Unfortunately, it isnât always easy to accurately determine which option will save you the most money. As a very general rule, we usually recommend third-party processors to small businesses and merchants who are just starting out. In contrast, larger, more established businesses will usually save money with a traditional merchant account.
Typically, the single most important factor in making this determination is your monthly processing volume. Unfortunately, there are so many variables involved that we canât provide a specific amount where it makes sense to upgrade to a full-service merchant account. Weâve seen figures from vendors ranging from as low as $1,500 per month to as high as $10,000 per month. The important thing to understand is that this number is highly variable and unique to your business. Youâll have to compare quotes from several merchant account providers and compare them against what youâre currently paying to figure out whoâs offering the best deal. To make this process as simple and accurate as possible, we recommend our Merchant Account Cost Analysis Workbook, which includes spreadsheets to help you automatically compare rate quotes.
Lastly, choosing between a third-party processor and a merchant account isnât entirely a matter of dollars and cents. Sometimes, itâs worth paying a little extra for things like better customer support or more fully featured software. While costs are always going to be important, we recommend that you consider the overall value you receive in choosing a provider. Good luck!
The post The Truth About Third-Party Payment Processing appeared first on Merchant Maverick.
People like to say that, but if you get a literal lunch for listening to a sales pitch on something you’ve already decided to buy, then that lunch is free. The mobile processing industry, though, typically doesn’t offer free lunches. Instead, they offer free credit card readers. These readers are usually simple swipe card readers or maybe EMV readers if you’re lucky.
Card readers used in mobile processing are typically inexpensive to make, so they are perfect candidates for free giveaways to entice new merchants to sign up. For a small business just getting started, anything free is usually good, especially after looking at the retail price of some of the high-end readers in the market (or even a conventional credit card machine). However, mobile processing isn’t just about the reader. It’s about the suite of services and credit card processing.
So if you are looking for a mobile credit card processing app, don’t make your decision based just on a free reader. Take a look at the app and the extra services provided as well as any upgraded card readers offered by the processor. Compare pricing and features to see if everything truly fits your needs. Even if you do not need any additional services right now, you might need them in the future, so make a plan if you can. Only after you’ve looked at the software and extra features should you take the free card reader into account and make your final decision.
Below, we give an introduction to how these mobile readers work and then talk about some commonly offered free readers. Hopefully, the information will help you make an informed decision for your business.
What Does A Swipe Card Reader Do?
Most people have used magnetic stripe, or magstripe, card readers before. They’re the readers with a slot that you move a card quickly through. This movement allows the device to read the data from the magnetic stripe on the back of the card.
With mobile processing, quite a few of the free readers are magstripe only readers. You may already have seen some around — little white squares attached to phones, popularized by the third-party processor Square, who gives them out for free. To read payment card information, the reader gets inserted into a headphone jack or a Lightning port of a phone or tablet.
There are some disadvantages to using only a magstripe reader. To understand why lets first look at the technology of magstripe readers.
How Swipe Card Readers Work
Not everyone is hungry to learn the science behind every technology. For instance, you the merchant probably don’t care that the magnetic stripe on a payment card has millions of tiny magnets in it. Or that each magnet is affixed in a north or south pole direction so that they can correspond to a zero or a one to make up a binary code to store data. You probably have no desire to learn that there are three strips of information stored in every magstripe. But so you know, the first and second strips store cardholder data, such as the primary card number, country code, cardholder’s name, and expiration date. The third strip stores an encrypted PIN, the country code, currency unit, and the amount authorized.
What you care about is whether the card reader is connected to your mobile device correctly so that the card information gets sent to your card processor. It doesn’t matter to you that a magstripe reader reads information off a credit card much like an old cassette player reads information from a cassette tape. (That’s about how long we’ve been swiping credit cards if it’s any indication.)
You might care, though, that this means that the credit card information on the magstripe can be easily stolen. Under some circumstances, you might get stuck with the loss on purchases made with that stolen card.
Credit Card Swipers Don’t Protect You From Fraud
Back in 2015, to get merchants to adopt the more secure EMV (Europay, Mastercard, and Visa) technology (i.e., chip on the card), the credit card companies decided to shift some fraud liability onto those merchants who hadn’t adopted the technology.
As of October 1, 2015, if a merchant only has a magstripe reader and a customer presents a stolen or fraudulent card with both a magstripe and a chip, the merchant would be responsible for the loss on the purchase. To shift the liability back to the credit card companies, the merchant need only have an EMV card reader.
Admittedly, if you’re just starting your business and do not expect to take a high volume in credit card sales or if you only sell smaller ticket items, assuming liability for taking a fraudulent card might be a risk you’re willing to take. That’s fine, but we at Merchant Maverick do encourage you to upgrade to an EMV reader sometime in the future for your protection. There’s little reason to delay upgrading because some free card readers in this article are combination EMV and magstripe readers, so you can eliminate the risk at no cost to you.
How Do You Get A Free Credit Card Reader?
A free credit card reader is not very difficult to find. Both merchant account providers and third-party processors will sometimes offer a free card reader to entice you to sign up for their mobile processing service.
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A lot of third-party processors are also mobile processors. Their primary offering is usually the mobile app and card reader. Sometimes, they make money not only on processing cards but also on other value-added services related to running a business in general, services such as invoicing and payroll processing. (Yeah, we’re looking at you, Square.) Once a merchant signs up, the processor will try to upsell and cross-sell these services to the merchant. It makes sense for some merchants — the centralized management of their business is an advantage.
Since an expensive reader can discourage signup, third-party processors often offer readers for free. They make it very obvious on their website that you can get a free reader. However, keep in mind that these services are designed for small businesses — they don’t expect you to need a lot of equipment. Your first reader might be free, but you will typically have to pay for any additional readers.
As to merchant account providers, they typically work with more established businesses that can afford (sometimes expensive) countertop registers and credit card terminals. It’s pretty rare to see credit card terminals given away for free. When they are, it’s usually only a “rental,” and you’ll have to return the equipment when you leave the processor. However, as mobile processing becomes more and more popular, many merchant account providers are starting to offer mobile processing services as a convenience to their existing customers. With these mobile processing services, the merchant account providers do tend to give away free mobile credit card readers. Sometimes the information is clearly advertised but not always. You might need to contact your payment processor and ask if you’re interested in adding on a mobile POS and card reader.
Let’s be clear: Just because you’ll get something for free doesn’t mean that you should immediately sign up with a particular processor. There are some negative issues you might wish to consider.
Why You Should Be Wary Of Free Credit Card Reader Offers
As already alluded to earlier, free card readers are generally provided as loss leaders — something provided for free or at a drastically reduced cost to bring in a new long-term customer. Often, this means that the reader will be a lower-cost magstripe reader, with no EMV capability. If that is the case, then you might not be able to recover losses from purchases made with cards using stolen credit card numbers. At this late date, there is very little reason to settle for a reader that doesn’t support chip cards, and doing so can make your business look a bit antiquated.
If you are getting a free mobile card reader (or a “free” device of any kind) from a merchant account provider, be aware that there could be a tradeoff. Of course, a top-rated merchant account provider such as Payment Depot will deal with their customers honestly and fairly and will give a free reader under their usual no-contract deal. Other merchant account providers, however, might require you to sign a contract to tie yourself to them for a more extended period. Read your contract carefully, so you understand which services you’ve signed up for and for how long. You should also understand how to get out of the contract if you’re not happy with the provider.
