If you’ve looked into using a DIY website builder service to create a website for your business, it’s likely that you’ve come across Squarespace. Squarespace is a tool that allows you to create a great-looking and functional website without having to possess coding knowledge or hire a team of developers.
However, you may not be familiar with the particulars of how Squarespace works and how it stacks up against other website building software apps. That’s why we’ve set out to define exactly what Squarespace is and clarify how you can use it to benefit your small business. Read on for a full exploration.
What Is Squarespace?
Squarespace is a cloud-based SaaS (software as a service) website builder. You can try it out for free for 14 days without being required to enter your payment information. To continue with Squarespace after your trial period is up, you’ll have to choose from between Squarespace’s four subscription plans, each of which is offered both on a month-to-month basis and on an annual basis. Because the annual option is offered at a discount and comes with a free domain for a year, we recommend it over the monthly option.
A Squarespace subscription includes hosting for your website, SSL security, and 24/7 customer support.
Perhaps the main factor that distinguishes Squarespace from the competition is its commitment to elegant design. Squarespace’s templates look and perform better than just about any templates you’ll find in a DIY website builder, making Squarespace a particularly good website solution for artists, photographers, and others for whom sharp aesthetics are of paramount importance.
How Does Squarespace Work?
Like nearly every other website builder, Squarespace uses the SaaS model, meaning the software is cloud-based and that you won’t have to install anything. As I mentioned earlier, Squarespace is a paid subscription service with four different subscription plans. These plans run from $12/month to $40/month with an annual subscription. For more details on the cost of using Squarespace, including hosting and payment processing fees, read our Squarespace pricing article.
Squarespace brings together a wide array of elements and features that give freelancers and business owners the ability to create gorgeous and functional websites. Here is but a sampling of them:
Smart Image Handling: Squarespace gives you some nice tools to refine your custom images, such as optional Image Zoom, Set Focal Point (to ensure the best part of your image is centered in any thumbnail), galleries, automatic image scaling, automatic text wrapping, and display effects. Another feature photographers will appreciate is progressive image loading — enabling this will ensure that the images on the top of your website load first, speeding up loading times for visitors.
Device View: Squarespace lets you check out your site in three configurations: desktop, tablet, and mobile. As you build your site, this feature means you can make sure your site performs well on each device type.
Conversion Metrics: View your siteâs performance, learn about your siteâs traffic, and identify sticking points for your visitors.
SEO Features: Customize image file names, product tags, and meta descriptions.
Forms: Squarespaceâs editor gives you access to a number of attractive prefab contact forms. You can easily customizable these forms to fit your business needs. Add as many form fields as you wish, along with checkboxes, radio buttons, and the like.
Blogging: Squarespaceâs blogging system is one of the platformâs highlights. From the ability to schedule posts to the option to have multiple authors posting to the same blog, Squarespaceâs blogging capabilities are excellent. You can even host a podcast on a Squarespace blog. The commenting system is pretty sophisticated as well.
Sell Physical & Digital Products: Squarespace’s capable eCommerce system lets you sell and deliver digital content as well as physical offerings. You can also use your Squarespace store to accept donations.
Inventory Management:Â Track inventory for products and product variants.
Shipping Calculator:Â Use the real-time shipping calculator to charge precise shipping rates for USPS, UPS, and FedEx.
Subscriptions:Â Sell recurring and limited subscriptions.
Squarespace Commerce App: The Commerce App allows iOS and Android device users the ability to run their businesses from anywhere. The App includes an integrated barcode scanner, inventory management, discount creation, and the ability to process in-person sales.
Squarespace Point Of Sale: Squarespace just introduced its new Point of Sale system, which allows you to connect your Squarespace Commerce App with a Square Reader for magstripe, contactless, and chip transactions. The system connects to your inventory management, making it easy to manage a store with both in-person and eCommerce elements. Square POS is included with a Basic/Advanced Commerce subscription, and no Squarespace transaction fees are charged beyond the base cost of Squareâs payment processing.
The Benefits Of Squarespace
Squarespace’s appeal lies in the fact that it offers both accessibility and advanced functionality. While there are website builders out there that are even simpler and easier to use, just as there are circumstances that call for a more sophisticated solution such as a custom developer-built website or a WordPress site, Squarespace aims for the sweet spot that encompasses ease of use, sharp aesthetics, and utility.
What’s more, Squarespace is a relatively cost-effective website solution. While you will find website builders offering cheaper subscription plans, the differences aren’t huge, and the cost of hiring developers to build you a custom website with the kind of aesthetic precision Squarespace offers is going to be several orders of magnitude higher.
Excellent templates
Easy to use
Great for photography and blogging
Capable eCommerce system for online and in-person selling
Free 14-day trial — you don’t need to give your payment information until you sign up for a paid plan
The Drawbacks Of Squarespace
As I mentioned above, Squarespace isn’t the cheapest website solution out there. Many other website builders offer a bare-bones free plan, while Squarespace only offers a 14-day free trial. However, this lack of a free plan shouldn’t trouble most business owners — the free plans offered by the likes of Wix and Weebly are quite limited in the features they offer.
Another drawback: Although Squarespace can host a good online store and can even facilitate offline commerce with its new POS system, it still doesn’t quite measure up with the likes of Shopify when it comes to eCommerce. You simply won’t get access to as many merchant features as you would with Shopify. Furthermore, Squarespace only offers two payment processing options for online sales (and only one — Square — for offline sales).
Squarespace’s customer support comes in for its share of criticism as well, with many users noting the lack of phone support.
Limited integrations
Limited eCommerce features
No free plan
Limited customer service options
Who Should Use Squarespace?
Squarespace’s capabilities match up very well with the needs of artists, photographers, podcasters, bloggers, and freelancers in general. The software allows you to create a professional, elegant website without breaking the bank. It’s as simple as that.
Likewise, Squarespace’s eCommerce features make it a good choice for smaller eCommerce outfits as well as certain types of brick-and-mortar establishments. Larger, high-volume eCommerce businesses are better served by dedicated eCommerce services like Shopify or BigCommerce, however.
How Does Squarespace Compare To Wix, WordPress, & Others?
As I’ve said, Squarespace’s eCommerce chops don’t quite compare with the likes of Shopify. Read our Shopify VS Squarespace piece for more on this comparison. While smaller sellers will find a lot to like about Squarespace, more ambitious merchants will find even more to like about Shopify.
Another Squarespace competitor you’ve likely come across is Wix, which is currently the most widely used website builder on the planet. As we wrote in our Wix VS Squarespace comparison article, we give Wix the overall edge; it’s even easier to use than Squarespace, and it offers a much greater range of add-ons and integrations through its Wix App Market. However, that’s not to say that Wix is better for everyone. Squarespace’s superior aesthetics still make it a more fitting choice for art, photography, blogging, and podcasting.
Another Squarespace alternative we should discuss is WordPress. WordPress is a Content Management System (CMS), not a DIY website builder, so this isn’t quite an apples-to-apples comparison. However, a WordPress site can integrate with a much wider range of products and services than can Squarespace and is almost infinitely customizable. If you need a business website with more advanced functionality than Squarespace can offer and/or you want to retain the option of taking your site to a different web host should you grow dissatisfied with your current one, you should look into creating a website with WordPress instead.
That said, WordPress is nowhere near as user-friendly as Squarespace, and unless you possess some serious web development skills, you’ll likely need to outsource the creation of your site to a team of web developers and designers, thus making a WordPress site cost-prohibitive for smaller businesses and freelancers.
How To Get Started With Squarespace
Getting started with Squarespace is a cinch. First, you sign up — you don’t need to enter your credit card information at this stage, just your email address and a password. If you want to continue using Squarespace for free, you can do so for a period of 14 days. If you’re ready to purchase a subscription plan, you’ll be able to immediately buy a domain for your site from Squarespace. If you get an annual subscription, you’ll pay nothing for your domain for the first year. Domains cost $20-$70 each subsequent year when purchased through Squarespace. And if you opt to use Squarespace for free for the free trial period, you’ll get a temporary Squarespace-branded URL.
After answering some basic questions about the purpose of your site, you’ll be able to choose a template. You can narrow down your search by selecting a category (templates are organized into categories based on site purpose) or by simply typing your site’s purpose into the box provided (“To sell my artwork” for example). After choosing a template, you’ll be taken to the dashboard to start editing your site.
At this point, you’ll be able to add pages to your site and edit them to your heart’s content. Squarespace’s site editing system is fairly self-explanatory, and to the extent that it isn’t, Squarespace provides a knowledgebase, tutorial videos, webinars, and more to help you understand the editor.
At this point, you can edit your site and integrate some of the more basic tools on offer. For access to the more advanced features, including many of the eCommerce tools, you’ll need to sign up for a paid subscription. For a look at some of Squarespace’s best feature add-ons, read our post detailing Squarespace’s 8 best integrations.
Is Squarespace For Me?
Squarespace is an excellent tool for those who want to create a design-forward website for their business without spending a boatload and without having to learn code. Artists, photographers, bloggers, podcasters, and owners of smaller online stores are particularly well-positioned to take advantage of what Squarespace has to offer.
If you’re curious, give Squarespace a try and explore it thoroughly during your 14-day trial period. See if the template designs are to your tastes and if the editor works to your liking. If you find Squarespace to be a good fit for your business — or if you don’t — drop us a comment and let us know about your experience!
If you think another website builder might better fit your needs, check out our article on the 10 best Squarespace alternatives.
The post What Is Squarespace & Is It Right For You? appeared first on Merchant Maverick.
There are many ways to build a successful business. Some business models involve selling lots of items each marked at a lower price, while others work by selling fewer things at a higher cost. With either path, the financial resources of your customers will come into play. You might soon realize that not everyone can afford the more expensive things you sell; similarly, not everyone has the resources or desire to buy a lot of small items in one purchase. Is there a way to solve this problem and increase your sales without cutting your prices?
Of course there is. In fact, there are many ways. One way is to advertise, so that a larger number of potential customers are brought to your door. Statistically, you should make more sales. Another way is to offer financing to your customers. Financing allows those who are wavering on a purchase because of the price to buy from you right away and then pay for the goods/services in installments in the future. This way, you don’t lose a sale to sticker shock. This is called customer financing or, sometimes, consumer financing.
Broadly speaking, you can provide customer financing yourself, or you can use a third-party financing specialist. As to how to do either, along with their pluses and minuses, read on to find out.
How Does Customer Financing Programs Work?
By customer financing, we mean any sort of buy-now-pay-later arrangement. Typically, the customer will have to pay a portion of the total cost before the goods/services are released. This sort of financing is usually a business-to-customer (B2C) arrangement instead of a business-to-business (B2B) arrangement.
If you want to offer customer financing, you can either provide that service in-house or you can work with a third party. We’ll discuss each option in more detail below.
In-House Customer Financing
By in-house financing, we mean that you, the merchant, take all the financial risk — and possibly reap all the financial rewards — when letting a customer walk away with your merchandise (or receive the benefit of your services) before you’ve collected in full. If you wish to consider this avenue, there are some items you might want to think through first.
Cash Flow
If you wish to tackle in-house customer financing, you’ll need to consider your business’s finances first. Understand your cash flow and maybe do some financial projections.
Know that when you actually start to finance your customer’s purchases, you’ll have a period of reduced income because you’re not receiving the full payment for the goods or services you sell. At the same time, your customers might be making a greater number of purchases, so you would need to pay out to replenish your inventory. You’ll need to make sure that you have enough money to run the day-to-day operations of your business while you wait for the installment payments to come in and become a regular part of your cash flow.
If you are right and your customers start to buy more than before because they can now finance their purchases, then your cash flow should eventually increase after an initial dip.
Legal Risk
When it comes to lending money and charging interest, both state and federal usury and debt collection laws may apply. If you fail to follow them, you might have to pay fines or be subject to other penalties.
When you provide financing to your customers, you might want to charge interest on the loan. If that is the case, be sure to check your state’s usury laws that govern, among other things, the highest interest rate you can charge. To complicate matters, if you sell online and a customer is in another state, you might be subject to that other state’s usury laws as well.
If your customer defaults on a loan, you might wish to collect that debt. Unfortunately, what you can and cannot do are also governed by federal and state laws. The laws typically restrict you on the amount you can collect per type of asset and how you are allowed to collect it. Again, the laws differ by state, so this can get fairly complicated fairly quickly. (Here’s an article from the consumer’s standpoint.)
If you wish to start an in-house consumer financing operation, be sure to talk to a lawyer specializing in this area first. They can help you design a set of best practices that are best suited for your type of business — and that stay within legal limits.
Operational Considerations
If you decide to start your own financing department, you’d probably have to hire new people. For instance, for every application, you might want to pull a credit report before deciding whether or not to lend. There would be additional paperwork and internal records to keep as the customer pays off the debt. If the customer fails to pay the debt, you would have to have someone to work on the failure to pay in some way, even if it’s just sending the account to a debt collection company.
Additional internal processes will have to be set up to smoothly move a customer through each step, from application to approval to installment invoicing. All this requires additional employee hours. So, whether you hire one person or ten people to handle the financing, you would have to consider these operational changes and expenses before making a final decision.
Bad Debt
Lastly, not every customer will pay off their loan. We covered the legal aspects of debt collection above, but the more important aspect of bad debt is the financial impact on your business’s cash flow. Know how much bad debt your business can absorb without running into cash flow issues before you decide if you wish to move forward.
Third-Party Customer Financing
It’s always nice to be able to keep your hard-earned money, but now that we’ve gone through some of the major considerations for providing customer financing in-house, you might start to see the headaches that are involved as well.
Fortunately, there is an alternative. There are companies specifically set up to do customer financing or just debt collection (if you continue to wish to keep a portion of the work yourself). Some of these companies charge you nothing for sending a customer to them for financing, but others want a fee so that they charge you for sending a customer to them. They will also keep all the fees/interest the customer will pay to obtain financing. In return, they take care of all the legal and operational complications of customer financing for you.
If you continue to be interested in working with a third-party financing company, be sure to understand the details of how the financing company works before signing a contract. Understand your expected sales increase and your expected profit. If you sell low margin items, make sure that these financing charges do not exceed your profit margin. Otherwise, you would have gone through all this trouble for nothing.
Is Consumer Financing A Good Fit For Small Businesses?
Many large businesses provide consumer financing. For instance, you can finance a car purchase through any one of the major car manufacturers. Consumer financing is also available from some chain store home furniture sellers or large electronics stores. These are all large businesses that can afford a separate department–and sometimes even a separate corporate subsidiary–to take care of consumer financing.
But you’re a small business owner. Maybe you have only a handful of employees, and each of them is already busy taking care of other things. You already work twelve-hour days and things are still not done. How do you provide consumer financing when you’re already stretched so thin?
