Digital Transactions & Mobile Payments 101
Digital transactions — credit cards, online payment gateways, Apple Pay — have already supplanted cash as our preferred payment method, with cash falling even further out of favor in the wake of the global pandemic. Yet, despite growing consumer demand for a wider and wider array of electronic payment options, there are still merchants all over the United States and around the world that don’t offer online shopping, don’t offer contactless payments, don’t offer mobile payments or digital wallets like Apple Pay, and, in some extreme cases, don’t even offer card payments at all.
In many cases, the reason merchants fail to offer their customers these in-demand payment options is a lack of understanding – both of what their options are for getting set up with electronic payments and just how easy it is to start accepting a wider variety of payment types. The following is a quick, 101-level guide on the different types of electronic payment services even the most technophobic merchants can easily access and the types of hardware and software each allows to be employed in pursuit of a better customer experience.
Sign Up with a Traditional Merchant Services Provider
The first and likely best option for merchants looking to start accepting electronic payments is to sign up for a merchant account through a payment processor or independent sales organization (ISO.) A merchant account gives sellers the ability to begin accepting credit and debit card payments from the major card issuers, both online and in-store (with a little help from some payment hardware or software) as well as digital wallets such as Apple Pay.
While the application process for a merchant account is more arduous than getting an account with a third-party processor like PayPal, merchant accounts offer the significant benefits of higher monthly limits and, most importantly, lower fees. With a traditional merchant account – especially one offering interchange-plus pricing – merchants can often access fees under 2% of transaction values.
Payment System Options
Merchant accounts make it possible to sell online or in-store with the help of either an online payment gateway or a payment terminal. The former can be easily acquired online and pairs with the shopping cart systems available through ecommerce platforms like WooCommerce, Magneto, Shopify, Wix, GoDaddy, and others. Many ecommerce systems today are so user-friendly that merchants can get basic stores set up in as little as a day or two with little to no outside help, making online sales more accessible than ever and offer a variety of digital payment options, including Apple Pay.
In-store payment terminals come in a variety of types depending on a merchant’s needs. Merchants operating larger businesses or specialty businesses like restaurants can opt for full point-of-sale systems and multi-point networked mobile payment systems. Smaller merchants can opt for a simple payment pad, or even a mobile reader that attaches to a smartphone. Almost all merchant service providers offer payment hardware, and a merchant’s support specialist can help them decide on the right hardware and software systems for their needs.
Sign Up with a Third-Party Payment Processor
Merchants just starting out and looking for a simpler way to start selling can access electronic transactions through third-party processors like PayPal and Square. With third-party processors, the processor holds a master merchant account, and all of their merchants are processed under that account, using a single merchant identification number (MID.)
Pooling all their merchants under their own MID gives third-party processors a great deal of flexibility and control over who they accept, which is why their application process is so much faster and easier. However, casting that wider net also increases their risk significantly, and that’s offset by hitting their merchants with higher fees – sometimes well over 3% of the transaction value for certain types of sales. Those higher fees add up fast, making third-party processors a poor choice for most full-time merchants. However, for very small and hobby businesses, the accessibility offered by third-party providers can sometimes make the higher fees worthwhile.
Payment System Options
Merchants opting to go with a third-party processor may find they have slightly more limited options when it comes to payment systems. Online payments are extremely easy, offering the ability to integrate an account with an online gateway and ecommerce system, or, in the case of processors like PayPal, to simply copy and paste a payment button almost anywhere on the page and handle the complete transaction process off-site using PayPal’s payment infrastructure.
For brick and mortar environments, merchants in need of full point-of-sale systems for inventory control or customer experience will likely find third-party processors limiting in their integration capabilities. However, small merchants looking for payment hardware can access systems like Square’s classic smartphone card reader or their expanded line of terminals and branded POS systems.
Start Accepting Apple Pay and Digital Wallets
The newest digital payment options merchants can take advantage of are digital wallets like Apple Pay, Samsung Pay, and Google Pay. Digital wallets replace a customer’s physical wallet by keeping digital copies of their payment cards (and some loyalty cards) on their mobile devices. Rather than rifling through their wallet for a credit card, digital wallet users can just tap their phone or click a single button when shopping online.
Digital wallets also offer advanced security by incorporating biometric identity verification into the process. Apple Pay, for instance, requires users to either swipe their thumbprints or scan their faces on their iPhone, iPad, or Macbook. That biometric verification only adds a fraction of a second to the process, providing air-tight security while maintaining unmatched convenience.
Payment System Options
Digital wallets require merchants to have a merchant account that payment funds can be sent to, but beyond that, accepting them is extremely easy. Online, many top ecommerce systems include digital wallet activation in their backend settings, allowing users to start accepting Apple Pay and other wallets by enabling them with a single click.
In-store, digital wallets are even more convenient for merchants because they use the exact same hardware as tap-enabled credit and debit cards. If a merchant already has a tap-ready, EMV-compliant payment terminal – something already present in the majority of stores – they don’t need to do anything to start accepting Apple Pay or other digital wallets. They’re already set up and can begin informing customers of the option right away.
BAMS offers merchant accounts that make getting started with credit and debit card payments as easy as possible. Our merchant solutions also make it easy for merchants to get the ideal payment systems for their business needs, from contactless payment terminals to mobile readers to POS systems and beyond. We offer a full line of online payment gateways, and can also help merchants get set up with everything they need to offer their customers Apple Pay and other leading digital wallets. Best of all, our interchange-plus pricing model offers the lowest transaction fees in the industry, guaranteed.
To find out more about BAMS merchant services and how they can help your business start accepting electronic payments, get started with a comprehensive five-point price comparison today.