Despite the negatives and our caveats, all of these free readers will be serviceable. If you need one of these devices to get your business off the ground or for occasional off-premises use (e.g., trade shows), then these free readers should fit the bill.
How To Find The Best Free Credit Card Reader
Below, we will highlight four free readers currently available in the market. But, before we delve into the specifics of each, we want to point out a few benchmarks you should think about when considering any free reader.
Reader Type: Typically, these readers will read magstripe and potentially EMV cards. It’s unusual to get a contactless (i.e., NFC) reader for free. Keep in mind that a magstripe reader could create a liability issue for you under some circumstances, so it is better to have a reader that can take both magstripe and EMV.
Connection: There are two types of connections — physical connection or Bluetooth. The physical connectors can break off if you’re not careful, and a reader that uses a Bluetooth connection still needs to be periodically charged. We typically recommend a Bluetooth connection over a physical one since smartphones and tablets seem to be phasing out the headphone jack. For example, all the recent iPhones and the Samsung Galaxy Note 10 do not have headphone jacks.
Software: A card reader is just a piece of hardware. Without its supporting software, the reader is useless. Each business is different, however, so its software needs are different. Some businesses will prefer a no-nonsense basic mobile processing app. Others might want additional functionalities, such as inventory tracking. Be sure to think through your software needs before you decide on a free reader.
Battery Life: Battery life applies to Bluetooth and/or EMV readers. Ideally, you want something that can last you at least one day, so you can process credit card charges without interruption.
Peripherals: A basic, pocketable magstripe reader that plugs into a headphone jack or Lightning connector won’t have any peripherals, but Bluetooth and/or EMV readers need cables to charge them up. Other nice-to-have items include carrying cases, docks, clips, and even lanyards that allow the user to carry the reader without losing or damaging it.
Now, let’s look at four simple readers that are available for free. For ease of reference, we’ve put the card reader comparison information into a table:
Payment Depot Swift B200
Square Magstripe Reader
Shopify Chip & Swipe Reader
PayPal Chip & Swipe Reader
Reader Type
EMV, Magstripe
Magstripe
EMV, Magstripe
EMV, Magstripe
Connection Type
Bluetooth
Headphone jack (for Android) or Lighting connector (for Apple devices)
Bluetooth
Bluetooth
Processing Software
SimpleSwipe
Square Point of Sale
Shopify Lite or Shopify POS
PayPal Here
Battery Life
420 transactions
Not applicable
400 chip or 700 swipe transactions
“all day”
Peripherals
Micro USB charging cable; mounting sticker
None
Stand, micro USB charging cable, mounting sticker, travel case
Device clip, micro USB charging cable
There are plusses and minuses to any free card reader. Ultimately, the “best reader” is the one that fits with the specific needs of your business.
Swift B200 From SwipeSimple
The Swift B200 from SwipeSimple is a Bluetooth magstripe and EMV reader. The parent company, CardFlight, makes two models of readers: the B200 and the B250 (which we review here). The B200 is the less expensive of the two readers, and it lacks the NFC card reader function in the B250.
The B200 can pair with both iOS and Android devices. It uses a rechargeable battery that lasts about 420 transactions. There’s a battery indicator LED light on the device, and the box includes a USB cable. You also get a lanyard and a carrying case.
SwipeSimple’s mobile processing app is available through several providers, but we recommend Payment Depot. Payment Depot is one of our top-rated providers because of its great customer service and fair, transparent pricing. The company also offers a mobile processing plan exclusive to Merchant Maverick readers, which includes the B200 reader for free (you can upgrade to the B250 for $25). You’ll pay $10/month plus 2.6% + $0.10 per transaction with no monthly minimums or additional fees.
We like the SwipeSimple app, and you can find more details about the app in our review. The app takes care of all your credit card processing needs without the clutter of too many extra features. If you’re a no-nonsense kind of person, this might be the app for you.
SwipeSimple Swift B200 Fast Facts
Reader Cost: Free (when you sign up through Payment Depot)
Payment Types Supported: magstripe, EMV
Companion Software: SwipeSimple
Connection: Bluetooth
Square Magstripe Reader
The Square Magstripe Reader is, as its name says, just a magstripe reader. This reader has been Square’s trusty free reader for many years, and it hasn’t evolved much. Of course, when Apple stopped providing headphone jacks on its phones, Square had to adapt to come up with the Lightning connector for its reader. (Soon, it will have to adapt again for Android phones, as Samsung seems to be phasing out headphone jacks too.)
Square
Visit Site
Read our Review
The Square Magstripe Reader does not need charging, and it’s small enough to fit in your pocket to be carried around. There’s a certain elegance in that sort of simplicity, even though it’s only a magstripe reader that can open the merchant up to liability from fraudulent cards.
Square does offer a tradeoff for that liability, and, for some, the risk might be worth it. The Square magstripe reader works with the very robust (and free) Point of Sale app as well as opening up the rest of Square’s highly-rated (and value-added) services to you. In addition to processing cards at 2.75% per transactions, the Point of Sale app can also track inventory, manage employee hours, keep track of appointments, and do much more. So before you rule Square out based solely on its magstripe reader, we encourage you to think about your company’s future needs and see if Square might be a fit for you after all. Here are our full Square review and our Point of Sale app review to help you make a better-informed decision.
If you decide you want to upgrade to one of Square’s other devices later, Square offers financing for all hardware purchases starting at $49 — conveniently, the price of its Contactless + Chip card reader.
Square Magstripe Reader Fast Facts
Reader Cost: Free (additional readers $10)
Payment Types Supported: magstripe
Companion Software: Square Point of Sale
Connection: headphone jack or Lightning connector
Shopify Chip & Swipe Reader
Shopify is better known as an online shopping cart and eCommerce platform. With its free POS software and credit card reader, though, it appears to be branching into stores with physical locations. The Shopify reader is of a proprietary design. It’s a magstripe and EMV reader that comes with a charging cradle. Packaged in a neat little carrying case, you’ll also find a micro USB charging cable, mounting hardware, and everything else you need.
Shopify Lite
Visit Site
Read our Review
Shopify’s Chip & Swipe Reader connects to a mobile device through Bluetooth. The reader can process 400 chip transactions or 700 swipe transactions on one charge. It works with Shopify POS, which runs on both iOS and Android devices. If you subscribe to any of Shopify’s eCommerce plans, the POS app and hardware are included as part of your service. However, if you’re just interested in the mobile app and some tangential eCommerce features, you can opt for the Shopify Lite plan, which goes for $9/month and 2.7% per transaction. It doesn’t include access to all of the advanced features, but as a mobile offering, it’s quite serviceable.
Be sure to check out our detailed review of the Shopify Chip & Swipe Reader. We have reviewed Shopify’s eCommerce plans as well as its Shopify Lite plan and Shopify POS software. Take a quick look at the reviews and see if Shopify is a good fit for you.