You might want to consider using third-party customer financing companies. This doesn’t preclude you from trying in-house financing in the future, if you pick one with a contract with no early termination penalties. It’s a quick way to get started, and it introduces you to an industry that you can become more familiar with, so you can make a more informed decision in the future.
Below are some pros and cons for your consideration.
Pros To Offering Third-Party Customer Financing
No Need To Increase Staff: The most obvious advantage is that you won’t need to hire more people to run the financing. As a small business owner, you know how difficult it is to find the right person–one who has the knowledge needed as well as the proper “fit” for your business. It might take several tries to ultimately find the right person, but with third-party financing, you won’t need to do that.
No Need To Worry About How The Details Work (e.g. credit checks): There are a lot of things you would have to set up from scratch to start an in-house customer financing operation. You’ll have to have the application forms, know where to run credit checks, figure out how much risk you can take, and give the customer the credit needed to make the purchase. With third-party financing, you won’t have to worry about any of this. You just send the customer to the financing company, and they take care of the rest with their existing workflow.
Legal Compliance:Â As already touched on above, when it comes to lending money, there are a lot of legal issues that could arise. If you’re in the US, then not only would you have to understand federal laws that could affect your operations, you’ll have to understand multiple state laws as well, if you operate an online store. These laws change from time to time, so you can’t set up a process and forget it. It would be easier to let a third-party financing company worry about following the laws. They might still (hopefully only accidentally) violate these laws, but at least if they do, they would be responsible for it. (Be sure the contract clearly states they’re responsible for any legal compliance issues.)
Less Need To Worry About Cash Flow:Â While you might still have to invest more money into your business to have enough inventory for increased sales, you are less likely to have to worry about a healthy cash flow by using a third-party financing company. A lot of these companies will fund you within two to three days of purchase, so you shouldn’t have to worry about cash flow at all.
Cons To Offering Third-Party Customer Financing
The Reputation Of The Financing Company Will Affect Your Own Reputation: A company’s reputation, especially where money is concerned, matters. When you recommend a financing company to your customer, like it or not, you’re guaranteeing that the company is reputable. If this turns out to be incorrect, then the bad reputation rubs off on you too. A business’s reputation is everything, and a bad one will run customers away from you.
Customers With Bad Experiences Might Not Come Back: Even if customers clearly understand that the financing company has nothing to do with your business, a bad experience with the financing company could still prevent them from coming back to you. Their shopping experience is ruined, and it’s highly likely they will subconsciously connect that bad experience with you. It’s not difficult to imagine that they might go elsewhere to shop in the future.
Customers With Bad Experiences Might Blame You: Related to the above, we know that people don’t always notice things that they should. This is why there will always be a portion of the customer base that thinks you and the third-party financing company are one and the same. If anything goes wrong, it’s very likely that they will blame you for the financing company’s mistakes. They might go online to complain, giving you a bad reputation that you don’t deserve.
You Must Share Revenue:Â Naturally, these third-party financing companies can’t provide their services for free. In fact, in addition to keeping the interest and fees paid by the consumer for the loan, many will want you to pay them for their services as well. Maybe your margins are high and you don’t mind, but if you do mind, then you’ll need to pick the financing company carefully.
Possible Long-Term Contract: Some third-party financing companies will require you to sign a long-term contract. As with all contracts, you’ll need to look at the possible penalties if you need to get out of the contract early. One contract we reviewed when researching for this article allows you to cancel but requires a 12-month notice period, which is basically the same as not being able to cancel at will. Make sure you’re not stuck with a company that you won’t want to work with for one reason or another (e.g. bad reputation) for longer than necessary.
How To Offer Financing To Customers: Options For Online & Brick-and-Mortar Businesses
If you have decided to offer financing to your customers, the way you tell your customers that financing is available and invite them to apply will depend on whether you operate a physical store or an online store — or both. It also depends on whether you’ve decided to do this in-house or through a third-party specialist.
If you’ve decided to offer financing in-house, then you can advertise any way you want to, as long as you have the application readily available for an interested customer to sign up. However, if you’ve decided to go with a third-party provider, then there are several ways to deliver information about the financing offer and payment options.
Online Customer Financing
For webstores, customer financing is often offered at checkout. The customer sees a financing button, along with other payment choices such as credit or debit cards. If the customer clicks the financing button, they must respond to a few questions. A “soft” credit check is performed. With some companies (e.g. Affirm, Afterpay), a decision to lend is made based on the soft check. With other companies (e.g. Square), a hard credit check is eventually required. (If you’re curious, this article explains the difference between soft and hard credit checks.)
After this, the customer is presented with a choice of how they want to finance the purchase–i.e. how many installments, how much per installment, and interest or other fees. Once the customer makes a pick, the online merchant is paid by the financing company, typically within a day or two after shipping.
As to the rest of online financing, a merchant is often supplied with banners and buttons that they can place on their website to announce that financing is available.
In-Store Customer Financing
If you run a physical store, then customer financing is done a little differently, though you’ll still need a connection to the internet just like online financing.
There are several ways a customer at a physical store can apply for financing. One financing company offers free-standing kiosks that customers can use to apply. Tablets can also be loaded with financing application software for the store clerk to hand to the customer. Yet others simply have the store clerk ask a few questions of the customer at checkout and enter that information online. Lastly, a customer can apply for some specific amount beforehand, the financing company can issue the customer a single-use virtual card, and the card number can be keyed in by the merchant just like any keyed-in credit card charge.
How Much Does It Cost To Offer Customer Financing?
The cost to offer customer financing runs the gamut, from free to something similar to the swipe of a credit card. It’s not always easy to find this cost on the provider’s website, however. (It’s much easier to find out how much the customer will be charged for taking the financing offer.) Very often, the company simply does not disclose the charges to the merchant but instead tries to sell their services as a way to increase sales. You can only find out the cost after you contact them.
Ten Customer Financing Programs For Small Businesses
For this article, we did a quick survey of the companies currently providing customer financing services for small to mid-sized businesses. We briefly discuss the companies we found below, but we haven’t reviewed most of them, so please be aware that we pass no definitive judgment about the quality of service each provides. We hope to have some reviews for you in the future.
In looking through these companies, we find that they can generally be categorized into three groups. The first group contains more traditional financing companies. Financing applications may take a day or two to process and be approved. A second group includes the so-called fintech companies–they have their origins in the tech startup world, and they’re here to “move fast and break things.” These companies tend to do a soft credit pull and then give you a loan within seconds. These loans tend to be of a smaller amount and they typically must be paid back within a year. Some of them are fee-based and do not charge interest. The third group seems to be a hybrid, featuring some characteristics of both the traditional and the fintech companies. They also do a soft credit pull and sometimes can offer you a loan for a very small amount very quickly. Typically, larger loans are also available with these companies.
Grouping the vendors we found below into the three categories above, we have:
With some of these companies, it was hard to find merchant-related information–i.e. sign up cost, processing fee, contract terms, etc. These companies tend to try to sell their services by touting how much more a merchant can sell if the customer had the ability to buy more. Signing up with them might mean that you never get to see any income from the financing side. Still, they seem to be worth investigating, so we encourage you to find a few that you might be interested in and contact them for details.
Lastly, if you look at the way these companies work–especially the fintech companies–you’ll see that there’s a strong potential that they might replace the entire merchant processing side of the credit card industry. If you look carefully about the nature of the credit approvals, loan amounts, and repayment terms, you’ll see that they work like charge cards, where each charge is judged separately based on the person’s current debt load and creditworthiness. It’s very similar to the American Express model. From a merchant’s standpoint, it might be a good idea to understand how these financing companies work, in case they do replace some credit card company functions in the future.
With the above in mind, here are some of the customer service companies we found that you might wish to look into further.
Flexxbuy
Flexxbuy seems to fall into the more traditional side of the consumer lending business. It has a relationship with over 20 lenders in its backend and can quickly set a customer up with the right lender, depending on the customer’s credit score.
With Flexxbuy, the customer can get a loan of up to $50,000. The website isn’t quite clear, but the wording in various places suggests that smaller loans might be approved instantly, but the larger ones can take up to 48 hours. There is a formal application to be submitted by the merchant. The customer doesn’t have to pay a penalty for pre-payment, and loan payback can be from 12 months to a few years.
Flexxbuy says the cost to the merchant is “customized,” and, since they work with several lenders, this probably just means that the cost varies depending on the lender. To sign up with Flexxbuy, there is an enrollment/setup fee for the merchant.
LendPro
LendPro, like Flexxbuy, seems to fall towards the traditional lender side of the industry. They claim that they have lending relationships with more than two dozen lenders on the backend to provide financing for a wide range of amounts and for all types of credit scores.
When a customer finances through LendPro, the lending relationship is directly between the customer and LendPro. LendPro can integrate their financing application software with your website, so customers can see their financing options at checkout and file an application if they are inclined. They also have physical kiosks for physical stores, where a customer can apply for credit in person. A merchant can also buy a tablet and install LendPro’s software on it and then hand the tablet to the customer to apply for financing.
There are no other disclosures about how a contract with LendPro would work or how much they would charge the merchant per transaction.
Snap Financing
Snap Financing calls itself a “lease to own” company. This means that, as a merchant, you might be sending your merchandise out to consumers, but you still own the item until the lease term is up. Then, the consumer can either buy the item outright or return it to you.
Lease-to-own arrangements are typically used for large furniture, appliances, electronics, and computers. If the goods are damaged during the lease, they still belong to you. (Presumably, you can deduct the damage from the price.) With Snap Financing, you’re working with a somewhat traditional business model. While it’s not clear on the website, it seems from the nature of the business model that the merchant still owns the sales contract. If the customer defaults on the (unsecured and high-interest) loan, then the matter is between Snap and the customer.
Snap funds your business within 2-3 days once the leased goods are delivered, so you are fully paid.
Affirm
Affirm falls squarely within the fintech label, and it has the pedigree to prove it. The company was founded by Max Levchin, who was one of the founders of PayPal. Even now, it’s still taking money from venture capital firms, with the latest round of funding raising $300 million USD.
Affirm’s website is geared more towards the consumer than the merchant, so there are not a lot of details on how (or if) they charge the merchant to process a customer’s loan. On its backend, Affirm’s loans are financed by two banks: Cross River Bank and Celtic Bank.
The Affirm financing application can be integrated into various eCommerce shopping platforms and be shown to a customer at checkout as a push-button option. When a consumer applies, Affirm performs only a soft credit pull and then makes a decision to lend based on that pull. There’s no stated loan limit. If the purchase is made from an online store, then the payment can be applied at checkout. If the payment is at a store that’s not affiliated with Affirm, then Affirm issues the customer a single-use virtual card that can be used like a credit card.
Afterpay
Afterpay is yet another fintech company. It has a business model that looks very similar to that of Affirm, and it is also funded by venture capital investors. While Affirm seems to focus on providing financing for goods and services that cost a bit more, Afterpay seems to be focused on things that cost a little less.
Afterpay discloses a little more on their website on how they work with merchants. When the merchant makes a sale, the purchase is made between the merchant and the buyer. But the merchant immediately assigns the purchase contract to Afterpay so that Afterpay has the right to recoup nonpayment. After that, the merchant is still responsible for taking care of complaints and returns, but any questions on payments belong to Afterpay.
Afterpay’s services integrate with many existing online shopping carts. Consumers are presented with Afterpay as a payment choice at checkout, and they can apply for credit that way.
Afterpay checks the consumer’s credit with a soft credit pull and, once approved, the consumer is presented with several installment payment options and can see fees and the payment amount for each. The consumer picks whichever option that appeals to them. They can be charged a late fee, but there’s no interest or service fee on the amount borrowed, and of course, the customer can prepay or fully pay before the payment is due.
To borrow from Afterpay, the consumer will have to have an Afterpay account. A credit or debit card must be linked to the account, so Afterpay can automatically withdraw the installment payment from the account. (Which begs the question: why not just use the credit card instead?)
ViaBill
ViaBill is a European fintech startup. Merchants in Denmark, Norway, and the US can sign up with ViaBill.
Like Affirm, ViaBill focuses on bigger ticket items. They offer easy integration with online shopping platforms, easy and fast approvals, and installment payments linked to the debit or credit card used to set up the consumer’s account. The payment is broken into four installments, with the first installment due immediately at checkout. Afterward, ViaBill assumes the risk of fraud and credit risk. If the customer fails to pay, they are charged a late fee (but no “penalty fee”), and ViaBill handles everything related to non-payment/collections.
For merchants, ViaBill charges 2.90% + $0.30 per transaction, which is comparable to some credit card processing charges. After the goods are shipped, the merchant assigns the right to receive payments to ViaBill, but ViaBill may assign the right back to the merchant to deal with chargebacks, disputes, item returns, and some other conditions.
When a merchant signs with ViaBill, the contract can be terminated by ViaBill at any time for any reason or no reason, while the merchant can only cancel for any reason or no reason in the first three months. Thereafter, the merchant must give ViaBill 12-months notice before the contract can be canceled.
There is a setup fee to connect up to ViaBill. They fund the purchase five days after shipping. Be aware that if you sign with ViaBill, they don’t want you to work with any other consumer financing provider unless you both agree in writing that you can.
Vyze
Vyze is a fintech startup that began in 2008. It was acquired by Mastercard in 2019, so if you sign up with them, you at least know that they are backed by a reputable business. Vyze doesn’t seem to be doing anything too different from the other fintech startups, however, so there might not be any other specific benefits to working with Vyze.
Like other fintech companies, it seems Vyze only does a soft credit pull; consumers can apply with just a few quick personal details. A customer can apply online, or if at the checkout of a physical store, apply from the store’s tablet loaded with Vyze’s app.
Once Vyze has the customer’s credit information, the software queries a first lender for approval. If the first lender rejects the application, then the software automatically pings a second lender in the queue, and then a third, and so on until one lender approves the financing.
Vyze’s website does not have much information for the merchant, so it’s difficult to tell if/how much they charge you for each customer you bring them, how they would handle returns or chargebacks, or any other details of a merchant’s contract with them.
VIP Financing Solutions
VIP Financing Solutions has an interesting business model. It seems to be a credit card processor that also does consumer financing (or vice versa). You can get Clover POS stations from them (it’s unclear if they sell or lease them, so be careful). They also have multiple lenders in the backend to support their financing activities.
No matter what you do with VIP, whether it’s credit card processing or customer financing, you’re charged the same rate: a 3.0% “Merchant Fee.” The website also claims that you’re not charged a credit card processing fee, but that 3% seems to cover more than enough of the usual fees associated with credit card processing. Once the charge is cleared, you are funded within 48 hours.
As to financing, VIP offers three types of financing:
A Store-Branded Credit Card:Â The shopper can be instantly approved and walk out with a card, which basically is a revolving line of credit specific to your business.
A No-Credit-Check Loan: The amount can be between $500-$35,000. The repayment is divided into four installments, to be paid within a short period of time.
A Traditional Personal Loan: Approval can take a few days, with repayment plans of up to 60 months.
