Is a Smartphone Credit Card Reader Right for Your Small Business?
Food trucks were only the beginning. Seems like everyone has credit card reading smartphones on their hips these days.
These days, merchants can accept credit card payments anywhere theres cell phone service. Thats a real boon to entrepreneurs looking for an alternative to a cash-only business.
However, youll need the right equipment to take advantage of this new technology. Here are some basics to consider before entering the world of mobile payments and smartphone credit card readers.
In addition to your smartphone, youll need a credit card reader peripheral (most attach to your phone via the headphone port); an app to handle things like taxes, tips and receipts, and a service provider to get the payments from your phone to your bank.
Mobile payment services, apps and smartphone credit card readers are available for most major phone models. In most cases, the card reader and app are free, with the service making its money off of fees. Some popular services:
Such a large range of product choices comes with compatibility challenges. Before making the commitment, make sure you confirm whether a particular service and/or card reader will work with your smartphone.
Generally, businesses accepting credit card payments need a merchant account. This is a special type of bank account that works with a processor service to transfer funds from a customers card to the businesss bank.
Mobile card-swiping services, like Square and PayPal Here, often allow you to connect directly to a bank account, eliminating the need for a merchant account. Payments from customers cards are then sent to the account you specify (though the availability of those funds varies among services).
Most popular mobile payment services charge a per-swipe fee of around 2.7%. However, fees for keyed-in transactions (i.e. where the card is not swiped through a reader) are higher often around 3.5%. Some services, like Intuit, offer a tiered fee system, with lower fees for higher transaction volumes.
Also, dont forget your phones role in all this. Conducting this kind of commerce requires sending data over either a Wi-Fi connection or cellular service. Depending on your phones data plan, overage fees could add up quickly.
You have a lot of choices when it comes to mobile payment technology. Be sure to do your homework and find the service thats right for your business.