Shopify Chip & Swipe Reader Fast Facts
Reader Cost: Free
Payment Types Supported: magstripe, EMV
Companion Software: Shopify POS (with eCommerce plan or Shopify Lite)
Connection: Bluetooth
PayPal Chip & Swipe Reader
PayPal first made its name as an online payments processor. These days it’s more of an all-in-one solution for businesses, including its free mobile software, PayPal Here, and the free card reader that comes with it. Like most other free readers in this article, the PayPal Chip & Swipe Reader is a magstripe and EMV reader that connects to a mobile device via Bluetooth. The reader comes with a micro USB charger and a clip for attaching the reader to the mobile device.
PayPal Here
Compare
Read our Review
According to PayPal, the reader has enough battery to last all day. However, a little digging in the comments section of reviews and tech support messages suggests that some people have issues with the battery life. So you might want to proceed with caution if long battery life is important to you.
PayPal, like its closest competitor, Square, used to offer a free basic card reader. However, it discontinued that offer and implemented account restrictions on merchants who use the basic magstripe reader (see our PayPal Here review for more information on that). The free Chip & Swipe reader is a nice alternative to this policy. The mobile app is free to use, with transactions processing at 2.7%.
Signing up with PayPal gives you access to all its payment-related services. Make sure you understand the full scope of PayPal’s business as you consider whether or not to get the PayPal Chip & Swipe Reader. And if you do want a mobile card reader with contactless support, check out the PayPal Chip & Tap reader.
PayPal Chip & Swipe Reader Fast Facts
Reader Cost: Free
Payment Types Supported: magstripe, EMV
Companion Software: PayPal Here
Connection: Bluetooth
As you look through the reviews, don’t forget to look at the upgraded readers available from each provider. You might wish to take these readers into account, so you’ll know how much more it might cost you in the future to upgrade.
Don’t Be Fooled By The Promise Of A Free Card Reader
Mobile card readers are usually loss leaders used to entice merchants to sign up with a particular card processor. The free readers tend to be a simple piece of hardware without a lot of extras, and they tend not to be able to read NFC signals, so customers won’t be able to tap to pay. For the card processors, free readers are merely a way to introduce you to their other services.
Before you sign up, it’s important to research the processing company to make sure the mobile software and other features are worthwhile and that the pricing works for you. Otherwise, while you might get your free card reader, you will suffer the administrative headaches or reduced profits that come with choosing the wrong credit card processing company.
Lastly, don’t forget to read our article, The Best Credit Card Readers For Your Small Business, for a truly comprehensive discussion on the best card readers in the marketplace today.
Have you used any of these free readers? If so, what’s your experience with them?
The post The Best Free Credit Card Readers For Small Businesses appeared first on Merchant Maverick.
It’s hard to beat the convenience of selling products over the internet. Not only do you not have to worry about paying the overhead costs of a brick and mortar store (unless you want to), but you can sell to customers that live far from your local market.
If your experience taking electronic payments has been limited to swapping cash with friends via Venmo, you’ve probably got a lot of questions about how to get started. In truth, it’s probably both more and less complicated than you think.
So let’s dive in and try to teach you everything you need to know about eCommerce payments.
1. There’s No One-Size-Fits-All Solution
First, some disappointing news. There isn’t one single “correct” way to handle eCommerce. The right payment processing solution will depend upon a number of factors. Take a business website, for example. Do you currently have one that you’d like to start selling products through? Or are you content to use a premade shopping cart template? If you’re a relatively technical person, you can integrate solutions into your site with software APIs or plugins. If you’re not, you’ll probably want to consider a service that provides that functionality upfront. While you can potentially save money doing it yourself, you’ll need to make sure that you’re keeping your customer’s information secure and reducing your own liability.
You’ll also want to consider the nature of the payments you’ll be accepting. Are your customers just buying a product one-off, or are they subscribing to a service that will require recurring monthly payments?
And of course, you’ll need to take stock of your budget and figure out how much you’re willing and able to spend on payment processing and any additional software services.
2. You Need A Payment Processor And A Gateway
A common point of confusion for people new to eCommerce is that there are actually two components to taking payments online. You need both a payment processor and a gateway. These services may be offered together as a package (PayPal, Square, and Stripe, for example) or separately. If you do end up going with a payment processor that doesn’t include gateway access, you’ll need to get it from a separate service like Authorize.net.
A payment processorprovides an account that allows your business to accept credit cards and receive credit card payments. It’s also used to deduct fees and processing charges associated with the transaction. After the payment gateway successfully processes a transaction, your payment processor receives the information.
A payment gateway stands in for what would be your point of sale (POS) interface in a brick-and-mortar transaction. It allows you to securely process payments online by relaying the transaction information from your site to the processor, which then requests the payment from the customer’s bank before releasing funds to you. A payment gateway is also responsible for most of the security features associated with online payments as well as offering services like recurring payments and a credit card vault.
Types Of Payment Processors
Because nothing is ever simple in the world of payment processing, you won’t just need to think about getting a payment processor, but what type of payment processor you need.
The safest option is to go with the tried-and-true merchant account. Think of your merchant account as a holding area where all the busy work of receiving a credit card payment happens. Unlike, say, a business checking account, you don’t have direct access to your merchant account or the ability to directly make deposits and withdrawals to it. Instead, it automatically transfers payments to your business bank account, typically a day or two after receiving the transaction.
Merchant accounts are generally stable and you’re unlike to encounter holds, freezes, or terminations unless you have a sudden spike in chargebacks. Because of the underwriting process, merchant accounts are somewhat slow to establish–you’re probably looking at three days or so to get it up and running, though if you are negotiating or your business is particularly complex, it could take longer. The biggest drawback is that they often have minimum credit card transaction thresholds you have to meet; $5,000/month is typical but some expect you to handle at least $10,000/month in credit card sales. Pricing models with merchant accounts vary, and not all of them are great. We recommend interchange-plus pricing because it’s the most transparent and easiest to compare.
So what do you do if your new business isn’t doing that kind of sales volume?
You can turn to a third-party processor (aka payment services provider). Instead of having your own, unique merchant account, a third-party processor puts you in a pooled account with other merchants, from which fees are deducted in a similar manner to the merchant account. Signing up for a third-party processor is typically faster and easier than for a merchant account (you can start accepting payments the same day), but puts you at greater risk of account holds and terminations. Still, they provide an entry point for new businesses, or established ones that want more predictable pricing. Most third-party processors use a flat-rate pricing model where you’ll pay the same fee regardless of the card type; for eCommerce, that rate is commonly 2.9% + $0.30.
3. You Can Accept More Than Just Credit Card Payments
While credit and debit cards will probably make up the bulk of your eCommerce transactions, they aren’t the only way to make payments online.
It seems like every few years a new tech company rolls out their own digital wallet. We’re talking about services like Apple Pay, Google Wallet, PayPal, Venmo, and Cash App that allow you to link one or more payment sources to a single app account. In person, mobile wallets (a type of digital wallet that lives on your phone) allow you to make near field communication (NFC) purchases at terminals that allow tap-to-pay. In most cases, mobile wallets directly debit a linked credit or debit card while other digital wallets tend to store a balance, which can be used to make payments or be deposited into a bank account.
Many of these services can be used to make payments online as well. If your payment gateway doesn’t support mobile payments out of the box, it probably won’t be that big a deal since the customer can still just pay with the card attached to their mobile wallet. But if you want to go ahead and support mobile payments, you may have to add some code to your store.