We couldn’t find a merchant contract on VIP’s site, so we don’t know other details about how VIP works with its merchants.
PayPal Credit
If you are already a PayPal merchant, then you can offer consumer financing through PayPal Credit. Just activate the service as a form of permissible payment. Then you can advertise that the service is available by adding promotional banners already prepared by PayPal to your website.
When a customer uses PayPal Credit, the merchant is paid upfront (i.e. no need to wait for the customer to completely pay back the loan to PayPal). PayPal does not disclose how much it charges per transaction, but it also doesn’t say that the cost would be different from other PayPal transaction charges. So, each transaction likely costs the same as other PayPal payment transactions.
From the consumer’s standpoint, PayPal Credit is a loan between PayPal and the consumer. Once PayPal’s underwriter approves the loan, the consumer has to make minimum monthly payments. For purchases over $99, as long as the consumer pays the loan back within six months, there’s no interest on the loan. However, if the loan is not paid back completely within six months, interest is charged from the date of purchase.
PayPal will pull a soft credit check before approving a loan. The minimum starting credit is $250, and this might be increased from time to time. You can use the money in PayPal Credit to send to family and friends, just like sending cash. And, just like sending cash, you pay 2.9% + $0.30 per this person-to-person transaction.
The service is available to US consumers only.
Square Installments
As with PayPal Credit, if you’re already a Square merchant, you can use Square Installments. Square Installments can be used from the point-of-sale or from your virtual terminal, and they cost 3.5% per transaction. You can also integrate Square Installments into your electronic invoice, and that service costs 2.9% + $0.30 per transaction.
For a merchant to sign up, navigate to your dashboard and look to see if you’re already approved for Installments (approval sometimes depends on industry or location, business type, and/or volume and price of goods sold). If you are, then you’ll have to watch a video and answer a few questions to make sure you understand the terms of service. That’s all you need to do. You can cancel the program at any time. There’s no added integration needed, and Square can provide all the buttons and banners you need to advertise online to your customers that the service is available.
For your customers to apply for financing, they follow a link customized for your business and then enter their information. They will quickly get an offer after a soft credit pull, and the offer will include various monthly plans and total fees. Square pulls a full credit check if the customer elects to go forward with financing. Square Installments are used for purchases of $150 and up and the repayment terms are for up to 12 months.
For physical stores, Square Installments can be used with a digital card, which can be keyed in like any other purchase. The merchant is paid right away, and if the customer misses a payment, it doesn’t affect the merchant.
Here’s a more detailed article about Square Installments, if you’re interested in learning more.
Should I Offer Third-Party Financing For My Customers?
There are a lot of data-based arguments out there that suggest that making financing available to your customers translates to more sales. As a small business owner, the easiest way to do this is to go through a third-party financing company so that you won’t have to deal with the paperwork, the possible cash flow issues, the legal aspects of lending, and the defaults when a customer refuses to pay.
Third-party lenders aren’t willing to do all this for free, of course. Some will charge you a fee, and it’s important to understand how this fee works. It’s also important to think through other issues, such as how chargebacks and returns will be handled. Of the companies we surveyed above, many do not disclose much about how they work with the merchant at all. If you decide that you’re interested in working with one of these companies and contact them, be sure to ask questions such as:
Do they charge you for sending a customer to apply for financing?
Do you get a finder’s fee for sending customers?
How do they deal with merchandise returns? Are you required to accept a return, or can you simply refuse? Do you have to return the money to the customer? Or is that handled between the financing company and the customer? And if so, will the merchant have to return the money to the financing company?
How do they deal with disputes/chargebacks? What about fraud, such as a customer claiming that you didn’t ship a product when you actually did?
How do they deal with defaults? Some companies assign defaults back to you and you’d have to deal with that, so that seems to create more headaches for you.
Who handles customer service? If this is divided between the merchant and the financing company, how do you share the responsibility?
How quickly are you funded, and at which point in the process does a sale count as a sale?
You might have more questions, so be sure to write them down before you contact a financing company. That way, you won’t accidentally leave out a question.
If you decide that providing customer financing is just not for you, but you still want to explore ideas on how to increase the cash you have at hand to grow your business, be sure to check out some of our lending articles. We have picks for the best small business loans, advice on how to get a line of credit, and even information on startup grants. You might also want to consider invoice factoring or invoice financing.
Lastly, if you have had any experience with any of the providers above or want us to do a detailed review of a specific provider, do let us know by leaving a note below.
The post The Complete Guide To Customer Financing For Small Businesses appeared first on Merchant Maverick.
Are you passionate about education? Do you love working with students? Do you have a specialized skill that you want to pass on? If so, you might be a good candidate for establishing your own tutoring business.
Becoming a tutor allows you incredible job flexibility, while also giving you an opportunity to do meaningful work in your community. When you tutor, you make an impact on students’ lives and help guide them toward educational success. And at the same time, tutoring allows you to manage your own schedule and set your own rates. What’s more, when you set up an online tutor business, you can even work from home!
Have you been considering starting a tutoring business, but you aren’t sure where to start? In this article, we’ll walk you through a step-by-step process for planning your tutoring business. And, we’ll also give you some ideas for where you can turn for the funding you might need to get set up.
Ready? Let’s go!
Why Start An Online Tutoring Business?
Tutors start their own businesses for a number of reasons, but one of the primary reasons is the ability to be your own boss. When you operate an online tutoring business, you are able to set your own hours, determine your own hourly rates, and take on as many or as few clients as fit your schedule. The flexibility that comes with tutoring is one of its biggest advantages.
What’s more, becoming a tutor is an excellent way to support students and parents. When you step in as a tutor, you help students learn the skills they need to succeed in the classroom, and you relieve some stress on parents. For many students, a tutor can change the outcome of their educational career. So if you have a heart for students, and a desire to see them grow and succeed, tutoring could be your passion.
In addition, over the past few years, online tutoring has been increasing in popularity. According to IBIS world, the market size of online tutoring services in the US (as measured by revenue) is expected to increase by 4.1% in 2020. There is always a need for educators, especially during the school year and around standardized testing time, and when you become a tutor you help fill that need. If you want to join a growing market, now is a great time to open our own online tutoring business!
When To Sign Up With A Tutoring Service Instead Of Starting Your Own Business
There are a couple of routes you can take to begin tutoring online. You can choose to sign up with an existing online tutoring network (such as Care.com), or you can start your own independent online tutoring business. Your choice between these two options depends on your available resources, your timeline, and your intentions for your business.
In general, you should sign up with an existing tutoring network if the following applies to you:
You Have A Limited Social Network: If you don’t already have a number of potential students in mind, it might be best to join a tutoring website. These sites help connect tutors with students, which can reduce some of the demand that comes with building an entire client base from scratch.
You Need To Start Working Immediately: Finding clients and establishing a presence in the tutoring market can take significant time, energy, and money. If you want to skip over this process, signing up with a tutoring site is a great option. You’ll be able to find clients and get teaching much sooner.
You Don’t Mind Paying A Fee: Most tutoring sites charge tutors a percentage of their earnings. You should have room in the budget for this expense in order for a tutoring site to be an advantage.
You Don’t Want To Set Up The Technical Tools On Your Own: In order to successfully tutor across the internet, you need access to a variety of tools. At minimum, you need a video conferencing tool, a way to share your computer screen, and a virtual whiteboard. Many tutoring sites that specialize in online tutoring (such as Varsity Tutors) offer these tools built into their platforms.
Here are a few tutoring sites you might consider: Chegg Tutors, Care.com, VIPKid, and Varsity Tutors.
Alternatively, you should consider building your own business if:
You Already Have Potential Students: If you have a wide social network full of school-age children and college students, you may not need any help building a client base.
You Want To Keep All Your Earnings: This is a huge factor. If you resent the amount that tutoring sites charge for their services, you should build your own business. You’ll have to cover other expenses, but you get to decide how much those other expenses cost.
You Have The Time To Get Set Up: As I mentioned above, building your own business takes time. Make sure you have the time (and available income) to build your business before you begin.
Before You Start Your Tutoring Business: Essential Prereqs
As you might imagine, education is a major requirement for starting your own tutoring business. In general, most tutors need to have earned at least a high school diploma or a GED. This is especially true if you are signing up with an online tutoring site.
The level of education you have earned plays an important role in determining what content areas you can teach. Here are the grade levels and subjects you can tutor with each level of education:
High School Diploma Or GED: At this education level, you are able to tutor elementary and middle school students. You are also able to tutor high school students, although you may need to demonstrate your knowledge in other ways (using transcripts or standardized test scores to demonstrate content area knowledge).
Undergraduate Degree: With a Bachelor’s degree, you are able to tutor elementary, middle school, and high school students. You are also able to tutor college students in your area of specialization. This is especially true if you have work experience post-college that relates to your specialization.
Post-Graduate Education: You can tutor elementary, middle school, high school, and college students. Depending on your area of specialization (if you have a degree in education or in teaching English for Speakers of Other Languages), you might also consider teaching adults who are finishing their GED or who are looking for a way to develop their English fluency.
As you look into tutoring, you should also consider working towards a Tutoring Certification. These certifications require you to go through a few hours of training, pass a background check, and submit a couple of letters of recommendation. Earning a Tutoring Certification enhances your credibility, and it also demonstrates to parents that you are safe around their students. Many tutors also benefit from the training included in earning a Tutoring Certification. These certifications are available from the National Tutoring Association and the American Tutoring Association. Depending on the certification, you may have to pay for training, membership fees, a background check, and application fees. These expenses total around $200-$250 for certification, but I think this expense is worth it for the amount of credibility you gain.
Finally, in order to begin tutoring, you need to identify your area of specialization. Think about where you can add value, and consider the experience that you have under your belt. Is there a particular grade level or content area that you are skilled in? As you look for your specialization, consider the subject areas in which tutors are in high demand: English, Math, Science, Test Prep, and Study Skills. And remember, each of these subjects can be broken down into sub-categories like Algebra, Chemistry, reading comprehension, SAT and ACT preparation, etc. Once you have identified one or two specializations, you’re ready for the next step.
8 Steps To Starting Your Own Tutoring Business Online
Step 1: Make A Business Plan
Strong businesses start with a strong plan. A business plan is a written description of your planned business and business strategy. It’s your vision of how your business will be organized, how it will operate, and how it will be profitable. You can find lots of information online about writing a business plan. Your local chamber of commerce and government economic development agencies likely also have resources you can use.
A typical business plan includes:
Executive Summary
Company Description
Market Overview
Sales & Marketing Strategy
Operating Plan
Organizations & Management Team
Financials
Once you have a basic idea of how your business will operate, it’s time to calculate your starting costs. Do you need to purchase materials or teaching aids? Will you be paying for website building software or a web host? Do you need to purchase any hardware or software, or perhaps buy business insurance?
Since your business is just getting started (and since you will probably be the only employee for a while), your business plan does not have to be incredibly in-depth. Mostly, you should use this plan as an opportunity to set goals, create your marketing strategy, and predict your business expenses.
Step 2: Perfect Your Computer Setup
Your next step is to set up your classroom. Find a place in your home to conduct your online tutoring. You should look for a location that’s away from the noise of the house and has plenty of light. Then, position yourself so that there is a clean, neutral background behind you in video calls.
You should also make sure that you have all of the technology you need to begin online tutoring. You, of course, need a computer and a strong internet connection. You should also have a webcam and a functional microphone (even if it’s just the microphone built into your laptop). In addition, we recommend purchasing a tablet or digital drawing pad and stylus that you can use with a virtual whiteboard software. These tools make it easier for you to illustrate and share concepts with your students from a distance.
Step 3: Find The Right Tutoring Software
Once you have your hardware figured out, you should select your software. You should consider purchasing the following types of software:
Video Calling Software: Find a video calling software like Zoom or Google Hangouts that allows you to schedule meetings in advance and then send meeting links to your attendees via email. You should also look for the ability to share your screen as you will likely want to use this tool to make demonstrations in your tutoring.
Virtual Whiteboard Software: Virtual whiteboard software allows you to draw, write, and diagram on a digital whiteboard. All you need to use the software is a mouse, but using a tablet or a digital drawing pad and stylus (like Wacom Intuos) gives you even better control. A few virtual whiteboards you should check out include Ziteboard, Â IDroo, and Scribblar.
Document Sharing Software: Consider using the free tools that Google provides to your advantage. Google Docs is an excellent tool for sharing documents, editing simultaneously, and making comments on specific pieces of a document. Google Classroom further expands these tools. Using Google Classroom, you can create a central hub of information for your students. Here, you can add resources, assignments, and rubrics. You can use quiz features to help students assess their learning. Google Classroom stores students’ work indefinitely, making it a great way to keep track of student progress over time.
Step 4: Set Your Rates
As your own boss, you get to decide on the rate you charge for your services. Rates vary dramatically from tutor to tutor, and they typically depend upon your education level, the subject area that you teach, and your students’ specific learning needs.
Typically, tutoring rates fall somewhere between $20–$80 an hour.
Tutors who charge the highest rates are those who teach in-demand subjects that require significant experience and familiarity, like SAT prep, and high school and college-level math and science. Tutors who have training and experience working with students with special education needs also typically charge higher rates.
Unfortunately, hourly rates tend to drop when you tutor online instead of in-person. This is primarily because tutors are not limited by location, which makes the online tutoring market much larger with more available tutors. On the other hand, when you tutor online, you eliminate any expenses related to travel and you don’t have to rent out a space for tutoring.
I’ve seen information that suggests that the average rate for online tutoring is $20–$30 an hour, although you can certainly charge more based on your education level and experience.
As you think through your pricing rates, you should look into the rates that other tutors in your content area charge. Then, you should take into account your anticipated business expenses (pricing for any required software, self-employment taxes, and the time you spend preparing for each tutoring session). Using this information, you can set your own pricing range.
Step 5: Register Your Business
In many cases, registering your business is technically optional.
Tutors who decide to operate as a sole proprietorship or partnership do not need to do anything to register their business. Essentially, the business is an extension of its owner. Sole proprietorships are easy to set up, and typically in a sole proprietorship, taxes are simpler than they are with other forms of incorporation. In a sole proprietorship, when you go to file taxes, you file your business taxes and personal taxes together. You will have to pay self-employment taxes on your earnings. In addition, sole proprietorships do not come with the liability protection that is part of many other types of business structures. You are personally liable for any debts your business takes on.
Other forms of incorporation require more time to set up and come with their own advantages and disadvantages. Here are the most popular ways to incorporate:
Limited Liability Corporations (LLCs): Aside from setting up a sole proprietorship, many tutors find that establishing an LLC is their next best option. LLCs offer limited liability protection for their owners, and they are not as complex as a corporation. Each state has its own rules for what it takes to start an LLC, and you don’t necessarily have to register your LLC in the state where you’re doing business (although you generally should). Like with a sole proprietorship, LLC owners report their business earnings and losses on their personal taxes.
