All businesses, great and small, have at least one thing in common: payment processors. Cash-only businesses get away without having to pay a processor to complete credit card, debit and digital payments, but that type of business is rare. Accepting card payments is convenient—for you and customers—but it means there’s a risk of credit card fraud. And while point-of-sale (POS) platforms can help you better facilitate payments, they can bring their own obstacles. In a Forbes Advisor poll, 33% of small business owners said credit card fraud is a major issue. Is the risk worth the reward?
What Is Payment Processing?
To accept credit cards, a business must sign up for a merchant account, have a card reader and an internet connection. Credit card processing happens when a customer swipes, taps or dips a credit card or debit card or uses a digital payment method, such as Apple Pay with their phone. Data transfers from the card reader to a card network that communicates between the acquiring bank and the issuing bank. The end of the process results in either an approved or declined transaction.
There are some big benefits to accepting credit and debit cards, rather than cash. Card payments are convenient—there’s no need to withdraw cash to pay for goods, and consumers can use cards to pay for items online. Average transaction totals go up, too—the average card payment is $112, while cash transactions are $22.