The other type of payment you may want to think about isn’t cutting edge. In fact, it’s been around since the 70s: the automated clearing house (ACH). ACH transactions cut out the credit card company middleman and instead establish direct transfers between bank accounts. ACH payments can be one-time transactions, but if you’re using them in a retail context, you’re probably more interested in using them for recurring payments.
ACH is a bit more laborious to use at the point of sale than credit/debit cards, but it is a much less expensive way to process transactions and less prone to fraud and chargebacks. Most payment processors don’t offer ACH support by default, but a number do offer it as an add-on. Failing that, you may need a supplemental service.
Do You Want To Sell Globally? Prepare To Pay More
The internet is a miracle of the modern age, connecting people together and granting you easy access to markets abroad! Right?
While it’s true that you can theoretically sell anywhere in the world, it introduces some additional complexities. For starters, there’s the matter of different currencies. Someone’s got to turn those euros into dollars! Some service providers, like Stripe, will handle currency conversions for you. Keep in mind that this service will usually come at a premium; in the case of Stripe, you’re looking at an additional 2% charge on your transaction.
And of course, you might want to convey the price of your goods to customers in their local currency. This feature usually goes hand-in-hand with automatic currency conversion, but you might need to enable this feature if you want to attract global buyers.
You’ll also need to take local taxes, customs, and duties into account, which means familiarizing yourself with foreign concepts like the value-added tax (VAT), which is used in Europe, Canada, South America, and Africa, as well as China and India. Here again, there are services that can take care of most of this complexity for you, but be prepared to pay for the privilege.
4. You Need To Be PCI Compliant
If you’re doing eCommerce, you’re going to be handling people’s money, and that means security concerns. And yes, yet another acronym.
The Payment Card Industry (PCI) has established a set of guidelines called the PCI Data Security Standard (PCI DSS) designed to minimize the risk of data being compromised by bad actors. So far so good, but PCI compliance is complicated by the fact that it’s actually a set of four different standards. The standard that applies to you is based on the number of debit and credit card transactions you process annually. Risk level four is considered the lowest risk, while risk level one is considered the highest. The fewer transactions you process, the lower risk you are unless there’s a data breach, at which point you’ll probably be considered risk level one regardless of your volume.
It gets a bit complicated, but what this means in practical terms for you is that you want to make sure your payment processor is PCI compliant and that you’re following the guidelines laid out by your PCI-compliant payment processor.
Payment Security Is Important
It can be a headache, but payment security will ultimately help protect your business and save you from costly chargebacks and account freezes. EMV chips have helped to reduce in-person credit card fraud, but unfortunately, that means online transactions are the new low-hanging fruit for fraud.
In addition to maintaining PCI compliance, security features like AVS (Address Verification Service) and CVV (Card Verification Value, that short number you’re asked for sometimes) provide extra layers of verification would-be fraudsters have to work through. Programs like Visa’s 3D Secure are also constantly evolving to make the changing payment security landscape.
How To Find An eCommerce Payment Provider
Got all that? eCommerce payment processing has a lot of moving parts that can confound even the tech-savvy. Having a sense of the functionality you need in advance will make it much easier to select a payment processor and gateway that can handle the transactions your business depends on. But you should also keep in mind how much of a budget you have for the monthly services required to keep your eCommerce setup running, what you can expect to pay for payment processing, and whether you’re going to need some technical assistance in building out your system.
If you’re ready to get started, we recommend checking out our list of the best online credit card processors. This will give you the rundown on some of the best options in the industry. If you want to learn a bit more about online payments before you get started, our article How To Choose An eCommerce Merchant Account is another great resource.
The post Everything You Need To Know About eCommerce Payments appeared first on Merchant Maverick.
What if there was a way to reduce wrong orders, increase customer trust, and make your restaurant feel trendy and modern? Well — lucky you — there is! The solution: rethink your restaurantâs ordering system. With a modern restaurant ordering system, you can have online orders sent directly to your kitchen display system, servers can send orders from the floor with handheld tablets, and dine-in customers can pay at their table without having to wait for the server to go run their credit card. And those are only a few of the many cool things you can do with a good restaurant ordering app.
What Is A Restaurant Ordering System?
A restaurant ordering system includes any and all features that allow you to accept orders in person, over the phone, or online. As such, there can be a lot of moving parts and several different ordering processes, depending on your setup. Ideally, your ordering system should be as streamlined as possible and linked through your point of sale system. Sometimes, online ordering is separate from the main POS, supported via a third-party app like DoorDash, Postmates, or Grubhub—though many restaurant POS systems offer seamless integration with these apps.
A key aspect of the POS in a modern restaurant ordering system is that it should be tablet-based. At the very least, the POS should work with tablets in addition to a traditional terminal. Why is that? Tablets mean mobility, and they put powerful technology at the disposal of your servers—and your customers. The optimal configuration varies according to the restaurant type; for example, a casual quick-service restaurant system might include self-ordering kiosks or even just a single tablet register equipped with a credit card processing app, while an upscale bar and restaurant setup might have servers use handheld tablets to take orders and payments.
12 Features That Take Your Restaurantâs Ordering System To The Next Level
Now that you’re considering a revamp of your ordering system, it’s time to decide which features are important to you.
The most basic tablet POS consists of a cloud-based POS app installed on an iPad/touchscreen register. But even with a lightweight, single-iPad setup, you might be surprised at all the features a cloud-based system can offer, from online menu management to targeted email marketing campaigns. Your system may also include other additional hardware and accompanying functionality, described in more detail below.
Keep in mind that even if all of these features are available, you only have to use whatâs relevant.
Kitchen Display System
A digital kitchen display system, or KDS, is a lot better than kitchen ticket printing. This allows servers to send orders directly from a tablet to the kitchen, with the ability to prioritize orders, check on cook times, and so much more. The result is a fast, accurate, streamlined ordering process. What are some more advantages of a kitchen display system? Read What Is A Kitchen Display System? for a more in-depth breakdown.
Online & Phone Ordering
With phone orders, the operator may manually key in payments, noting the type of order (call in for pickup vs. delivery) and other transaction details. A smartphone ordering system can save these details for easy re-ordering the next time the customer calls in.
With an online ordering and delivery system, online orders are sent into the queue with the rest of orders (again, this is where KDS comes in handy). Note that online ordering and delivery functionality can be a built-in function of your POS that integrates with your restaurant website, or your POS might support third-party online ordering apps like Grubhub, Uber Eats, etc.
Modifiers & Prompts
A POS system with a menu that allows for modifiers allows for easy order customization. Even better is a POS that prompts servers to ask for choices instead of assuming the customers want the default meal. A handheld tablet ordering system can prompt servers to upsell on the spot, and input the customers’ choices for sides, dressings, level of spice, etc. All of this information is relayed to the kitchen via a KDS or ticket, with no need to ask for a special order.
Seat & Table Management
Using a POS with seat and table management, you can easily assign orders, split items, reassign items to different people, and more. Table management can also include support for reservations, via an add-on or integration (more on reservation management below).