C-Corp:Â In a C-corp, shareholders are considered the owners of the company, and they receive limited liability protection. However, at the same time, business decisions are made by corporate officers who may or may not be shareholders. In a C-corp, taxed are filed separately from personal taxes, and shareholders pay income tax on dividends. In order to form a C-corp, you have to file articles of incorporation with your state.
S-Corp:Â S-corps are very similar to C-corps, but with a few additional restrictions: You have to have fewer than 100 shareholders, and they have to all be U.S. citizens or residents. Profits and losses are reported on personal taxes. Finally, in addition to filing your articles of incorporation, you also have to file IRS Form 2553.
Even if you decide to operate your tutoring business as a sole proprietorship, we suggest setting up a plan for separating your business finances from your personal finances. The easiest way to keep your finances separate is to create separate business checking and savings accounts. These additional accounts make it easier to track your profits and losses, and they can save you a ton of headaches when it’s time to pay your taxes.
You should also consider filing a DBA (Doing Business As), Trademark, or Entity Name for your business. Filing a business name allows you to operate your business under its own name, instead of your legal name (Math Works as opposed to Sandy Davis, for example).
Step 6: Establish A Web Presence
As an online tutor, it’s crucial that you have a strong online presence. There are a few ways you can go about building your web presence:
Create A Website: It never hurts to have a sleek, attractive website. Developing your own website adds credibility to your business and can help build hype for your services. Luckily there are user-friendly and cost-effective website builder tools that you can use to set up a site in a matter of days. Some of these tools (such as Wix) even provide appointment scheduling tools that you can use to allow your clients to book–and pay for–their tutoring sessions online.
Set Up Social Media: Set up business accounts on the social media sites that your clients use most frequently (Facebook and Instagram are good places to start). Make sure you include important information like your subject areas and a link to your website. You should also encourage reviews on your Facebook page, so parents and students can leave testimonials, improving your credibility.
Create A Yelp Page: If your business doesn’t already have a Yelp page, now is a good time to set one up. Adding a page on Yelp encourages more clients to leave reviews, and it can help direct new potential clients to your services.
Check out these top website builders:
Service
Pricing
Hosted or Licensed
Templates & Themes
Compatible Credit Card Processors
Next Steps
$14 – $179/month
Hosted
Excellent
Many
Go to Site
Free – $29.90/month
Web-Hosted
Excellent
Many
Go to Site
Free – $25/month
Web-Hosted
Average
Many
Go to Site
$0/month
Hosted
Good
Square Payments
Go to Site
Step 7: Choose A Payment Processing Solution
In order to accept payments online, you’ll have to integrate with a payment processing solution.
Payment solutions fall into two categories: Payments Service Providers (PSPs) and merchant accounts. PSPs are typically easier and faster to set up, but they are also known for having account stability issues. Many PSPs accept merchants almost immediately, and then upon review decide that certain merchants are too high-risk to use their platform and freeze their accounts. Merchant accounts, on the other hand, take longer to set up because there is an initial review process. This makes merchant accounts more stable (you are less likely to have your service revoked). Merchant accounts also allow you to negotiate the rates that you pay for payment processing. In order to process online payments with a merchant account, you need to find a payment gateway, which is an integration that allows you to connect your website and your merchant account.
Here are a few payment processing solutions that might work for you:
Payment Service Providers: PayPal is one of the most widely accepted PSPs out there, and it is a familiar payment option for your clients. Another good PSP is Square. In fact, Square includes appointment scheduling features, so your clients can schedule sessions and pay for services at the same time.
Built-In Payment Processors: Some website builders come with their own in-house payment solutions. One of these options is Wix Payments for Wix users. Built-in payment solutions are great options for quickly setting up a payment method.
Merchant Accounts: Although merchant accounts often take longer to set up, for some merchants the initial investment is well worth it. We particularly like Fattmerchant and Payment Depot.
Step 8: Market Your Business
Once you have your website and payment method set up, it’s time to start marketing your tutoring business! Your marketing strategy should take into account your current network and your intended audience. Here are a few methods you can try:
Email Marketing: If you already have a large personal network, make sure to notify them of your new business. Use email marketing software like Constant Contact or Mailchimp to reach out to family and friends with information about your tutoring services.
Social Media Marketing: Use your personal and business social media accounts to announce your business. One great way of gaining new clients with social media is to put out free content that anyone can view or download. Upload or link your favorite learning resources, and create a few videos to show how you prepare for a tutoring session. Sharing these resources and videos demonstrates your personality and teaching style. It can help build your reputation and make you appear more approachable.
Post In-Person Flyers: Place fliers with tear-off tags on bulletin boards in libraries, churches, schools, gyms, and daycare centers. Think about where parents of school-age children might be, and get your fliers out there! Be sure to always check with management before posting your fliers, of course.
Offer Free Consultations: Consider giving new potential clients an opportunity to meet with you for a free initial consultation. It’s a good idea to include parents in this initial conversation.
Share Customer Testimonials: Ask happy clients for a positive customer review, and then use that testimonial to your advantage. Word-of-mouth goes a long way. Make use of it in any way you can.
How To Fund Your New Online Tutoring Business
New businesses often find themselves in need of capital. If you’re facing startup costs and wondering how to address them, here are a few options:
Personal Savings
If you have some liquid assets saved up, now might be a good time to use them. By using the money you’ve already saved, you eliminate the risk associated with debt and you ensure you won’t be losing additional money on interest. That said, you take a risk by using your personal money to finance your business. If your business fails, you lose that money.
Credit Cards
One of the easier–and riskier–ways to fund your startup expenses is with personal or business credit cards. Credit cards allow you to access credit quickly and apply it to many different types of purchases.
You should keep in mind, however, that credit cards charge high-interest rates on any balances you carry from month to month. This makes credit cards a good option for purchases you can pay off quickly, and a potential problem for ones that you can’t.
Note: Avoid taking out cash advances on your cards unless absolutely necessary. They come at a very high cost.
Personal Loans
Although traditional business loans are not an option for some new businesses, you can often use a personal loan to cover some of your startup expenses. These loans can be easier to get when you’re first starting out.
The downside of a personal loan is that you don’t get the liability protection you’d have if you applied as a business. You may also be more limited in terms of the amount of money you can take out. Still, if you need a little money to get started, it’s not a bad option.
Grants
Grants might be the closest thing to “free money” we have in the real world. Grants are often highly competitive, and they require businesses to complete a fairly involved application process. As you consider your options, you should factor in the amount of time you spend applying for a grant. And, you should take into account the likelihood that you will not be selected for that grant.
If you need some advice on where to look for grants, check out our feature on the topic.
ROBS
ROBS stands for Rollovers as Business Startups, and they are extremely niche products for entrepreneurs with retirement accounts like 401(k)s.
For a fee, a ROBS provider allows you to use money from your retirement account to pay for startup costs without incurring any tax penalties for accessing retirement funds early. Like with personal savings, with ROBS, you are risking your own money. ROBS is probably overkill for most new tutoring businesses, but it is a good option to keep in mind.
Go Out & Start Your Online Tutoring Business
Does tutoring from the comfort of your own home sound like your dream job? Tutoring can be one of the most rewarding and profitable small businesses to start. And with minimal start-up costs and very few steps to getting started, you can get begin tutoring in very little time!
That said, as with all new business ventures, you should approach your online tutoring business with a strategic mindset. Take your time, decide on a niche, gather all the tools you need, and work towards building a positive reputation in your social network. Now is a great time to enter the tutoring market. So get out there, and get teaching!
What’s Next
Your complete guide to business structures
Learn about unsecured business lines of credit
Check out this guide for starting a consulting business
Learn how to start an Amazon business
Check out this guide to starting a pet sitting business
The post How To Start An Online Tutoring Business: Prerequisites & 8 Steps To Success appeared first on Merchant Maverick.
It’s a beautiful spring day, the sun is shining, and the birds are chirping. Out in the fresh air, you’re surrounded by vendors selling the freshest local produce, natural products, and unique handmade gifts. No, this isn’t a dream — it’s a trip to your local farmers’ market.
Farmers’ markets are growing in popularity across the nation, so it’s no surprise that farmers, artists, and other local vendors are capitalizing on this money-making opportunity. Perhaps you’ve even pondered the idea, or maybe your family and friends have suggested you make some extra cash by selling your handmade or homegrown wares.
In this guide, we’ll explore how to become a seller at a farmers’ market. While it may seem as easy as grabbing your goods, setting up a table, and bringing in customers, there are actually tips and strategies to keep in mind to improve your odds for success … and increase your profitability. From selecting your products to marketing to buyers, we’ll cover it all to help you get started on the right foot. Read on to find out how you can start selling your goods at your local farmers’ market.
Why Are Farmersâ Markets So Popular?
From small towns to big cities, farmers’ markets are quickly popping up everywhere and attracting people of all ages. What makes a farmers’ market so appealing? It might be easier to ask what’s not to love about these local stops!
There are a number of reasons that more people are frequenting farmers’ markets. One of the top reasons is that these are places where you can purchase fresh local produce, most of which is organic and isn’t genetically modified. Compare this to your local supermarket where you aren’t sure of when the produce was picked and shipped or how it was grown. Farmers’ market produce is the freshest, and often the healthiest, that you can find.
Buying locally isn’t just good for your body — it’s also better for the environment. Produce at farmers’ markets usually comes from small family farms, which use fewer pesticides and chemicals. Because these products aren’t being shipped around the country, shopping at your local farmers’ market also conserves fossil fuels.
When you shop at your local farmers’ market, you’re supporting small businesses, whether it’s a small family farm or a local artist peddling paintings, pottery, or other handmade art that you won’t find in your local department store. In addition to supporting your local economy, attending a farmers’ market is a great way to meet new people. Farmers’ markets are family-friendly (and sometimes, even pet-friendly!) events that let you meet and socialize with people in your community. Some farmers’ markets even offer live music, classes, and other special events that only add to the fun. Add in local food trucks serving delicious meals and treats, and it’s not hard to see why farmers’ markets are truly the place to be.
Now, it’s pretty easy to see why you would visit a farmers’ market, but what are the benefits for sellers? In a 2015 survey, the USDA found that over $700 million of goods were sold at over 8,000 farmers’ markets around the United States — and the majority of that money is being funneled directly back into local economies. The USDA also found that farmers and ranchers make less than 16 cents for every dollar when selling to retailers. On the flip side, they can retain nearly 100% of their profits when selling locally through farmers’ markets.
10 Kinds Of Products You Can Sell At A Farmersâ Market
Despite its name, you don’t have to be a farmer to sell at a farmers’ market. There are lots of ways that you can connect with the community while earning a profit. Items to sell might include:
Produce
Sure, you don’t have to be a farmer to sell at a farmer’s market, but if you are, you can certainly bring your freshly grown produce to sell to your customers. Seasonal local fruits and vegetables really sell, but don’t forget about unique products you won’t find in most supermarkets (think colorful heirloom tomatoes or purple cauliflower). No matter what you bring, make sure that you only provide the freshest, highest-quality produce for your customers.
Don’t feel stuck to just fruits and vegetables, either. Mushrooms and fresh herbs that you’ve cultivated yourself are also big sellers at farmers’ markets, providing you with additional opportunities to earn some extra cash.
Milk, Meat & Eggs
If you raise cattle and chickens, it’s a no-brainer to bring your milk, meat, and eggs to the farmer’s market to share with your community while making a profit. These are popular items at farmers’ markets because of freshness, but also because many people prefer buying from small farms that treat their animals humanely, as opposed to large factories that may have questionable practices.
Not a rancher, but you enjoy hunting? Venison, bison, and other wild game can be sold at the farmers’ market. And it doesn’t stop at fresh meat, either. You can always sell your dried meats and jerky that you’ve marinated, cured, and dried yourself.
Baked Goods
Your family and friends think you could be the next Betty Crocker, so why not bring your baked goods to the masses? If you love to bake, there are endless possibilities and a whole lot of money-making potential at your local farmers’ market. Bake your homemade cookies, cakes, pies, scones, and cinnamon rolls and sell them to customers during your free time. Again, you can think outside of the box to boost your profit potential by selling unique items such as dog treats or treats for customers with special dietary needs (i.e. vegan or gluten-free).
Flowers, Plants & Seedlings
From season to season, people spruce up their homes inside and out with colorful flowers, outdoor plants, and houseplants. From flower baskets that add a touch of color to your front porch to common and unique species of plants, many customers bypass big-box home improvement stores and instead purchase from local growers.
You don’t even have to wait to have fully grown plants and flowers. Some shoppers may prefer to buy seedlings that they can plant and grow themselves. Succulents and herbs are also popular options to consider.
If you grow roses, tulips, lilies, or other beautiful flowers, you can also create unique arrangements that shoppers may snap up for weddings, prom, Valentine’s Day, or even “just because.”
Honey
If you’re a beekeeper, cash in on the benefits of your (and your bees’) hard work by selling your delicious honey at the farmers’ market. Customers can purchase high-quality honey for use as a natural sweetener, but there are also additional benefits of eating local honey. Local raw honey is often marketed as a natural home remedy used to help with seasonal allergies, soothe sore throats, kill bacteria, or even help you get a good night’s sleep.
Want your honey to stand out from the rest? Switch up the way you process your honey to create creamed honey, or consider adding natural flavors to make your own unique honey blend.
Also, don’t overlook the value (for health and your wallet) of pollen granules. These tiny pellets contain a mixture of nectar, saliva, and pollen and are rising in popularity due to their perceived health benefits. Pollen granules are used for treating inflammation, strengthening the immune system, reducing stress, and other ailments.
Soap & Skincare Products
As we learn more about the chemicals in everyday household items, more people are stepping away from these potentially harmful ingredients and going a more natural route. If you’ve created the perfect recipe for homemade soaps, lotions, or other skincare products, set up a display at your local farmers’ market to peddle your natural concoctions.
As more people move to natural products, the farmers’ market in your area gives you the perfect platform for selling your goods. There are lots of opportunities in this space, from creating your own natural (and great smelling!) bug repellent to homemade sugar scrubs and natural deodorants.
One thing to remember is that you can be multi-dimensional at a farmers’ market. For example, if you keep bees, not only can you sell honey and pollen granules, but you can also sell natural beauty products made from pollen, honey, or beeswax.
Beverages
Need some inspiration for what to sell at the farmers’ market? Look no further than the neighborhood kid with a lemonade stand. And the great news is that you aren’t just limited to lemonade, although selling freshly squeezed lemonade to hot shoppers is an easy way to make some extra cash.
If you make your own local wine or mead, brew your own craft beers, or even make a mean cup of hot apple cider, selling beverages can help draw in customers. Your booth or display can serve as a showcase for your homemade brews, or you can sell beverages in addition to other products. Many people that frequent farmers’ markets are looking for products that are unique and can’t be found in the local grocery store, so think outside the box. Flavored lemonades made with freshly squeezed lemons and natural flavorings, kombucha, and other tasty beverages can be sold by the glass, bottle, or jug.
