Selecting the right payment solution for your business

Having the ability to accept credit cards can certainly help boost a business’ sales, but with monthly fees and high transaction rates, having a merchant account is simply not an option for all business owners. So what options are available for businesses that only process a small number of transactions monthly or yearly?

Developed by Twitter creator Jack Dorsey and released in 2010, Square allows businesses to accept credit card payments without having a merchant account. By simply attaching a small card reader to a smartphone or tablet, businesses now have the ability to swipe a customer’s card and accept payments.

There are no hidden fees when using Square, all swiped transactions are charged at 2.75 per cent. You can also manually enter transactions, but they’re charged at 3.5 per cent plus 15 cents per transaction. Those fees are considerably higher than merchant banks fees, which average at around 1.9 per cent per transaction.

Square doesn’t offer a solution for accepting payments online, but by using an iPad app, a Square cash box and a Square printer the application turns into a fully-functioning cash register solution. Square is linked directly to your bank account and transfers are processed to your account the following day. One drawback to this system is that international credit cards may be charged higher rates because the fees are taken in Canadian dollars and then converted by the bank into the international currency.

An alternative solution for web developers looking for an integrated web payment solution but don’t have a merchant account is Stripe. Some programming knowledge is required for this system. Stripe doesn’t have a card reader, but for $4.99 you can download an app and manually enter credit card numbers, or you can enter the card number via a web browser. Stripe also has no hidden fees but has a slightly higher charge rate than Square at 2.9 per cent plus 30 cents per transaction. Stripe is also linked to your bank account and transfers are processed weekly. Stripe’s slick interface allows you to view transactions in detail including in what country the credit card was issued, the date and time of transaction, the charge price and Stripe fees, which allows for easier account reconciliation. There are no additional fees for international customers.

The most popular option for accepting credit cards online without having a merchant account is PayPal. PayPal’s merchant rate varies depending on sales volume, with the highest rate being 2.9 per cent plus 30 cents per transaction. It’s possible enter credit card numbers manually, but transactions are then charged 3.9 per cent plus 30 cents per transaction. PayPal’s easily integrated into any website, however it does have limitations with its shipping options and its user interface is very clunky.

Unlike other non-merchant account solutions PayPal offers a low rate for non-profit groups of 1.9 per cent in Canada. There’s currently no integrated credit card swipe solution for PayPal however it is in test mode although there’s no date as to when it will be available.

All three options here are great solutions for businesses that don’t have a merchant account; the best solution for your business will depend on what you’re trying to achieve.

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Cathy Earle

Cathy Earle is a WordPress Web Developer and Internet Consultant. She has been developing websites and consulting clients in Australia and North America for over 15 years.
Her degree in Public Relations and Management Communication, in addition to a 12 year career as owner of an independent publishing company, have proven beneficial to her work today — navigating the vast world of the internet and online marketing.

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