Menu Management
Menu management makes adjusting menu items easy and keeps your offerings up to date. Usually, you can do this with a back-office function online. You might also update your menu to include special time-sensitive offers and daily specials, or manage several different menus for different locations or days of the week. With integrated raw ingredient tracking, menu options stay in sync with ingredient availability.
Pay-At-Table Function
An emerging trend flips the traditional restaurant payment system on its head, bringing the POS to the customer at their table. Servers simply swipe/dip the card in front of the customer and voila! The customer can sign their receipt on-screen, or the POS may have a mobile receipt printer. The system can also prompt customers to leave an on-screen tip, with percentage suggestions.
Clover Flex and Square Terminal are both examples of mobile POS devices that allow customer payments at the table. These nimble, cordless terminals include both a card reader and receipt printer.
Self-Service/Kiosk Mode
It can be a big investment, but some POS systems give you the option to place tablets at every single table. This lets customers enter their own orders, summon servers, and even split the check themselves. This is typically seen at casual dine-in setups. For example, Chili’s and several other casual restaurant franchises use self-ordering kiosks at tables. Some fast-food chains, such as McDonald’s and Wendy’s, also offer self-service ordering, from touchscreens located at the front of the restaurant.
Customer Relationship Management
Have a takeout restaurant with regulars? A good CRM system keeps track of what they order so if they want to call in âthe usual,â you can plug it in without having to remember it. Customer data can also be used for targeted marketing—for example, sending emails about discounts, promotions or events. Additionally, CRM can include a loyalty program for in-person transactions, which rewards frequent customers with discounts, free entrees, etc.
Server & Customer Notifications
A POS system can include different types of notifications for both servers and customers. For example, some restaurant POS systems can alert servers when orders are ready with an in-app notification sent to their handheld device, or even with a text-message— SMS alerts are probably more effective if servers use a smartwatch to receive these notifications. Customers can also receive texts letting them know when their takeout order is ready, or alerting them that their table is ready. Again, the best way to use notifications all depends on your restaurant’s setup.
Mobile Payment Support
More and more restaurants accept contactless NFC (mobile) payments like Apple Pay and Google Pay. Mobile device payments require the customer to be present, so you usually see this at casual eateries where customers pay at the counter. However, a sit-down restaurant can also accept mobile payments, if you opt to bring the POS to the customer with pay-at-table functionality.
Email Receipts
Giving customers the option of email receipts for their orders is beneficial for both you and your customer. Customers can track expenses and past orders, and you can reduce receipt paper costs. Email receipts can also contain CTAs customers can click on, such as surveys or prompts to follow you on social media. Once you have a customer’s email address, you can additionally send them promotional offers in the future.
Depending on the POS system, you use, you might not even have to ask the customer for their email address. For example, Square lets you send automatic receipts to any customer who has already opted into receiving Square email receipts from another vendor.
Online Reservations & Waitlist
When your waitlist and reservations are automated, your staff is freed up to focus on the bread and butter of your restaurant: food orders! While not too many POS systems offer native support for reservations, many restaurant POS systems now integrate with a reservation or waitlist app, such as Waitlist.me or OpenTable, which also serves as a marketplace where new customers can find your restaurant online, similar to Yelp.
Yelp also now has an online waitlist app that, when integrated with your restaurant management system, lets customers hop on your waitlist before they even leave the house. Customers can view their approximate wait time, see how many parties are ahead of them in line, and receive a text when their table is ready.
4 Ways The Right Restaurant Software Will Improve Your Business
Okay, we’ve covered the features to look for in your POS—but we haven’t discussed why these assets to businesses. What are the high-level impacts and how will they change your business? Let’s delve in!
Tableside Ordering Means Fewer Errors
Back to modifiers and promptsâif servers enter orders at the table, they are less likely to forget or make a mistake. This improved accuracy results in less waste and fewer unhappy customers. Even if mistakes are made, they are quicker and easier to fix with a digitized system that allows for easy modifications and instant reordering.
Pay At Table Means Better Data Security
A card leaving a customerâs sight is a liability due to the possibility of credit card skimmers and identity theft. In some cases, you can reduce this risk with a pay-at-table feature and also with mobile payment acceptance. Additionally, the option to pay at the table means no waiters walking away and taking forever to bring the card/check back.
Better Efficiency Means Faster Turnarounds & Happier Customers
All of these features ultimately lead to one thing: a more efficient restaurant. Less time transpires between orders being taken and orders being placed, and less time is needed to complete payment transactions. Tables turn faster, resulting in more customers. And even more important than the faster turnaround is that you’ll have happier customers who arenât stuck waiting. This should also lead to better tips and happier servers!
Updates & Integrations Add Even More Functionality
All of the popular tablet POS systems integrate with other apps. This gives you the potential to extend your system’s functionality ever-further with each new integration that comes out. For example, there are restaurant apps for liquor inventories, tip tracking, social media management, and much more. Web-based systems are also updated frequently to add and improve features, meaning that the system you buy today could be even more powerful with next month’s update.
Cost Is The Biggest Hurdle To A Good Ordering System For Restaurants
There isnât really a disadvantage to having a POS with a solid ordering system. But there is an obstacle: the cash investment required. Some cost considerations for investing in a new restaurant POS:
You need multiple tablets so servers can use them.
You need the space and equipment to charge tablets.
You need additional card readers if you offer pay-at-table.
You need a reliable internet connection, either with cellular data plans or WiFi that reaches across the entire premises. Some POS systems set up local networks as a backup to keep the system functional during internet outages. No matter how you approach it, your internet infrastructure is going to cost money.
Depending on your setup, there are also additional hardware costs such as a KDS, kitchen printers, self-service kiosks, even a digital menu board.
Monthly POS software costs can add up if you have a lot of add-ons or third-party software integrations, e.g., $50/month add-on for loyalty program, $99/month add-on for delivery management, etc.
Whatever you do, donât try to cut costs by leasing POS/credit card processing hardware. This ultimately costs way more and involves contracts. Buy the equipment outright instead. Also, when choosing a restaurant POS system, make sure any system you’re considering offers competitive pricing for payment processing (if in-house payment processing is included) or integrates with a merchant account that offers interchange-plus pricing.
If you need to finance your POS system, this is possible with small business loans. Make sure you research the best options for small business loans for restaurants.
Is It Time For You To Upgrade Your Restaurantâs Ordering System?
Your existing restaurant POS might already support some of the tech-forward ordering features I’ve described in this post. Are you using them? If not, it might be time to consider trying them out. If your POS doesnât support these features, but they sound interesting, it’s probably time to switch to a new POS system. Start shopping around!
So what are the next steps toward implement a faster, more efficient, mobile restaurant ordering system? Talk to your POS provider and learn how to implement existing features you haven’t taken advantage of yet. Or, check out some top restaurant POS providers to find a system that does support the modern ordering features you want and need to make your restaurant all that it can be.
The post Modernize Your Business With A Good Restaurant Ordering System appeared first on Merchant Maverick.
We at Merchant Maverick like Square. Itâs a great service that opens up the ability to process credit card payments to many small businesses, and weâve written a lot of articles about Square’s point of sale, payment processing, inventory, booking, and invoicing features. These articles can be prohibitively in-depth to the uninitiated, however, so you might want to read this quick overview of Square for a summary before digging into the details.