Prepared Foods
Spending a long time at the farmers’ market can leave shoppers feeling famished. Why force hungry customers to drive to restaurants when you can bring the food right to them? If you operate a food truck, consider bringing your tasty fare to the farmers’ market. If you have openings in your schedule, a partnership with a local farmers’ market can fill your weekends with customers and the profits they bring with them.
Arts & Crafts
Whether you’re a professional or just an amateur artist, locally-made arts and crafts are big sellers at farmers’ markets. No matter what type of art you make, a farmers’ market is the perfect platform for selling your creations.
Paintings, drawings, embroidered items, crocheted blankets, hand-painted t-shirts, pottery, wood carvings, sculptures, and homemade greeting cards are just a few of the arts and crafts you can peddle at your local farmers’ market.
Other Unique Goods
Don’t see anything on the list that appeals to you? Then tap into your own unique talents. The great thing about the farmers’ market is that there are relatively few limitations when it comes to what you sell. While you can’t sell anything illegal or dangerous, you can let your creative flag fly and bring something truly unique to the table. What can you offer that is different and unique? Exotic spices, ethnic goods, homemade candles … the list goes on.
One way to be a successful seller is to think about what your customers want or need. For example, if you live in an area known for its tasty barbecue, consider selling your own dry rubs or barbecue sauce. Whatever you decide to sell, make sure that it’s unique to attract the most customers. Homemade, natural products are popular, but items like vintage clothing and shoes may also sell quickly. Whatever you do, just make sure that what you’re selling is allowed by your chosen market.
7 Ways To Prepare For Selling At A Farmers’ Market
Once you’ve decided that you want to sell at your local farmers’ market and you’ve decided what products you’ll be offering, the hard work is over, right? Not exactly. Whether your goal is to sell on occasion to earn some money on the side or you dream of bringing in a steady income by selling your goods to the community, there are some steps you need to take to help boost your chances for success.
Find Farmers’ Markets In Your Area: Once you know what to sell, the next step is to figure out where to sell it. And just like the unique products you’ll find from sellers, not all farmers’ markets are the same. Get a good idea of the culture, people, and products at each farmers’ market by visiting them yourself. Keep your eyes open for markets that have a need for what you’re offering, but don’t forget to find a farmers’ market that’s a good fit for you. For example, if there are no other artists and you’d feel uncomfortable selling your art, keep searching. If you’d like to bring your four-legged friend with you, look for a dog-friendly market. You can also turn to the internet to learn more about the farmers’ market in your city and surrounding areas. Look for official websites and social media profiles that feature pictures, posts, and information about each market. Finally, you should get an idea of the registration process. While this process varies across markets, you need to be aware that vendor registration windows aren’t always open, and you may have to sign up weeks, months, or even longer in advance to secure a spot. You can find this information online or talk to a manager in-person to learn more about signing up as a vendor.
Research Local Ordinances & Health Regulations: Nothing can bring your business to a halt faster than getting shut down by the health department or local authorities. Do your research to learn about local ordinances and health regulations, such as how produce and prepared food must be stored or how baked goods are prepared. Laws and regulations vary, so contact your local health department to learn more.
Make A Business Plan: Even if selling at a farmers’ market feels more like a hobby than a business, it never hurts to create a business plan before you get started. This business plan can be used to outline your goals, how you plan to finance your business, and your marketing plan. If you’re panicked at the thought of a business plan that’s an inch thick, don’t — a one-page plan is sufficient for keeping you on track. Don’t know where to get started? Learn how to create your one-page business plan in no time.
Get Startup Capital & Set A Budget: While selling at a farmers’ market can certainly be one of the more inexpensive ways to make money off your homemade goods, there are still some expenses to consider. One of the most common expenses is a booth rental fee. You need to consider other expenses, too — think signage for your booth, tablecloths and other items to spruce up your display, price stickers, and the cost of materials and packaging for samples. It sounds like a little, but these small expenses can add up quickly if you don’t watch out. Determine if you need to get financing before you start selling, set a budget, and stick to it. Want more tips? Check out our guide, How To Start A Side Hustle.
Look Into Business Registration: Depending on local regulations, you may be required to register your business before you take part in a farmers’ market. Some farmers’ markets require you to provide an Employer Identification Number (EIN) or Taxpayer Identification Number (TIN) when you register as a vendor. If an EIN is required, it’s easy to obtain one for free from the Internal Revenue Service. Contact the farmers’ market you’re interested in to learn more about the requirements for sellers.
Research Business Insurance: Some farmers’ markets require their vendors to have their own business insurance. Even if this isn’t a requirement, though, you still want to research your options to protect yourself from liability. If you’re unsure of how to get started, check out our article on general liability insurance for your business and contact your chosen farmers’ market to determine if insurance is a requirement. They may even be able to recommend local insurance companies that other vendors use.
Get Accounting Software: Even if you’re just making a little extra money on the side, do you really need accounting software? Yes, you do, and though it may seem like a pain now, you’ll thank us later. No matter how much you’re bringing in from your sales at a farmers’ market, it’s important to keep track of your finances. The best way to do that? Accounting software. The good news is that there are many options available that are low cost (or even free!) and easy to use, even if you have no prior accounting experience. Tracking your finances will help you see how much money you’re making, as well as where you’re spending it — allowing you to determine where you can make changes to increase your profits. You’ll also be glad that you kept track of finances when it’s time to pay your taxes. If you don’t know where to get started, take a look at some of our top accounting software choices for small businesses.
Should You Accept Credit Card Payments At Your Farmers’ Market Booth?
In a world where paying with plastic is quickly becoming the standard, you might be wondering if you should accept credit cards at your farmers’ market booth. Unfortunately, there isn’t a clear answer, but here’s what you should consider before making your choice.
Mobile point-of-sale (POS) apps make it easier than ever to accept credit cards. With your smartphone or tablet and a card reader provided by your chosen provider, you can accept debit and credit cards with ease without a bunch of heavy equipment and complicated systems. Some credit card readers are even available for no cost, and you could even score extras like stickers that advertise that your booth accepts debit and credit cards. There are lots of POS apps to choose from, so do your research on top choices like Square, SumUp, and PayPal Here.
On the flip side, though, you don’t have to accept credit card payments. Many farmers’ markets are prepared for customers that are paying with plastic, so they allow customers to purchase tokens which can be used to buy products from vendors. At the end of the day, these tokens can be redeemed so the seller gets their earnings. If you’re thinking of going the cash-only route, check out our article, Can You Really Run A Cash-Only Business?
If the farmers’ market you’ll be attending does not offer this service, you definitely want to consider getting a POS app and card reader so that you can serve all customers, regardless of how they’re paying. Mobile POS apps come with additional features that may be beneficial to your business, such as inventory tracking and sales reporting.
Another consideration to keep in mind is whether or not you’ll be taking larger orders or custom orders. If this is the case, you’ll need to have the ability to create invoices for tracking your orders and getting paid by your customers. Let’s say that the holidays are coming up, and you’ve been commissioned to make baked goods for a Christmas party. Before you invest your time and money into fulfilling the order, you can make sure you get paid by sending your customer an invoice that can even be paid online. Some mobile POS systems like Square Invoices allow you to create and send invoices, or you can use your accounting software if that feature is available.
Can You Accept Food Stamp/SNAP Benefits At A Farmers’ Market?
Statistics show that the Supplemental Nutrition Assistance Program (SNAP) helped 40 million Americans each month in 2018. This program — formerly known as food stamps — provides benefits that allow low-income households to afford food. SNAP participants are provided with an Electronic Benefits Transfer (EBT) card, which is used like a debit card at participating retailers. This includes grocery stores, convenience stores, and, yes, even farmers’ markets. This system makes it easy for you to accept EBT without having to jump through hoops.
Most farmers’ markets have a system in place that allows SNAP participants to purchase tokens with their EBT cards. These tokens can then be used to make purchases. Many states even reward SNAP participants for shopping at farmers’ markets with “double-up” programs. These programs match each dollar spent (up to a certain amount), allowing these households to receive more healthy and nutritious food using their benefits.
5 Clever Marketing & Promotion Tips For Your Farmers’ Market Stand
You’ve decided what to sell and where to sell it — now, it’s time to sit back and wait for customers, right? Wrong! While you won’t have to have a huge (and expensive) marketing campaign for your farmers’ market stand, there are some steps you need to take to make your business more appealing to shoppers.
Business Cards: A customer that isn’t interested in what you’re selling now may become a customer in the future, or you might have a customer that wants to spread the word about your business. Make sure that they can get in touch with you by passing out business cards. You can easily create business cards online and have them shipped to your door for a low price. Make sure to include critical contact information, including your name, the name of your business, your email address, social media or website links, and any other relevant information.
Email List: Allow your customers to sign up for an email list. There are lots of options for the emails you send, including new product announcements, upcoming sales, or your schedule if you attend multiple farmers’ markets and events. Mailchimp is one good option that’s free for small businesses.
Social Media: Social media isn’t just for connecting with overseas relatives and old classmates. Social media is a great outlet for advertising your business. Create a social media profile for your business and provide contact information, photos of your products, customer reviews, and important updates. You can also join groups in your area that allow you to interact with customers, take preorders, answer questions about your products, and more.
Dress Up Your Display: You can’t just throw your products on a table and expect them to sell. Sure, you may make a little bit of money, but to maximize profits, it’s time to pimp out your display. For this technique, you’ll have to invest a little bit of money, so make sure you budget and plan before implementation. Use signs, tablecloths, and decorations to make your space stand out. Arrange your products neatly and make sure that everything is labeled and priced correctly. This is your chance to really show off your personality, so take advantage of the opportunity to attract customers.
Offer Free Samples: Nothing in life is free — unless you’re a customer and businesses are giving out free samples. While providing samples of your products does come with some expenses, allowing your customers to try before they buy is a good way to get them interested … and have them reaching for their wallets. Provide small bites of your baked goods or testers for your natural lotions and body products. Before distributing your samples, make sure that you’re aware of all health regulations to keep your business in operations and provide a sanitary shopping experience for your customers.
Are You Ready To Start Selling At Farmers’ Markets?
On the surface, selling at a farmers’ market seems easy, but as you can see, there’s actually quite a bit of work that goes into planning, prepping, and selling your products. While it may take a lot of hard work and expense to sell your products and make a profit, there are many benefits to peddling your goods at farmers’ markets, including low costs, more personalized interaction with your customers, and creative freedom.
It’s up to you to determine if selling at a farmers’ market best fits your business goals. Once you’ve made the decision to move forward, we offer plenty of great resources to help you launch and operate your small business. From learning how to apply for a small business loan to choosing the right accounting software and POS systems, you’ll find everything you need to make your business dreams a reality. Good luck!
The post How To Sell At A Farmersâ Market (Plus 7 Clever Tips To Succeed Before You Even Get Started) appeared first on Merchant Maverick.
Being a first-time business owner can be a daunting experience. In addition to having to comply with a dizzying array of legal requirements, youâll also have to have at least a working knowledge of credit card processing, inventory management, and other topics. At one point or another, youâre going to encounter the term merchant services, and youâll want to know what it’s all about.
To put it in the simplest terms, unless youâre only going to accept cash and paper check payments in your business, youâll need to understand merchant services: what they are and where to get them from. Merchant services â and the providers who offer them â are essential to providing your customers with the largest range of convenient and secure payment methods. Signing up through a merchant services provider will â provided you choose the right one for your business â result in increased sales that more than offset the cost of those services.
In this article, weâll explain what merchant services are, and provide explanations of each of the primary products that are available from merchant services providers. Weâll also tell you how to find the best merchant services for your business, and what features you should look for in choosing a provider. Finally, weâll give you a brief overview of the best merchant services providers in the industry for small businesses, and explain which providers are the best choice for certain types of companies.
What Are Merchant Services?
The term âmerchant servicesâ can be confusing, because there are a lot of different definitions floating around out there, and they donât all agree on every detail. For our purposes, weâll define merchant services as the products and services a business needs to accept and process any form of payment other than cash or paper checks. This includes processing services for credit cards, debit cards, eChecks, ACH payments, and the newer mobile wallet services such as Apple Pay and Google Pay. It also encompasses hardware and software, such as credit card terminals, point-of-sale (POS) systems, payment gateways, virtual terminals, and mobile processing systems.
Note that there are also a variety of ancillary services that are often bundled with merchant services, including inventory management software, gift card/loyalty programs, online reporting features, merchant cash advances, and many others. These are not considered to fall under the rubric of merchant services, as theyâre not strictly necessary to enable your business to process credit card transactions. They can still be pretty useful, however.
Where do you go to get merchant services? Why, to a merchant services provider (MSP), of course! Again, the term âmerchant services providerâ is an umbrella term that covers any type of business offering merchant services. However, there are really two main types of merchant services providers: (1) merchant account providers, who offer true full-service merchant accounts with a unique merchant identification number for your business, and (2) payment services providers (PSPs), who offer credit card processing services, but donât provide a true merchant account. PSPs aggregate your account with that of other businesses using their services â a low-cost solution that can be very affordable for a small business thatâs just starting out.
Hereâs a brief description of the primary merchant services that your business will need to accept credit cards, debit cards, and eCheck/ACH payments:
Credit/Debit Card Processing: Of all the merchant services you might want to add to your business, credit (and debit) card processing is obviously the most important one. If a customer pays for a purchase with a credit card, youâll undoubtedly want some cold, hard cash to make its way into your bank account â and that wonât happen unless you have a service to process the transaction. As weâve noted above, you can get credit card processing through either a merchant account provider or a payment services provider (PSP). In either case, your provider will usually rely on a larger, direct processor (also called a backend processor) to approve and process transactions. While large direct processors such as First Data and Elavon offer merchant services, they arenât good choices for a small business. Popular payment services providers (PSPs) include Square (see our review) and Stripe. Traditional merchant account providers are much more numerous, with Dharma Merchant Services (see our review), National Processing (see our review), and Payment Depot (see our review) among the best choices for small and medium-sized businesses.
eCheck/ACH Processing: In addition to accepting credit and debit cards, you might also want to allow your customers to pay by check. While old-fashioned paper checks are rapidly declining in popularity, they can be accepted without the need for a check processing service. However, youâll have to take the check to the bank yourself, wait for it to clear, and hope that it doesnât bounce. eCheck and ACH (Automated Clearing House) payments bring advanced security and convenience to paying by check, allowing you to scan physical checks for processing or accept an ACH payment from a customer on your website. While some providers include these features with every merchant account, itâs more common for them to be offered as optional add-ons. In this case, youâll usually pay an additional monthly fee (typically around $20 – $30) for the service. For more information about these alternative payment methods, see our articles Everything You Need To Know About Accepting ACH Payments and The Complete eCheck Payment Guide.
