How to Accept Credit Card Payments

May 10, 2022

(The Quick, Safe, and Secure Way)

Having a processing solution that is stable and protects your financial security is just as important as being flexible to reach customers where they are. 

From managing account risk to handling transactions securely, you need a credit card process arrangement that is right for your business.

A Common Beginning 

For most businesses just getting started, what matters most is keeping things simple. This usually means using a payment solution that’s built right into the Website platform and requires virtually no setup. 

Paypal, Stripe (including Shopify Payments) and Square are common, practical solutions during this phase of business growth. 

Known as aggregators, these processors obtain a massive processing account themselves, then host their clients’ businesses on sub-accounts. This allows business owners to take payments almost instantly with little or no concern for the details of payment processing.

Unfortunately, this simple arrangement can take a sudden turn for the worse if the processor freezes or shuts down the account. 

What many business owners don’t realize is that aggregators have to keep the overall profile of the “master” processing account within certain parameters (so their account stays healthy).

As more volume starts flowing through any sub-account and it becomes a larger percentage of the overarching account, the processing company has to look more closely at things that didn’t seem to matter as much on day one. 

They review details like who owns the business, what’s being sold, how sales are made, and whether customers are filing chargebacks. If any of these details threaten the balance of the master account, the processor simply closes the sub-account and moves on.

This puts the business owner in the devastating position of turning away hard-won customers while they scramble to find a new solution.

That’s why if you’re processing $30,000 a month or more, it becomes mission-critical to make sure you’re working with a payment solution that is tailored to your specific business – before a problem comes up.

The Right Payment Solution

The first step toward having the right payment solution is being sure you are set up with a processor that specializes in your type of business. 

This assures they’ll be prepared for things that might affect your risk profile and they’ll know how to navigate any hiccups because they have most likely seen them before. 

The Right Provider

There are countless processors to choose from. Finding the one that is the right fit for your business can be like the proverbial search for a needle in a haystack.

Some business owners choose a trial and error method with the “shotgun” approach – submitting multiple applications to see which processor will board their account. There are 2 pitfalls with this strategy. 

  1. Your credit score takes a hit with each application, harming future attempts.
  2. Many processors use the same backing bank. This means your application could be getting denied on repeat by the same underwriting criteria. 

If your account isn’t approved on the first few attempts, both of these problems reinforce the impression that something is wrong with your request and it shouldn’t be approved. 

A Custom Account

Beyond simply getting an application across the finish line, you’ll want to make sure you’re getting an arrangement that’s tailored to your business. Processing accounts don’t come in “one size fits all.” 

Just as a few key measurements are needed for a suit to fit with James Bond perfection, a few key elements can certainly help shape a processing account for your business.

Business Model 

Each business model has unique processing account needs based on criteria like how sales are made and the product or service offered. 

Some critical elements of this feature include:

  • The number and size of transactions. Does an average day of sales consist of many small transactions or a few very large ones? (Or perhaps many very large ones!)
  • Recurring payments. Do your customers sign up for a monthly payment? Are there a specific number of payments or is the membership perpetual?
  • Regulated industry type. Is your business in a regulated field such as CBD, firearms, or financial services? 
  • Seasonal or event cycles. Do you only process sales at certain times of the year or have significant spikes in volume at quarterly conferences?
  • Products and services. Are you selling physical products that need to be shipped? Virtual products that can be downloaded? An intangible service? 

Your processing account needs to take all of these things into consideration.

Processing Method

Knowing how you’ll be collecting credit card data is also an integral part of getting the right payment solution. Working with a provider that accommodates this feature is essential. 

Your processing method comes down to whether the credit card is physically present at the business and how it is submitted to be processed.