A Brief History Of Square
Square was founded in 2009 when Jack Dorsey (also of Twitter) tried to help his friend Jim McKelvey take a credit card payment of $2,000.00. Squareâs first product was a magnetic stripe credit card reader that could be inserted into a smartphoneâs headphone jack to take credit card sales.
Square became a public company in November of 2015, and its stock is traded on the New York Stock Exchange under the ticker symbol SQ. While Square does bring in a lot of money ($3.3 billion for the year 2018), it still has not made a profit. For the moment, the company seems to be more focused on growing by adding new services for its customers.
While Square’s main focus continues to be helping small businesses quickly and easily set up taking credit card payments, it has also expanded its services to point of sale, inventory, and employee management — giving small businesses the ability to run more like large ones (more on these services below). To this end, it has bought the food delivery business Caviar, the catering service Zesty, and the website building service Weebly. It also owns a consumer-centric digital wallet called the Cash App, where users can send money to each other and even buy from any store with the money in the app.
In the span of about ten years, Square has grown from a startup focusing on one aspect of helping small businesses grow to a large business providing a suite of services that help small businesses expand. With so many additional services, what exactly does Square do these days?
What Does Square Do?
At its heart, Square is still a credit card processing aggregator (also sometimes called a third party payment processor or a payment service provider (PSP)). We have a great article on the difference between a merchant account provider and an aggregator, but below is a quick explanation.
Square’s Credit Card Processing Services
Traditionally, if you want your business to take credit card sales, you would work with a provider to set up something called a merchant account. To get a merchant account, you typically undergo a long application process and provide a lot of financial information before you are approved. These providers want to make sure that, based on your businessâs existing history, you don’t present a huge financial risk.
Credit card processing aggregators take more of a see-as-we-go approach and assume financial risk for bad accounts. Aggregators merely need to verify the identity of the applicant before authorizing a new account, and generally don’t ask too much more information. They have more freedom on who they sign up and how they do business with those they sign up.
While this means aggregators can quickly set your business up to take credit card payments without needing an established history, they tend to be cautious afterwards. These types of payment processors have advanced systems in place to analyze each transaction for any red flags. Suspicious transactions can cause the processor to hold funds until it has more information. Worse, third-party processors often have a clause in the contract that says they can terminate your account if they see fit. Usually, this happens to businesses that have high numbers of chargebacks or fraudulent transactions.
Square is an aggregator, so essentially the above is its business model. You can sign up for Square within minutes and without providing detailed financial information. In addition, Square gives you a basic set of free hardware and software so you can start taking credit card payments almost right away. The free items include:
Square Point Of Sale Software: Square’s free POS software is incredibly advanced for being free, though it’s certainly not a full-fledged POS. Still, for most small businesses it is more than sufficient. Square also offers premium iPad POS systems for a monthly fee if you need more advanced features.
Credit Card Reader: You can get a basic magnetic strip reader for free, but if you want support for chip cards, you’ll have to upgrade to another reader, which will cost you.
Invoicing: For those businesses that bill a larger amount but less often (e.g. lawn care services), Square offers an electronic invoicing function. The invoices are free to send, but you will pay a transaction fee when your customer pays with their card.
Square’s Value-Added Services
As mentioned earlier, Square has been adding more services to its core credit card processing business. Some of these services are for free, but others are available for a small fee. These services include:
Employee Management: With this service, you can manage your employees from anywhere. You can add new employees to the system, track their hours, track their register/sales (at either single location or multiple locations), edit and close employee timecards, and give selected employees selected access to various parts of this software (e.g. so they can enter their own hours but not see your weekly sales numbers).
Payroll Services: This service imports data from the employee management software so that you can easily pay your employees and contractors. Square will handle tax filings and withholdings, and they can handle the payments to other employee benefits such as health insurance and 401(k). You can even offer direct deposit to your employees.
Inventory Management: Square offers basic inventory management in its Point of Sale app for free, but the premium iPad POS systems offer a more detailed system that can track and analyze your business’s inventory across multiple stores and multiple registers. You are notified when inventory is low, and items are automatically removed from inventory when they’re sold, whether at one of your physical locations or online.
Business Debit Card (Square Card): When you are paid by your customers through Square, the money goes to an account kept by Square. Rather than moving the money to your bank, you can use it immediately with the Square Card. The Square Card is a debit card sponsored by Mastercard, and you can request it from Square for free. Check out How Does Square’s Instant Deposit Work? for more information about how to access your funds.
Appointments: Square provides a booking calendar for professional service businesses (like hair salons). The calendar not only tracks and moves appointments, but it can also send appointment reminders to customers. The POS and booking system is free for a single user, but if you have multiple users you’ll need to pay a monthly fee.
Square Online Store: Pretty much every business needs an online presence, and Square can help you build a professional-looking website even if you’ve never done it before. Square provides tools that can help you track your inventory sold through your online store and helps you with shipping (printing labels, discounted rates). Best of all, when you sell out of state, it tracks all the different sales taxes that you might owe. There’s a basic free webstore, but if you need more advanced features, you’ll need to upgrade to one of the other plans.
Other Services: Square offers many more services designed to make a small business owner’s life easier. For instance, Square offers marketing software to help you build email and social media advertising campaigns. It has an installment payment service for certain businesses so that a customer can buy a big-ticket item and pay Square in installments while you get paid right away. Square can help you build a loyalty program where customers can redeem goods or services with points. You can get your own branded gift cards to sell to your customers. Square even provides online store owners with a product photography service so that the items sold through webstores are presented in their best light.
As can be seen above, Square is well on its way to offering an entire suite of software and services that not only help you take credit card sales, but also help you manage your entire business’s operations.
What Are The Advantages of Square?
Every successful business has a few things it does extremely well, and Square is no exception. Square basically provides you with a free, fast, and easy-to-get-out-of way to start taking credit card sales. To elaborate a bit, the following are some advantages for signing up with Square:
Fast Setup: You can sign up for Square within minutes and get a credit card reader shipped to you very quickly.
Easy Termination: If you sign up and find that you don’t like Square, you can stop working with Square any time you want. There are no penalties for leaving, so you can sign up without fear. (There may be loose ends to tie up, but you can still terminate the services at will.)
Easy To Use: Square is focused on small businesses that are just starting out. They provide a simple piece of hardware and intuitive software to help you run your business and help you grow.
Simple Fee Structure: Compared with other pricing models, Square has an easy-to-understand flat fee structure so you can better predict your profits.
Fast Payment: With Square, you can get paid almost right away after a customer makes a charge. You can instantly deposit these funds into your outside account or use the funds directly with the Square Card debit card. In contrast, traditional merchant account providers typically hold the funds for at least 24 hours before releasing it to you. For a small business with tight cash flow, Square’s fast payment can make a difference to the business’s survival.
No Minimums Or Monthly Fees: A small fee here and there might seem insignificant, but they can add up in the long run. Square’s credit card processing service (and a lot of their other services) have no minimum or monthly fees, so a small business doesn’t have to worry about paying for anything other than the transaction processing costs.
These are just some of the advantages for signing up with Square. Of course, no business is perfect, and neither is Square. Under some circumstances and for some types of businesses, Square is not the best option.
What Are The Disadvantages Of Square?