Credit Card Terminals: Obviously, youâre going to need some type of physical credit card terminal to accept card-present transactions in a traditional retail setting. Options range from simple mobile card readers that require a smartphone or tablet (and the appropriate app) to function all the way up to complex point-of-sale (POS) systems that also include a variety of software features to help you run your business. While magstripe technology was the only option for many years, today EMV (i.e., chip card) is the standard acceptance method in the United States, Canada, and Europe. We also recommend that you seriously consider investing in hardware that also accepts NFC-based payment methods such as Apple Pay and Google Pay, as theyâre rapidly gaining in popularity and offer a higher degree of security than either magstripe or EMV. We also recommend that you buy your equipment outright. Terminal leases are wildly over-priced and should be avoided at all costs. Buying your hardware directly from your processor is usually the best option, but in some cases, you can save money by buying from a third party and having your equipment reprogrammed by your provider. For an overview of some great equipment options, see our article The Best Credit Card Machines And Terminals.
Point-Of-Sale (POS) Systems: As weâve mentioned above, a POS system is basically a credit card terminal with additional integrated software services built-in. Inventory management is a popular option, but there are also software add-ons for employee management and scheduling, online reporting, customer information management, and many others. While a POS system is a worthwhile investment for some businesses (such as restaurants), theyâre overkill for others. Beware of sales representatives trying to sell you a POS system if your business doesnât really need one. For more information on how to select a POS system thatâs right for your business, see our article POS 101: Choosing A POS System.
Payment Gateways: If your business has an online presence and makes sales through your website, youâre going to need a payment gateway to process those transactions. Payment gateways essentially perform the same function as physical credit card terminals, connecting your customerâs payment information with your providerâs processing network to approve the transaction and send you the money from the sale. Because not all merchants need a payment gateway, theyâre often offered as a separate feature (with an additional monthly gateway fee). However, itâs becoming increasingly common for providers to offer a gateway thatâs part of an integrated payment processing system designed to support both retail and eCommerce sales channels. For more information on what to look for in a payment gateway, see our article The Complete Guide To Online Credit Card Processing With A Payment Gateway.
Virtual Terminals: Used primarily by mail-order or telephone-order businesses, a virtual terminal is a software application that allows a laptop or desktop computer to function as a credit card terminal. Transactions can be manually keyed in or swiped/dipped with a compatible card reader (these usually connect via USB or Bluetooth). Retail merchants should be aware that, in most cases, youâll pay significantly higher processing rates if you manually enter the card data rather than using a card reader.
Integrated Payment Platforms: One common complaint we hear from merchants is that they often have to sign up with one vendor for a merchant account, another vendor for a payment gateway that has the special features they need, and possibly other vendors for things like online shopping carts or POS systems. Merchant services providers are well aware of this problem, and in recent years theyâve started to offer integrated, cloud-based processing systems that combine all these separate features into a single product. Obviously, they have a vested interest in keeping you tied to their particular ecosystem. However, there are genuine benefits to this approach for merchants as well. You wonât have to worry about compatibility problems or dealing with multiple customer service departments to keep everything humming along. Integrated systems can also (usually) save you money over signing up with multiple service providers. Finally, having all your business data accessible through the cloud is a significant advantage, even for smaller retail-only merchants who donât have a website. At the same time, youâll want to ensure that a vendorâs integrated system has all the features you need for your business before signing up.
Security & Fraud Prevention Features: Ensuring the security of your customersâ credit card data is essential for any business â retail, online, or a combination of the two. Obviously, you also want to take every step possible to minimize the chances of a fraudulent transaction. Security features such as tokenization and encryption protect your customersâ payment data and reduce the chances of experiencing a data breach. For online companies, fraud prevention features such as Address Verification Service (AVS) and card verification features such as CVV, CVV2, or CVC should be available through your provider at a minimum.
For more in-depth information on merchant services and merchant services providers, please refer to the following articles:
What Is A Merchant Services Provider?
What Is A Payment Service Provider?
What Is A Merchant Account?
High-Risk Merchant Services
Finding a good merchant services provider is challenging enough, but itâs even harder if your business is considered high-risk by the processing industry. What does it mean to be high-risk? Basically, certain business types are considered to be a riskier underwriting proposition by processors, and theyâll either refuse to give you a merchant account or put you in a high-risk account that invariably will be more limited and more expensive than what a comparable low-risk business would receive.
Besides being in an inherently high-risk business type (i.e., vape shops, online gambling, etc.), you can also find yourself in the high-risk category if you have an unusually high chargeback rate or your personal credit isnât so great. Fortunately, high-risk merchant service providers are available to serve your business. These providers usually work with a variety of banks (some of them located offshore) and direct processors to get you approved for an account. Your processing rates will be higher, and the terms of your contract wonât be so generous, but youâll have access to a stable account and youâll be able to accept credit and debit cards without any problems.
If youâre having particular difficulties in finding a high-risk account, you might want to consider an eCheck/ACH-only option. We only recommend this option for merchants who have been truly unable to get a merchant account, as youâll potentially lose sales when your customers find out that they canât use their credit cards.
For more details about high-risk industries and high-risk processing, check out our article Are You A High-Risk Merchant?.
How Do You Find Great Merchant Services?
Over the years, the question weâre most frequently asked is some variation of âWhatâs the best provider for my business?â Unfortunately, the sheer number of variables involved usually makes this question difficult to answer. As a very general rule, the best merchant services provider for your business is the one that offers the best combination of features, low processing rates, reasonable account fees, and favorable contract terms. In many cases, this might be such a close call that several providers might be able to offer you a good deal, without any single one standing out above the others.
One point we continually try to impress on merchants is that the best provider for your business is not necessarily the one with the lowest processing rates â or even the lowest costs in general. The most important thing to look for is a provider that offers the best overall value. Things like high-quality customer service are often worth paying a little extra for in the long run.
As a general rule, weâd also point out that payment services providers (PSPs) are usually a better value for small or newly-established businesses, while merchant account providers are more suited to medium-sized or larger companies that have been around for a while and have an established processing history. Signing up with a PSP is usually a good idea when youâre just starting out, but at some point, youâre going to reach a level where youâll need the stability and security of a true merchant account. It will probably cost you less money as well, as lower processing rates become more important as your monthly processing volume increases.
If youâre looking for a good merchant services provider, the resources available here at Merchant Maverick are an excellent place to start. Weâve reviewed almost all of the major players in the industry, and can give you an in-depth look at the pluses and minuses of each provider. As a starting point, we recommend that you look over our Merchant Account Comparison Chart, which compares several of the top-rated providers side-by-side.
How Much Should You Pay For Merchant Services?
No one likes to overpay for anything, and the merchant services industry makes it all too easy to pay too much without even realizing it. With complicated processing rate plans, highly-variable account fees, and surprise incidental fees that can show up on your processing statement without warning, figuring out whether youâre getting the best deal can be very difficult. If youâre new to payment processing, youâll want to evaluate pricing information and rate quotes from several providers before picking one to use for your business. This is also true if you already have a processing service and are thinking about switching to a (hopefully) less expensive provider.
Below is a quick overview of the various processing rate plans that will be the single most significant factor in determining your overall costs. Be aware that different pricing models will be more cost-effective for some businesses than others. Youâll want to have a good idea of your total monthly processing volume and your average ticket size to make valid comparisons between different providers.
Flat-Rate Pricing
The simplest pricing structure is flat-rate pricing. Despite the name, none of the providers offering this type of pricing actually use just a single rate for all transactions. However, youâll usually have only two or three rates to be concerned with, making your costs stable and predictable. Merchant services providers offering flat-rate pricing typically have a single rate for all card-present transactions, and another rate (or two) for card-not-present transactions. Often, there will be a higher rate charged for card-not-present transactions that have been manually keyed-in, rather than processed over a payment gateway.
Flat-rate pricing works best for very small businesses, mostly because you usually wonât have to pay any additional account fees. Be aware, however, that the flat rates themselves are often significantly higher than what youâd pay under an interchange-plus or subscription-based pricing plan (see below). For this reason, flat-rate pricing is usually not a good deal once your monthly processing volume exceeds a certain amount (typically around $10,000 per month).
Payment services providers (PSPs) usually offer flat-rate pricing as their only processing rate option. Popular providers offering this type of pricing include Square (see our review), Stripe, and PayPal.
Interchange-Plus Pricing
Arguably the most cost-effective pricing method for medium-sized businesses, interchange-plus pricing passes your transactionsâ interchange fees on at cost and also includes a fixed markup for your provider. For example, a typical interchange-plus rate quote might look like interchange + 0.30% + $0.15 per transaction. While the underlying interchange rates themselves can vary wildly, this pricing method is more transparent than others because youâll always know exactly how much of a cut your provider is taking.
Interchange-plus pricing is usually only available through a merchant account provider offering a full-service merchant account. Because these types of accounts also typically have a number of monthly and annual fees, they arenât the best choice for very small businesses. Depending on the provider and the particular details of your business, the threshold where youâll start to save money with interchange-plus pricing can be anywhere from $1,500 to $10,000 in monthly processing volume.
Popular providers offering interchange-plus pricing include Dharma Merchant Services and National Processing, among others. While these two companies offer interchange-plus rates exclusively, many run-of-the-mill providers offer a combination of tiered and interchange-plus pricing plans. Unless you specifically negotiate for an interchange-plus plan, youâll usually be given a tiered pricing plan. Although itâs still the most common type of pricing plan in the processing industry, we donât recommend tiered pricing under any circumstances because it makes it impossible to determine how much of a markup your provider is charging for each transaction. Itâs also the most expensive type of rate plan, in most cases.
Membership (Or Subscription) Pricing
A variation of interchange-plus pricing, membership pricing has only been available for a few years from a small number of providers. Pricing is similar to interchange-plus, except that you donât pay a percentage of each transaction as part of your processorâs markup. Thus, a typical membership pricing quote might be interchange + $0.15 per transaction. However, thatâs not all youâll pay. Membership pricing also includes a monthly membership fee that ranges from as little as $49 per month to as high as $199.00 or more per month. This fee combines all of your other account fees into a single charge, plus includes an extra amount to cover the per-transaction percentage markup that you otherwise wouldnât be paying.
Membership pricing isnât for everyone. The high monthly membership fee makes it particularly unsuitable for very small or seasonal businesses. However, high-volume businesses can save a substantial amount of money over what theyâd pay with a traditional interchange-plus pricing plan. In some cases, these savings can amount to several hundred dollars per month.
If youâre interested in seeing whether membership pricing is right for you, we highly recommend both Fattmerchant (see our review) and Payment Depot (see our review). Both of these companies provide excellent service and a full set of features to fulfill the needs of any business.
Monthly Billing VS Pay-As-You-Go
Most merchant services providers use one of two billing methods: (1) monthly billing, or (2) a pay-as-you-go billing model. With monthly billing, youâll pay a variety of separate fees for each service included with your account. These fees will be deducted once a month, at the end of your billing cycle. The processor will deduct any processing fees before sending the funds to your bank account, but if you have a statement fee, software subscription fees, etc. those will be billed at the end of the cycle. Pay-as-you-go billing, on the other hand, doesnât have monthly fees. Youâll only pay for the transactions that you actually process, and those fees are deducted before the processor deposits your funds in your bank account. If you don’t process anything in a month, you won’t pay anything — which is not true of a monthly billing plan.
If you sign up with a traditional merchant account provider, you can expect to be on a monthly billing plan, regardless of whether youâre on a long-term contract or a month-to-month arrangement. Payment services providers, on the other hand, usually use a pay-as-you-go model. This lowers costs for small businesses and also is the best option for seasonal businesses that arenât running year-round. Despite the additional fees, a monthly billing plan can actually save medium-sized or larger businesses money due to the cost savings of using an interchange-plus or membership pricing plan.
The Best Merchant Services For Small Businesses
As weâve noted above, some merchant services providers are a better fit for certain types of businesses than they are for others. Below, weâll briefly introduce our top picks for the most common types of businesses. Note that if your business falls into one of the categories described below, the provider we list wonât be the only good choice available to you. Rather, theyâre generally the best choice for most businesses that are similar to yours. If youâre interested in one of these providers, be sure to read the full review to learn more about them before deciding to sign up.
Vendor
Best For
Monthly Fee
Retail Rate
Online Rate
Contracts
Payment Depot
Mid-sized businesses ($10k-$25k/month)
$49-$199
0% + $0.15 markup*
0% + $0.15 markup
Month-to-month
Fattmerchant
High-volume businesses ($25k+/month)
$99-$199
0% + $0.15 markup*
0% + $0.15 markup
Month-to-month
Dharma Merchant Services
Non-profits
$20
0.15% + $0.07 markup*
0.20% + $0.10 markup
Month-to-month
Square
Micro-merchants & low-volume
$0.00
2.6% + $0.10 total
2.9% + $0.30 total
Month-to-month
PaymentCloud
High-risk businesses
Varies
Varies
Varies
Varies
PayPal
Online businesses
2.70%
2.9% + $0.30 total
$0.00
Month-to-month
Stripe
Tech-driven businesses
N/A
2.9% + $0.30 total
$0.00
Month-to-month
*Markup over standard interchange and assessment rate with interchange-plus pricing (our preferred pricing plan for transparency of fees).
Best For Micromerchants & Low-Volume Businesses: Square
Square (see our review) has been around since 2009, and has quickly become the leading choice for small businesses looking to accept credit cards with a minimum of fuss and paperwork. Square offers flat-rate pricing and uses a pay-as-you-go billing method that doesnât include any additional monthly account fees (unless you sign up for one of their optional services).
Square
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Squareâs most common processing rates are as follows:
2.75% for all retail and mobile (card-present) transactions
2.9% + $0.30 per transaction for all online (card-not-present) transactions
3.5% + $0.30 per transaction for all manually entered (also card-not-present) transactions
If youâre looking to minimize your up-front costs, Square offers a free mobile card reader that plugs into your smartphone or tablet. However, itâs magstripe-only. We highly recommend that you upgrade to either the $35 EMV-enabled reader or the $49 contactless + chip reader, which adds NFC compatibility and Bluetooth connectivity.
The company has expanded its services tremendously over the last ten years, and now offers far more features than we can discuss here. However, itâs still an excellent choice for merchants looking for a simple, low-cost solution. Squareâs flat-rate pricing is more expensive on a per-transaction basis than interchange-plus, but you’ll save money overall due to the lack of extra account fees. This pricing structure works best for businesses processing less than $3,000 per month, in most cases.
Best For Mid-Sized Businesses ($10K-$25K/Month): Payment Depot
For larger businesses with a stable processing history that need to upgrade to a full-service merchant account, Payment Depot (see our review) is an excellent choice. The company offers membership-based processing rates, true month-to-month billing, and a full range of products and services for retail or online businesses.
