How do I Choose The Right Payment System For My Small Business?

by Debi Enders

There are now more ways than ever for small businesses to accept payment from customers. Your challenge is to determine which ones make the best sense for your business. As you evaluate alternatives, here are a few questions to consider:

Can it protect against fraud?  A payment system is much more than a piece of equipment used to swipe debit and credit cards. It’s the “extras,” such as the ability to identify and defend against fraud, that differentiate one solution from another. Look for ones that include monitoring for improper activity, online reporting and other risk management services.

Will it lower my operating costs? Lower fees do not necessarily translate into lower operating costs. This can be especially true of “bare bones” options that provide little or no customer support.  You may be better served by using tools, such as PIN-based debit transactions, to reduce costs. What’s that? When you require customers to enter their PIN (rather than their signature) on a debit card transaction, you capture their funds immediately, significantly lowering the risk of charge-backs. Fees are often lower on these transactions too. You can also save money by always swiping credit or debit cards rather than entering the card number manually.

Will it improve my cash flow? Some payment methods require you to wait a week or more to access customer payments. Ask about next-day availability of funds for credit card transactions and electronic checks. And look for banks that offer 24-hour funding.

Choosing a payment system also involves selecting the right merchant services company to provide it. Experienced payment processing professionals can help you lower your costs and improve customer satisfaction. It’s worth your while to find them.

Debi Enders (debi.enders@commercebank.com) is assistant vice president, small business banking at Commerce Bank.