No business can be everything to everyone, so Square is not suitable for every type of business. One of the biggest complaints we see about Square is that Square sometimes withhold funds in a merchant’s account, with or without warning. Sometimes, you never get paid. If you fit into one of the categories below, you might want to think twice before signing up with Square:
Not Suitable For High-Risk Businesses: A “high risk” business is usually defined as a business that deals with guns and ammo, tobacco and vaporizers, pharmaceuticals, gambling and financial services, and similar — anything highly regulated or prone to chargebacks and disputes. If you deal in any of these, Square is likely not the right business partner for you. Specifically, in its Terms of Service, Square reserves the right to terminate service if you violate any export control regulations (for example, sell military-grade items to specific countries) and money laundering laws, sell weapons or devices designed to cause physical harm, or “use the Services except as otherwise allowed” under their agreements.
Not Suitable For Business With Many Chargebacks: If you have a business that causes a high rate of dispute or chargebacks (even if it’s not otherwise a high-risk business), then Square is probably not the right company for you. Going back to Square’s business model, it fronts you the money that you take from your customers so you can collect right away while it waits for the banks to settle the charges. So, if Square can’t eventually get the money from the banks, it might stop fronting you the money (put a hold on your account) or stop working with you altogether.
Not The Best Pricing For High-Volume businesses: Despite its transparent pricing, Square might not be the cheapest service provider for your particular business. If your business is mature, you have an established financial history and are doing a consistently high volume of card payments, and you know how your customers tend to pay for your goods or services, then you might want to shop around a little more to find the merchant account provider that can offer you interchange-plus pricing and volume discounts. (That said, Square does negotiate custom rates for high-volume businesses, but you should absolutely shop around all the same.)
We have an article that gives more details on why Square is not suitable for high risk and high chargeback businesses. If you have an established business and wish to shop around, here’s some information on where you might be able to get a better deal.
What Are Square’s Fees?
Business owners like having predictable operating expenditures every month. Because credit card fees usually have a percentage component and a flat fee component, the cost of allowing credit card sales tend to be less predictable. Compared to traditional credit card processors, however, Squareâs fees are easier to predict.
With Square, you usually only have to worry about just one fee, expressed in a percentage form. Right now, if you use Squareâs free credit card reader and free Point of Sale software, you pay 2.75% of the sale. Thatâs it. If your customers choose to pay online, your rate is 2.9% + $0.30 per transaction. Having only to keep two numbers in mind makes it easier for you to figure out your markups so you can make a profit for your entire business.
Note, though, that if you use Squareâs premium hardware or software, the charges can get a little complex. Here’s an article giving a more detailed breakdown of Square’s fees.
How Do You Use Square?
When it comes down to it, it’s fairly easy to start using Square’s services. You can do it in four steps:
Sign Up For A Free Account. This only takes a few minutes, and we even have an article walking you through the process. You wonât have to provide a lot of financial information, and they wonât do a credit check on you at this stage (they will later, after youâre all set up).
Get Your Free Square Reader. Youâll have quite a few hardware choices–some of which you will need to pay for–but thereâs always one thatâs free for either iOS or Android.
Download The Free Square App. The app is called Square Point of Sale, and you will need this app to process payments through a mobile device.
Log In To The Free Square Dashboard And Explore. This is a fairly robust piece of software that manages all your credit card charges. You can customize reporting in a centralized hub, and do much, much more (some of which cost extra). Here’s a Merchant Maverick article on the details of the dashboard.
As mentioned above, Square wants to help you run your business. There are a lot of value-added services they offer, so once you’re all set taking credit card sales, you might wish set aside a little time to explore these additional services to see how they can help you run your business.
What Kinds of Businesses Is Square Best For?
Square isnât right for every business, but if your business is small or new, Square is very likely the best bet for you. With Square, youâll get lots of free software, hardware, and add-ons to get you up and running very quickly. You can use Square on the web, at a brick-and-mortar store, and even at mobile locations such as food festivals.
We’ve compared Square with PayPal and Clover Go and believe Square really does offer the best value for the price for a start-up business. As long as youâre not one of the âhigh riskâ businesses, you should have no problems getting payments from Square or with your account being abruptly suspended or terminated. Best of all, if you use Square and then after a while decide you donât like them, you can stop using them at any time.
Is Square right for you? This more in-depth article can help you decide.
The post What Is Square And How Does It Work? appeared first on Merchant Maverick.
If you’re reading this article, chances are that some of your customers have recently asked whether you accept Apple Pay or Google Pay. Your preliminary research has yielded the terms digital wallet and mobile wallet, but while you may have heard of these forms of payment before, you don’t yet know many of the details.
What do these terms mean? Is there a difference?
The short answer is that digital wallet is a broad term covering software that electronically stores credit card numbers, debit card numbers, loyalty card numbers, etc. on your laptop, tablet, phone, or the cloud. A mobile wallet is a type of digital wallet that lives only on your phone and allows you to “tap to pay” in stores, often using NFC technology.
Below is a more detailed explanation of what these wallets are, as well as how they might affect your small business.
What Is A Digital Wallet?
A digital wallet is an electronic method for storing payment information. It is a broad term covering many types of functionalities, and not every wallet offers every type of functionality. Below is a list of major functions typically found in digital wallets.
Store Credit & Debit Card Information: All digital wallets can store credit and debit card information. Some, like Apple Pay, Google Pay, and Samsung Pay, will allow payment directly from the card. Others, like PayPal, draw funds from a stored credit or debit card but pay out through the service itself.
Pay At A Store: Many digital wallets will allow a user to pay for purchases made at a brick-and-mortar location. Apple Pay and Google Pay both allow this type of payment when an NFC-capable point-of-sale terminal is available.
Peer-To-Peer (P2P) Payments: Most digital wallets allow users to transfer funds to one another. Typically, these payments are small amounts used to split a lunch bill, pay a babysitter, or even pay a share of the rent. The Cash app, Venmo, Zelle, Apple Pay, and Google Pay all allow users to transfer money this way.
Online Payments: Digital wallets can be used to pay for online purchases. At checkout, a merchant who takes digital wallet payments will display the appropriate button for the appropriate wallet. PayPal is the most well-known wallet having this type of pay with button, but Apple Pay and Google Pay have similar buttons.
Hold Funds: A digital wallet can store cash in the same way a gift card can hold cash. The funds are held in a cash account, and a user can link a bank account or a credit card to this cash account to cover shortages. Square’s Cash app and PayPal’s Venmo are examples of digital wallets that hold funds, and they even provide their users with physical prepaid cards (Visa for Square and Mastercard for Venmo) so the cash can be used at brick-and-mortar stores.
Hold Coupons & Loyalty Cards: Many digital wallets can hold coupons or loyalty cards so a user can be given the appropriate credit or discount for using a particular card or for shopping at a particular store. Apple Pay, Google Pay, and Samsung pay all hold coupons and loyalty cards.
Store ID: Some digital wallets will allow a user to store IDs. For instance, Apple Pay will allow a college student to store a student ID and use it to access various buildings or even pay from a student account.
Store Transit Tickets: A number of digital wallets allow users to store transit tickets. Users can tap the phone (or a wearable linked to the phone) on a reader to enter subway or bus stations in an increasing number of cities in the US and abroad.