Payment Depot
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Membership fees at Payment Depot range from $49 per month up to $199 per month, depending on your monthly processing volume. This single fee covers all your merchant services, so thereâs nothing extra to have to pay. You can also receive a significant discount for paying your membership fees on an annual, rather than monthly, basis.
The companyâs processing rates start at a simple interchange + $0.15 per transaction, and go down with higher monthly processing volumes. There are four basic membership plans, which are tied to your monthly processing volume. For really large businesses, thereâs also a custom pricing option.
As long as your monthly processing volume is high enough that membership-based pricing makes sense for your business, Payment Depot is an excellent choice that will save you a significant amount of money over traditional merchant account providers. Just be aware that the company only serves US-based merchants, and they donât accept high-risk businesses.
Best For High-Volume Businesses (Over $25K/Month): Fattmerchant
Fattmerchant (see our review) also offers a membership-based pricing plan. However, their membership fees are high enough that their pricing structure only works well for an established business with a significant monthly processing volume.
Fattmerchant
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The companyâs membership fees start at $99 per month for businesses processing under $500,000 per year. Above this amount, youâll pay $199 per month. Bear in mind, however, that this one fee covers everything the company provides â unlike traditional vendors who nickel and dime you for every âextraâ service they provide. Processing rates start at interchange + $0.15 per transaction, with lower rates available for higher processing volumes.
Because of the steep monthly subscription fee, Fattmerchant isnât cost-effective for small businesses with a low monthly processing volume. However, if your volume is high enough, you can potentially save hundreds of dollars a month under this pricing structure. All accounts are billed on a month-to-month basis with no early termination fee (ETF), so you can always switch processors if things arenât working out.
Fattmerchant is an excellent choice for businesses that are large enough to benefit from the companyâs pricing structure. They offer excellent customer service and a terrific cloud-based integrated payments platform that will have you up and running in no time. However, they donât accept high-risk merchants, and theyâre only available in the United States.
Best For Online Businesses: PayPal
For a newly-established eCommerce business, you canât go wrong with PayPal. Pay-as-you-go billing means that, in most cases, youâll only pay for your transactions â and nothing else. Note, however, that the companyâs virtual terminal comes with a hefty $30 per month fee, so theyâre not such a great choice for a mail-order or telephone-order business.
PayPal
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PayPalâs flat-rate pricing structure couldnât be any simpler. Online transactions are always 2.9% + $0.30 per transaction, while manually entered and virtual terminal payments are 3.5% + $0.15 per transaction. The companyâs PayFlow Gateway comes bundled with every account, allowing you to quickly and easily integrate it with your website. There are no additional gateway fees, either.
While PayPal is a great choice for a small online business, be aware that the companyâs high processing rates will no longer be cost-effective once your business grows beyond about a $3,000 per month processing volume. At that point, you should seriously consider upgrading to a true merchant account with one of our other recommended vendors. Also, PayPal has relatively limited customer service options and doesnât serve high-risk businesses.
Best For Tech-Driven Businesses: Stripe Payments
If your business is 100% online and you donât plan to ever expand into the retail sector, Stripe Payments is a great choice for your payment processing needs. The company offers simple flat-rate pricing, pay-as-you-go billing with no monthly fees, and a host of developer tools for integrating their platform into your website.
Stripe Payments
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Pricing couldnât be more straightforward. All eCommerce credit and debit card transactions are charged 2.9% + $0.30 per transaction. International cards are also charged an additional 1.0% if currency conversion is needed. ACH payments are charged 0.8%, with a maximum charge of $5.00 per transaction.
As with any payment services provider, account approval is easy and can be accomplished online. However, the chance of later having your account shut down for any number of reasons is also higher. Stripe does a better job than most PSPs when it comes to customer service, offering live chat and telephone support on a 24/7 basis.
Overall, Stripe is a great choice for fledgling eCommerce businesses. Just be aware that your account wonât be as stable as a true merchant account, and the companyâs flat-rate pricing isnât cost-effective at higher processing volumes. Itâs also not available for high-risk merchants.
Best For Nonprofits: Dharma Merchant Services
Nonprofit businesses looking for a full-service merchant account will have a hard time finding a better choice than Dharma Merchant Services. One of our favorite processors, the company seems to be run like a nonprofit itself sometimes. Of course, itâs actually a public benefit corporation (B-corp), something thatâs almost unheard of in the processing industry.
Dharma Merchant Services
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Whether youâre a nonprofit or not, Dharma offers full-service merchant accounts that are billed on a month-to-month basis to all its users. There are no long-term contracts and no early termination fees (although you will have to pay a one-time account closure fee of $25 if you close your account). For nonprofits, the company offers special interchange-plus processing rates of interchange + 0.15% + $0.07 per transaction for retail transactions and interchange + 0.20% + $0.10 per transaction for eCommerce transactions.
Dharma offers a full range of products and services, including the popular Clover lineup of terminals and point-of-sale (POS) systems. The company also provides some of the best customer support in the industry. However, be aware that their pricing structure works best for merchants processing over $10,000 per month, and they donât support international or high-risk businesses.
Best For High-Risk Businesses: PaymentCloud
If youâve read this far, youâve probably noticed by now that most of our top choices for merchant services donât support high-risk businesses. Fortunately, if youâre in the high-risk category, there are high-quality vendors out there that specialize in serving the high-risk community and provide excellent services at a reasonable cost. PaymentCloud is one of our favorites due to their reputation for top-notch customer service and because they offer many features that are typically reserved for low-risk merchants only.
PaymentCloud
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Unlike many of our other top providers, PaymentCloud doesnât disclose their processing rates or account fees on their website. Because they work with a wide variety of banks and direct processors to get you an account, pricing is highly variable and subject to negotiation. While they have a reputation for fair pricing, you can expect to pay more than what a comparable low-risk business would pay. However, this is true with any high-risk merchant account provider.
The company offers a free credit card terminal with each account, which you can use for as long as you keep your account open. They also donât charge an account setup fee, which also helps to set them apart from most traditional high-risk providers. Finally, PaymentCloud is one of the few providers to offer support to the burgeoning CBD oil industry. However, they only allow CBD products that are applied externally â no food items or other ingestibles. If youâve had a hard time finding a merchant account for your high-risk business, be sure to check them out!
If youâre looking for additional options beyond the providers weâve profiled above, check out the following articles for more great choices:
The 5 Best Small Business Credit Card Processing Companies
The Cheapest Credit Card Processing Companies For 2019
How To Accept Credit Card Payments For Your Small Business
The Final Word On Merchant Services
Merchant services can be a complicated subject, and finding a merchant services provider thatâs a good fit for your business is often a real challenge. Youâll want to carefully evaluate the unique needs of your business, and factor in how much you can afford to pay to add the capability to accept credit and debit cards. In most cases, the added expense will more than pay for itself in additional sales.
All of the vendors weâve profiled above are excellent choices in their particular niche. However, they arenât the only good choices out there. So, we encourage you to look over the articles weâve linked to, and carefully read the full reviews of any vendor youâre considering. Most of the best merchant services providers for small businesses offer a very transparent disclosure of their processing rates and account fees on their websites, so check those out as well.
If youâre still having trouble deciding which company is best for you, youâll want to actually âcrunch the numbersâ and make a more informed analysis of what your potential costs will be. An excellent resource for doing this is our Cost Analysis Workbook, which will walk you through the steps necessary to estimate your overall costs with various providers. The workbook also includes spreadsheets to do the math for you â it couldnât be easier!
The post Everything You Need To Know About Merchant Services 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.
Payment Depot
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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.
Square
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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.
Check Out Our Preferred Credit Card Processors ðVisit Site
Read Review
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No early termination fee
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Pricing model
Interchange-plus*
Interchange-plus*
Interchange-plus*
Interchange-plus*
Rate matching / Negotiable
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Next Steps
Visit Site
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*All of our preferred processors use fully transparent Interchange-plus pricing.
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We’ve done in-depth research on each and confidently recommend them.
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.
Zoho is a software company that has a suite of products designed to help business owners get their businesses up and running online. Their website builder, Zoho Sites, is an all-inclusive website builder, which means it includes everything you need to create your site (from the builder itself to the hosting).
See Zoho’s Current Plans & Pricing
Recently, I gave Zoho’s website builder a try for a full Zoho Sites Website Builder review. But before I get into the pros and cons of my review, let’s dive into an overview about tools to build a website.
There are so many considerations to take into account when choosing a website builder — and really, there are a thousand ways to get what you want in the end in terms of functionality, convenience, pricing, etc. The thing to remember is: whether you’re building a simple personal website or running a business, the way you build your site has a lot of consequences.
In the long-term, it affects your versatility, functionality, and, of course, your brand. In the short-term, it can certainly add/take away a lot of headaches. That said, just like choosing a physical house or office, there is no such thing as an absolute “best” or “top” choice. There’s only the right choice relative to your goals, experience, and circumstances.
What Is Zoho Sites?
On the wide spectrum of website building solutions, Zoho Sites lives on the end that is all-inclusive and provides everything you need to get started and grow your website. It contrasts with solutions where you buy, install, and manage all the “pieces” of your website separately.
Using Zoho is sort of like leasing and customizing an apartment in a really classy development instead of buying and owning your own house. You’re still in control of decor, cleaning, and everything living-wise – but you leave the construction, plumbing, security, and infrastructure to the property owner. That point is key because there’s usually a direct tradeoff between convenience and control.
Everything may fit together just right with a website builder like Zoho, but that may or may not be what you’re looking for.
As far as competition, Zoho Sites competes with all-inclusive website builders like GoDaddy, Wix, Squarespace, Jimdo, Yahoo!, Strikingly, and WordPress.com.
Compared to their direct competition, they focus on ease of use and integration with their plethora of Zoho products. Zoho offers several website templates you can customize with no coding or design experience required, and also gives you the opportunity to integrate with their marketing and optimization tools.
One other quick aside – a disclosure – I receive referral fees from all the companies mentioned in this post. My opinions & research are based on my experiences as either a paying customer or consultant to a paying customer.
Pros of Using Zoho Sites Website Builder
Here’s what I found to be the pros of using the Zoho Sites website builder — not just in comparison to direct competitors like GoDaddy and Wix, but as an overall website solution.
Easy Sign Up Process, Onboarding, + Free Trial
One of the biggest pros of using Zoho Sites is how easy it is to get up and running on the platform. It’s a few basic steps of entering your information, picking a theme, and then you’re in.
Zoho also makes it incredibly easy once you’re inside the platform. Their onboarding process (AKA the information they give you to get you up and running and actually using the software) is very straightforward.
They walk you through a step-by-step tutorial of how to customize your website as soon as you choose a theme.
The entire process makes it easy to get your website up and customized in a matter of minutes, even if you have no online experience.
Zoho also offers a 15-day free trial when you sign up, and they don’t require a credit card to use it. Most software providers offer a “test run” of their products, but it comes with caveats. You either have to choose a plan upfront and enter your card info to be automatically charged when the trail is over, or have limitations on your features, or both.
Zoho allows you to truly test out their platform for 15 days before you make a decision — no strings attached.*
*Note – so technically, you’d have to sign up for some of their product integrations if you want to implement them in the free plan. I still consider it no strings attached, because you get all of the basic functionality / inclusions in the free trial.
Template Design / Functionality
When I’m looking at all inclusive website builders, I want to be sure I look at both the templates’ design and functionality to get an accurate picture of what the builder can do.
Zoho also offers a wide selection of template designs that are responsive (AKA they look good on a mobile device, tablet, and computer). They have a lot of variable designs that you can use as the foundation of your website.
Once you choose a template, you can customize it to your brand. Zoho is what’s known as a “drag and drop” editor, where you can “drag” premade sections and “drop” them on your page. It makes customizing your site simple, straightforward, and fast.
With Zoho, can customize the styles on the page (like fonts and colors), as well as the individual sections, and you can add new elements to a section layout. However, you can’t create a new section from scratch using the drag and drop editor.
You can, however, customize your template using the CSS and HTML editor, which is a big benefit if you have coding experience but want to use a template as a starting point.
All in all, Zoho’s Website Builder has a great balance of convenience and control in terms of template design, which is a big plus for an all-inclusive website builder.
Some Product Integration
Another thing that makes Zoho’s Website Builder unique is their product integrations. Zoho has their own CRM, Marketing, and Analytics products, and these integrations are easily accessible in the site builder.
One thing to note — these additional integrations / functionality are all part of paid plans (more on that in a bit).
This isn’t necessarily a con, but it is something to pay attention to… especially because you can find a lot of this functionality for less with other website builders (particularly if you went the self-hosted WordPress route).
Cons
Of course, no review would be complete without looking at the downsides. Every piece of software will have complaints. Let’s look at the specific cons I found with using Zoho Sites as your website builder.
Pricing + Plans
While Zoho is fairly easy and convenient for DIYers and business owners, they do leave a lot to be desired when it comes to pricing. All of their plans come with some sort of limitation, whether it be pages, storage, or even the number of forms you can have on a site.
It’s also worth noting that Zoho doesn’t offer a free plan. There’s a free trial, which lasts for 15 days, but if you want to continue on with their service, you have to choose from one of the paid plans.
Again, this isn’t necessarily a “con”, but if you’re looking for a website builder for a short-term project, you can probably find a builder with similar features who offers a standard free plan (ie, Wix or Weebly).
Limited Feature Set – Technical
Technical limitations are features that you don’t know that you want until you want them, and then you find out you can’t have them.
These are things like integrations with Facebook, Pinterest, Twitter, Google Ads, social sharing options, blogging, and a whole host of every intermediate to advanced marketing tools on the internet.
Now, as I mentioned above, Zoho does include some product integration that’s built-in (like their CRM) or can be added on (like their MarketingHub). But when it comes to outside integrations, Zoho is fairly limited.
For example, let’s take a look at their apps:
There isn’t much to built-in from an integration perspective outside of what Zoho offers in their product suite, and even then, there’s not a ton of clarity around what these features actually are or do.
Now, you could add your own integrations through code snippets. However, if you want something that you can easily “plug in” to your site and have it just work without you messing with code, then Zoho leaves a lot to be desired.
Zoho Review Conclusion
Zoho makes getting your website up and running simple and fast, and they also offer substantial customization options for more experienced website builders through their HTML and CSS editing.
See Zoho’s current pricing plans here.
However, like most all-inclusive website builders, there does come a point where there’s a tradeoff between convenience and control, especially when you factor in price. Zoho’s pricing leaves something to be desired, especially when you get into the higher priced plans and take into account the technical limitations, even with the higher priced options. If you’re looking for something that offers more control and scalability, you’re better off elsewhere.
Not sure Zoho fits your needs? Check out my quiz to find what the best website builder is for you based on your preferences.
The post Zoho Sites Website Builder Review: Pros, Cons, and Alternatives appeared first on ShivarWeb.
