6 Payment Processing Tips for Small Businesses

As a small business owner, it’s essential to prioritize payment processing whether you operate a physical store or an online shop. Payment processing is the lifeblood of any business, allowing you to accept payments from your customers and keep the sales rolling in.

To ensure that your customers have a safe and secure shopping experience, it’s important to follow some best practices. By taking steps to protect your customers’ information and ensuring that your payment processing systems are up-to-date and reliable, you can create a positive shopping experience that fosters customer loyalty and drives sales. So, consider these helpful tips to take your small business to the next level and achieve more success.

Find the right payment processor

Finding the right payment processor that allows you to accept payments online and in-store is essential to running a small business. All the features, data security, and support needed to receive small business payments come from your payment processor.

You can work with several payment processors, so each is responsible for a specific aspect of your payment workflow. However, it’s usually more efficient to work with a full-service payment processor that supports multiple payment options, including debit cards, credit cards, ACH payments, and gift cards. You’ll likely deal with fewer interoperability problems, and if you run into any issues with your payment processing, you only have to speak with one support team, not several. 

Additionally, you want to ensure that your payment processor provides Payment Card Industry (PCI) compliance, a requirement of all businesses that interact with debit or credit cards. PCI compliance ensures that you’re updated on the best practices for safeguarding your business and customers from fraud. Your payment processor should also offer other features like point-to-point encryption (P2PE), hosted payment pages, and tokenization.

Leverage additional security features

While choosing a PCI-compliant payment processor can help mitigate fraud exposure, it’s still your responsibility as a small business to protect any customer data that enters your system. Here are some additional security measures you can utilize to safeguard your business and customers:

  • Address Verification Service (AVS) — AVS verifies that a spicecinemas customer’s billing address matches the address associated with the cardholder’s account. This process helps determine whether a card transaction should be accepted or rejected.
  • Card Verification Value (CVV) codes — CVV codes are the three- to four-digit numbers on the back of most debit and credit cards. They’re used to verify that a customer has physical access to the card they’re using to purchase goods and services.
  • Two-factor authentication — Two-factor authentication is an extra layer of security beyond just a username and password. Usually, a customer or employee must provide a security code or an answer to a security question when logging in to their account with their username and password. While these extra steps can add time to the log-in or checkout process, they can help protect your customers and employees from criminals exploiting weak or stolen credentials.

Provide a clear refund policy

Some businesses may post their refund policy in their terms and conditions, which makes it hard for your customers to find. By keeping your refund policy obscure, your business might deal with chargebacks. A chargeback is a forced return of funds to a customer’s card account after they dispute a transaction with their bank. As a business owner, disputing a chargeback with calls, emails, and paperwork is time-consuming. If your business accumulates enough chargebacks, your payment processor could downgrade your service and charge higher credit card processing fees.

A better solution is to establish a refund policy that’s easy to understand and in clear view of customers and employees. It’s a good idea for your policy on receipts so customers can quickly refer to it. If you have a brick-and-mortar store, consider posting a sign with the policy near the cash register. While you might see an increase in refunds, this approach is safer and less troublesome than dealing with chargebacks. Plus, refunds allow you to request customer feedback so you can improve your products or services. 

Promote your payment options

Once you set up your business to process payments, let your customers know about all the payment methods you accept. For brick-and-mortar businesses, add credit card logos to your storefront and next to the cash register. If your point-of-sale (POS) systems come equipped with built-in NFC technology, you should also include contactless payment logos. If you’re an e-commerce business, add all the credit logos to your shopping cart, as well as links to websites such as Paypal or Venmo. Ultimately, the more payment options you have, the more likely you are to close a sale and retain customers.

Automate invoices

Manual invoices can take a lot of time out of your business. They require you to manually enter customer information, calculate sale information, track and monitor pending invoices, and follow up for payment reminders and past-due invoices. 

With invoice software, you can automate the invoice process to save time and get paid faster. Many services allow you to:

  • Automatically pull customer information into your invoice template.
  • Add a button to invoices so your customer can pay you directly online with their payment of choice
  • Track invoices and get notifications sent to your mobile device when they’re paid
  • Send payment reminders to your customers
  • Set up recurring invoices on a specific schedule

Link up your payments with accounting software

In addition to automating invoices, you can also link your payment information with your accounting software. Automating this process helps organize your bookkeeping and mitigate errors via manual data entry. Plus, it can reduce your days sales outstanding (DSO) and improve your audit and compliance positions. 

To help your small business grow and thrive, you must ensure your payment processing is set up for success. This means utilizing the right software, accepting multiple payment methods, leveraging security features, and establishing a clear refund policy. You’ll get paid faster and more efficiently, and your customers will likely return for future business.

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