Security: All digital wallets have security features that keep the stored information safe. The information is not only protected by password or biometrics (fingerprint scan, iris scan), but is also encrypted in many ways. Credit card information, for instance, isn’t even kept on the phone. Only a token that represents the information is kept on the phone.
Given that digital wallet is an overarching term that includes all the above features, is there a meaningful difference between a digital wallet and a mobile wallet?
How Is A Mobile Wallet Different From A Digital Wallet?
An easy way to distinguish mobile wallets from mere digital wallets is that mobile wallets let the user make a payment at a storeâs point-of-sale terminal. The payment is usually pulled directly from a credit or debit card rather than from a cash balance kept in the digital wallet.
With a mobile wallet, a user typically pays by tapping on a credit card terminal with a smartphone or a wearable device like a smartwatch or a fitness tracker. The device then transmits the payment information from the phone to the terminal via Near Field Communication (NFC) technology. Other mobile wallets (e.g. Dunkin’ Donuts, Walmart) send payment information through QR codes that a merchant can scan or the user can import through the phone’s camera. A third technology proprietary to Samsung (Magnetic Secure Transmission (MST)) mimics a magnetic swipe and transmits payment information that way.
As a side note, the popularity of NFC technology for payment processing has a lot to do with security. In the US, NFC is favored because it transmits the information only over very short distances. This way, there’s less likelihood that a snooping device can steal the payment information. In comparison, QR codes are less secure because a user can innocently scan a rogue code and be tricked into sending money to the wrong destination.
In this article, we try to draw a distinction between digital wallets and mobile wallets, but, in truth, the nature of these wallets is still in flux. When most people speak of mobile wallets, they tend to only be thinking of Apple Pay, Google Pay, or Samsung Pay. While digital wallets like PayPal and Cash can be loaded onto smartphones as apps, they cannot make NFC-based payments, so they are technically not mobile wallets. (PayPal can be linked to Google Pay and Samsung Pay, so it is still possible to pay at a store with PayPal, but the app itself is not capable of handling NFC payments.) However, Google Pay and Apple pay do let users make P2P payments and send cash, and these features tend to be major functions of pure digital wallets. Google Pay and Apple Pay, therefore, blur the line between digital wallets and mobile wallets.
If the line between digital wallets and mobile wallets is blurry, is there even a reason to draw a distinction between them? For a consumer, the answer is likely “no,” but for a merchant who wishes to take these payments, the difference can be significant.
What Mobile & Digital Wallets Mean For Merchants
For a merchant, there is a subtle but meaningful difference between a mobile wallet and a digital wallet. If you operate an online store or sell through a mobile app, then you can take digital wallet payments, but likely it will take a little work because you must add new code to your web store or your app. If you can’t handle coding yourself, you’ll need to hire a developer to implement these payment options. This is a bit different than some other online payment options that allow you to accept credit cards with minimal setup.
If, however, you operate a brick-and-mortar store where your customers pay through a point-of-sale terminal, then you can probably take mobile wallet payments without doing anything extra. If you have an NFC-enabled terminal, then you are all set to take Apple Pay, Google Pay, or Samsung Pay. If you are still using an older terminal that only takes a magnetic stripe card, then you can still take Samsung Pay because it has that the proprietary MST technology that mimics a magnetic strip card swipe.
Below are some of the additional advantages of taking digital and mobile wallet payments.
Payment Security
Digital and mobile wallets are secure. Digital wallets store payment information on a specialized, super-secure environment called the Secure Element (SE). Apple uses an SE chip embedded in the phone while Google and Samsung use one in the cloud.
When a customer makes a purchase, instead of the real credit card number, only a tokenized number is sent to the merchant. Hereâs a more detailed explanation of credit card tokenization, but for quick reference, a credit card token is just a random number with the same number of digits as a real credit card number. Only the credit card company has a way to match that random number to a customerâs real credit card number. So, if a token is stolen, the credit card company simply issues another token and disallows payment requests made with the stolen token. The real credit card number is kept safe and other purchases made with the real number (or other tokens) can continue.
From a merchantâs standpoint, the explanation above just means that tokenization takes you out of scope for PCI compliance (meaning less work for you) and you won’t be held responsible for fraudulent charges made with a stolen credit card. Thatâs a great reason for taking digital or mobile wallet payments.
Fast Checkout
Digital and mobile wallets make checking out faster. Whether you operate online only or have a brick-and-mortar store, faster checkout typically translates to more sales.
If you have a webstore or an app that takes in-app purchases, digital wallets often can populate all the payment fields with the push of a button. This means your customer wonât have to dig out a credit card, enter a long series of numbers, triple check to see the number is entered correctly, enter in their email twice, etc. etc. Being able to pay easily and quickly makes a better overall purchasing experience, and that means a better chance of a returning customer.
At a brick-and-mortar store, payment with an NFC enabled phone or wearable also makes checking out faster. Tapping a phone or a smartwatch over a point-of-sale terminal takes a mere second or two. Compare that to digging out a card from a wallet, dipping a card into the reader, waiting for the reader to approve payment, and making sure the customer does not forget to retrieve the card, you can see the time savings right away. Whatâs more, all the customers behind the one making the payment can see their time savings as well. The more happy customers you can move through your checkout, the more sales you can make.
Convenience
In line with faster checkout, taking digital and mobile wallet payments offer additional conveniences to your customers. These days, most people pay for their purchases with a credit or debit card, and mobile wallets are increasingly being used to store these cards, especially by the young and/or tech-savvy. Millennials and Gen Z’ers transfer cash between friends using mobile wallets without a second thought and never seem to carry actual cash on them.
For these customers, it would be convenient to consolidate spending into one wallet, so they can easily keep track of their cash, credit, and debit spending. Most digital and mobile wallets also allow users to pay faster by approving a purchase using stored information. PayPal has a one-touch feature that allows a customer to instantly approve a payment with stored data. Google Pay allows a user to approve a purchase by just unlocking the phone and hovering the phone over the payment terminal without ever opening the Google Pay app.
Of course, digital and mobile wallet users won’t stop patronizing your store just because they can’t pay with their mobile or digital wallet. But, if you do allow it, they might come back to you more often because you take payments in the way they prefer to pay.
Do You Need To Accept Mobile & Digital Wallet Payments?
You probably do not absolutely need to take digital and mobile wallet payments, but allowing them might bring you more sales. If you have an online store, then you might have to invest some time or money to connect up to the wallet services. However, if you own a brick-and-mortar store, you likely already can take them. In fact, if your customers tend to be tech-savvy and/or young–or you want to attract more such customers–the ability to pay with digital or mobile wallets will offer them the convenience they want and induce them to do more business with you.
Whatever you do, if you decide to take digital and mobile wallet payments, be sure to advertise it properly. You can request signs and stickers from the wallet providers and of course download logos and the appropriate buttons for your webstore. Once this is done, you are on your way to taking digital and mobile wallet payments.
If you already take digital and mobile payments, what has been your experience so far? Have you increased your sales? Have you gotten positive comments from (hopefully pleasantly surprised) customers that you have improved your technology to allow for this new way to pay? Leave us a message in the comments!
The post Digital Wallets VS Mobile Wallets appeared first on Merchant Maverick.