Strikingly is an all-inclusive website builder that’s tailored to helping entrepreneurs get up and running online quickly and easily. They’re platform requires zero code or design skills, meaning even those with no website experience can create a good-looking site in minutes.
See Strikingly’s Current Plans & Pricing
Recently, I gave Strikingly a try for a full Strikingly Website Builder review. But before I get into the pros and cons of my review, let’s dive into an overview about tools to build a website.
There are so many considerations to take into account when choosing a website builder — and really, there are a thousand ways to get what you want in the end in terms of functionality, convenience, pricing, etc. The thing to remember is: whether you’re building a simple personal website or running a business, the way you build your site has a lot of consequences.
In the long-term, it affects your versatility, functionality, and, of course, your brand. In the short-term, it can certainly add/take away a lot of headaches. That said, just like choosing a physical house or office, there is no such thing as an absolute “best” or “top” choice. There’s only the right choice relative to your goals, experience, and circumstances.
What Is Strikingly Website Builder?
On the wide spectrum of website building solutions, Strikingly lives on the end that is all-inclusive and provides everything you need to get started and grow your website. It contrasts with solutions where you buy, install, and manage all the “pieces” of your website separately.
Using Strikingly is sort of like leasing and customizing an apartment in a really classy development instead of buying and owning your own house. You’re still in control of decor, cleaning, and everything living-wise – but you leave the construction, plumbing, security, and infrastructure to the property owner. That point is key because there’s usually a direct tradeoff between convenience and control.
Everything may fit together just right with a website builder like Strikingly, but that may or may not be what you’re looking for.
As far as competition, Strikingly competes with all-inclusive website builders like GoDaddy, Wix, Squarespace, Jimdo, Yahoo!, and WordPress.com (and Shopify for online stores).
Compared to their direct competition, they focus on speed and ease of use. Strikingly offers several website templates you can customize with no coding or design experience required (more on that in a bit).
One other quick aside – a disclosure – I receive referral fees from all the companies mentioned in this post. My opinions & research are based on my experiences as either a paying customer or consultant to a paying customer.
Pros of Using Strikingly Website Builder
Here’s what I found to be the pros of using Strikingly website builder — not just in comparison to direct competitors like GoDaddy and Wix, but as an overall website solution.
Straightforward Sign Up Process
One of the biggest pros of using Strikingly is how easy it is to get up and running on the platform. It’s basically just two steps — enter your information, pick your theme, and you’re in!
This is great for DIYers who want to get up and running as quickly as possible without the hassle of creating a detailed account, selecting a niche, etc.
Template Design / Functionality
Strikingly also offers a wide selection of template designs that are responsive (AKA they look good on a mobile device, tablet, and computer). There are a wide variety of options to choose from, and Strikingly has them broken down by niche, so you can find a template that includes the functionality your business may need.
Now, Strikingly isn’t technically drag-and-drop (where you choose from premade sections and “drop” those onto your page), but it is fairy intuitive to use. You can customize the styles on the page (like fonts and colors), and you can add premade sections and blocks, but you don’t get the ability to add elements willy nilly.
The whole setup is like painting by numbers.
There are obvious drawbacks to this setup, which I will cover in the disadvantages, but it is a real advantage to having limited but accessible design options. It makes Strikingly a great option for entrepreneurs/ DIY-ers who want a website that looks professionally designed without having to hire someone to build something custom or spend much time tweaking the design themselves.
Free Trial + Free Plan
Another benefit Strikingly is their 14-day free trial and free plan.
Strikingly allows you to trial any plan (even their highest-tiered option!) for 14 days before committing. This is great for DIYers who want to give a plan a test drive before committing.
They also offer a free plan, which includes a fair amount of features when compared to competitors, such as unlimited sites and limited ecommerce functionality.
There are some cons with the free plan, such as limited storage, limited pages, having to use a subdomain (ex: yourname.strikingly.com), and extremely limited integrations — but if you’re looking for a simple site for a short-term project, this could be a solid option.
Some Product Integration
While limited, Strikingly does offer some product integration, such as ecommerce functionality and apps in their app store (which give you the ability to add maps, forms, and other functionality to your site).
You can also add on custom email for an additional $25/year. One thing to note — these additional integrations / functionality are all part of paid plans. This isn’t necessarily a con, but it is something to pay attention to… especially because you can find a lot of this functionality for less with other website builders (particularly if you went the self-hosted WordPress route).
Cons
Of course, no review would be complete without looking at the downsides. Every piece of software will have complaints. Let’s look at the specific cons I found with using Strikingly as your website builder.
Pricing + Plans
While Strikingly is fairly easy and convenient for DIYers and small businesses, they do leave a lot to be desired when it comes to pricing. All of their plans come with some sort of limitation, whether it be domains, the number of “pro” sites you can publish, or even storage.
You also can’t access the VIP plan on the monthly payment option. Again, this isn’t inherently a con… unless you need the VIP features and want to pay monthly. Then you’re out of luck. The price also changes based on how long you commit to, which is a pro if you’re looking for a long-term solution, and a con if you’re looking for a short-term solution.
Limited Feature Set – Design
With any technology product, there is almost always a trade-off between convenience and control (think Android vs. iOS)
And you can really see this trade-off with the Strikingly website builder. The convenience of their design setup is great. It’s straightforward and fast, and puts your focus on getting your content into a premade template. You can add pages and sections based on your specific needs, but for the most part, it’s got everything you need.
However, if you want to go anywhere beyond the basics of design, you are limited with the builder. You can’t add anything within the premade sections, you can’t create your own sections, and the elements you can change on the overall template are fairly limited.
If your website is growing, or becoming a bigger part of your business, the design limitations can be crippling. And unlike other website builders that attempt to solve this issue through apps, extensions, or access to the website code or HTML, there is no outlet for a Strikingly website builder website. You can embed HTML/CSS/Javascript with a pro plan, but you can’t manipulate the actual template you’re provided with.
Limited Feature Set – Technical
The limitations on design also bleed over into technical limitations.
Technical limitations are features that you don’t know that you want until you want them, and then you find out you can’t have them.
These are things like integrations with Facebook, Pinterest, Twitter, Google Ads, social sharing options, blogging, and a whole host of every intermediate to advanced marketing tools on the internet. Now, as I mentioned above, Strikingly does give some integrations, like DNS / hosting services and email for an additional payment. They also allow you to insert code into the header of your website for things like analytics tracking (but only on Pro plans).
However, there are a ton of technical features that Strikingly doesn’t provide or that are extremely limited.
For example, let’s look at Strikingly’s SEO features. I can edit the site title, description, and add a category and social share image. But aside from that, I’m pretty locked in to what I have. There’s no options for Schema, Open Graph settings, etc. – much less highly advanced options.
Even the additional add-on products / integrations are limited. There’s not much to address marketing your site, aside from adding code for Google Analytics and Facebook Analytics or putting code into the header of your website, which again, is only available for Pro plans.
Ultimately, Strikingly leaves much to be desired when it comes to product integrations and additional technical features that can help you better market your website.
Strikingly Review Conclusion
Strikingly makes getting your website up and running simple and fast, which makes it a great choice for DIYers who want a quick and easy way to build a nice website without the hassle of getting into the code or having something custom made.
Check out Strikingly’s plans here.
However, like most all-inclusive website builders, there does come a point where there’s a tradeoff between convenience and control, especially when you factor in price. Strikingly pricing leaves something to be desired, especially when you get into the higher priced plans and take into account the technical limitations, even with the higher priced options. If you’re looking for something that offers more control and scalability, you’re better off elsewhere.
Not sure Strikingly fits your needs? Check out my quiz to find what the best website builder is for you based on your preferences.
The post Strikingly Website Builder Review: Pros, Cons, and Alternatives appeared first on ShivarWeb.
Homestead is an all-inclusive website builder that’s tailored to helping businesses build their websites quickly, so they can have an online presence. Their platform includes “ready-to-use” templates that DIYers can customize to meet their needs, or simply “plug in” their content and hit publish.
See Homestead’s Current Plans & Pricing
Recently, I gave Homestead a try for a full Homestead Website Builder review. But before I get into the pros and cons of my review, let’s dive into an overview about tools to build a website.
There are so many considerations to take into account when choosing a website builder — and really, there are a thousand ways to get what you want in the end in terms of functionality, convenience, pricing, etc. The thing to remember is: whether you’re building a simple personal website or running a business, the way you build your site has a lot of consequences.
In the long-term, it affects your versatility, functionality, and, of course, your brand. In the short-term, it can certainly add/take away a lot of headaches. That said, just like choosing a physical house or office, there is no such thing as an absolute “best” or “top” choice. There’s only the right choice relative to your goals, experience, and circumstances.
What Is Homestead Website Builder?
On the wide spectrum of website building solutions, Homestead lives on the end that is all-inclusive and provides everything you need to get started and grow your website. It contrasts with solutions where you buy, install, and manage all the “pieces” of your website separately.
Using Homestead is sort of like leasing and customizing an apartment in a really classy development instead of buying and owning your own house. You’re still in control of decor, cleaning, and everything living-wise – but you leave the construction, plumbing, security, and infrastructure to the property owner. That point is key because there’s usually a direct tradeoff between convenience and control.
Everything may fit together just right with a website builder like Homestead, but that may or may not be what you’re looking for.
As far as competition, Homestead competes with all-inclusive website builders like GoDaddy, Wix, Squarespace, Jimdo, Yahoo!, and WordPress.com (and Shopify for online stores).
Compared to their direct competition, they focus more on getting businesses up and running not just with an easy-to-create website, but also through traffic driving strategies and consultations.
In fact – Homestead was one of the original website builders with a positively ancient history going back to the early 2000s. They, along with Blogger, helped make websites accessible to everyone regardless of HTML knowledge. Their product has evolved over time, but they are still ticking.
One other quick aside – a disclosure – I receive referral fees from all the companies mentioned in this post. My opinions & research are based on my experiences as either a paying customer or consultant to a paying customer.
Pros of Using Homestead Website Builder
Here’s what I found to be the pros of using Homestead website builder — not just in comparison to direct competitors like GoDaddy and Wix, but as an overall website solution.
Template Design / Functionality
Homestead offers a wide selection of template designs that are responsive (AKA they look good on a mobile device, tablet, and computer), which makes the website builder a solid option for a variety of niches.
In fact, I was pleasantly surprised with just how many templates Homestead offers and how well designed they are. When I was first doing research, I checked out their sample templates. These looked… outdated… to say the least.
Once you actually get inside the platform, the template selections are great.
Speaking of being inside the platform, let’s talk about functionality. The Homestead Website Builder is incredibly easy to use. When you first log into the platform, they offer a quick tutorial of how to use the features.
The whole set up is incredibly intuitive. You can add new sections (pre-made or blank), drag and drop different elements like photos, buttons, text, etc, and customize the existing template to match your branding.
There are obvious drawbacks to this setup, which I will cover in the disadvantages, but it is a real advantage to having accessible design options.
It makes Homestead a great option for entrepreneurs/ DIY-ers who want a website that looks professionally designed without having to hire someone to build something custom or spend hours trying to figure out how to tweak the design themselves.
Free 30-Day Trial
Another benefit Homestead is their 30-day free trial.
Homestead allows you to trial any plan (even their highest-tiered option!) for 30 days before committing. This is great for DIYers who want to give a plan a test drive before committing.
It is important to note, however, that your subscription will automatically renew, which means if you don’t cancel within 30 days, your card will automatically be charged.
This isn’t necessarily a “con”, but it something to be aware of if you’re just testing out the builder.
Some Product Integration
While limited, Homestead does offer some product integration, such as ecommerce functionality and domains / email.
One thing to note — these additional integrations / functionality are either part of paid plans or require additional fees. This isn’t necessarily a con, but it is something to pay attention to… especially because you can find a lot of this functionality for less with other website builders.
Cons
Of course, no review would be complete without looking at the downsides. Every piece of software will have complaints. Let’s look at the specific cons I found with using Homestead as your website builder.
Pricing + Plans
Perhaps the biggest con with Homestead’s website builder is their pricing and plan structure.
All of their plans come with storage caps, which means you’re limited to the photos, documents, files, etc. you store on your website. Their plans also limit bandwidth across all tiers.
There are also some significant fees for add-ons and advanced features on top of the paid plans. When you compare Homestead to other all-inclusive website builders, they’re definitely on the pricier side for similar features and less storage.
Design & Branding
Trust is a huge factor when choosing a website builder (or any other website product). You want to know that whoever you’re doing business with (and giving your credit card to) is a legitimate company who is going to stand by their offer.
Trust comes in many forms — word of mouth, reviews, years of existence, etc. — but it also comes via design and branding. If a business doesn’t look particularly trustworthy or credible based on their website design, it leaves you wondering… ESPECIALLY when you’re using them to build your website design.
While we didn’t have any issues with Homestead in terms of getting started with their website builder, their website design and branding does leave something to be desired. They haven’t quite kept up with the times, and it actually made me doubt that their template designs would be worth using.
Limited Feature Set – Technical
Technical limitations are features that you don’t know that you want until you want them, and then you find out you can’t have them.
These are things like integrations with Facebook, Pinterest, Twitter, Google Ads, social sharing options, blogging, and a whole host of every intermediate to advanced marketing tools on the internet.
Now, as I mentioned above, Homestead does give some integrations, like DNS / hosting services and email for an additional payment.
They also allow you to insert code into the header of your website for things like analytics tracking, and even offer some ecommerce functionality.
However, there are a ton of technical features that Homestead doesn’t provide or that are extremely limited.
For example, let’s look at Homestead’s Advanced settings. I can edit the site meta tags and header tags, and hide the site from search engines. But aside from that, I’m pretty locked in. There’s no options for Schema, Open Graph settings, etc. – much less highly advanced options.
Even the additional add-on products / integrations are limited. There’s not much to address marketing your site, aside from adding code for Google Analytics and or adding social share functionality. Even their traffic generating / SEO service add-on sounds… less than ideal.
Ultimately, Homestead leaves much to be desired when it comes to product integrations and additional technical features that can help you better market your website.
Homestead Review Conclusion
Homestead has well-designed templates that allow for quite a bit of customization when compared to other all-inclusive website builders. They make getting a good-looking website up and running fairly easy.
Check out Homestead’s plans here.
However, like most all-inclusive website builders, there does come a point where there’s a tradeoff between convenience and control, especially when you factor in price. Homestead’s pricing leaves a lot to be desired, especially when you get into the higher priced plans and take into account the technical limitations AND the extra fees for add-ons, even with the higher priced options. If you’re looking for something that offers more control and scalability for less cost, you’re better off elsewhere.
Not sure Homestead fits your needs? Check out my quiz to find what the best website builder is for you based on your preferences.
The post Homestead Website Builder Review: Pros, Cons, and Alternatives appeared first on ShivarWeb.