  • Card Present is any payment taken on a physical card reader that collects the credit card information when it is swiped, tapped, or inserted into the device. 
  • MOTO stands for Mail Only/Telephone Only. This is when credit card data is collected on a form or over the phone and keyed in by the business. It also includes virtual invoicing when a customer is sent a link to a form where they input their own information.
  • Card Not Present is when the credit card information is entered on a Website. While details are usually collected to confirm that the person using the card is the cardholder (the person whose name is on the card), there is no way to be 100% sure. 

Payment Integrations

No matter how you collect the card data, it is critical to make sure your processor can accommodate your chosen processing method. A traditional merchant account will give you the most options, whether you’re using one method or several.

If you are using an online shopping cart, integration is how your shopping cart experience connects to the processor through a gateway. 

A gateway serves the same purpose in an online environment that a card reader serves in a physical store. Specifically, it collects the card data in an encrypted format and submits it to the processor for approval.

The right gateway will also incorporate any other processing methods you intend to use – keeping everything in one place without compromising your flexibility. 

Some possibilities include: 

  • Physical card readers
  • Mobile payment options
  • Invoicing 
  • ACH payments

As a payment gateway, Easy Pay Direct incorporates all of these possibilities and more. If you are not sure which method you need, our team is equipped to provide recommendations to fit your specific business setup.

Winning in Underwriting

Every processing company is required to collect certain Know Your Customer (KYC) information as part of Anti-Money Laundering (AML) and Combatting Financing of Terrorism (CFT) laws.

In addition to these requirements, each processor has its own tolerance for risk. A company’s risk profile generally comes down to how likely they are to have chargebacks based on the history of similar companies

This means even if you never have a chargeback, your business may still be considered high risk just because it meets the criteria of a particular risk profile.

In an aggregator arrangement, only the most basic details are required at the beginning. But as we’ve seen, this can backfire when the processor takes a closer look at the business. 

Many business owners are completely unaware that their business model falls into a risk category that threatens the stability of their processing account. It can be a painful discovery when it results in an unceremoniously closed account and interrupted sales.

With a traditional processor, this information is gathered during onboarding in a step called underwriting

How it Works

Underwriting is the review of relevant information about the owner, the company, and the business model for the new account. This informs both the processor and the business owner about what level of risk is inherent in the business. 

Because they are knowledgeable about the business from the beginning, surprises are far less likely for either party and the account is significantly more stable. 

What You Will Need

While the full list of documents needed for underwriting varies from one case to the next, there are a few basic items that will be requested every time. 

You will be asked for: 

  • Owner’s Social Security number If there are multiple owners, this will be needed for at least 51% of the stakeholders. 
  • Government Issued ID This is needed for the same owners as the Social Security number.
  • Business Tax ID Except in the case of a sole proprietorship. This can be obtained from the IRS online.
  • Bank Statements The most recent 3 months of business bank statements. If none are available for the business, an owner’s personal bank statements may be required.
  • Processing Statements If the business has been accepting credit cards by any method, 3 months of statements will be needed (or as many as are available if there are not 3 full months of history).
  • Risk Assessment Documents If the business is 100% ecommerce, the Website URL may be all that is needed. However, businesses that operate offline or who are applying for larger accounts may be asked for additional documents. 

Some possibilities include: 

  • Marketing Items (brochures, ads, flyers, etc)
  • Scripts used for phone sales
  • Forms used to collect credit card information offline
  • Contracts you may use with your customers
  • Previous years’ tax documents, Profit and Loss Statements, and Balance Sheets (for large volume accounts)

During underwriting additional supporting documents may be requested to clarify or confirm certain details.

A Trusted Guide

Having a trusted guide is extremely valuable when choosing a payment processing solution. An advocate like Easy Pay Direct can help narrow the options and determine which processor is the best fit for your company.

We have years of history working with dozens of processors. Our experienced team knows which ones are backed by the same banks, what industries and business models they specialize in, and how to ensure your application gets the attention it deserves.

We take the guesswork out of underwriting and simplify integration by assisting with the account setup – from choosing the right processor to taking your first payment. 

Contact our team today for an easy and successful processing experience that is tailor-made for your business. 

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