How to choose the perfect Payment Processor for your Retail Business

by Jennifer Shambroom, 9 minutes read
HOME blog how to choose the perfect payment processor for your retail business

As a retailer, there are many decisions you have to make to ensure you grow a sustainable and profitable business. Issues, like hiring staff and marketing, all need to be dealt with in the most cost-effective way possible. The technology you choose should make operating your retail store more efficient and directly (or indirectly) provide a better customer experience. Selecting a payment processor should make accepting and processing credit cards simple and easy.

What is a payment processor?

A payment processor works in the background when a transaction has been accepted by a retailer. Payment processors carry out the transaction by passing data between the merchant account and the payment gateway. Payment processors normally provide the hardware that is used in physical store locations. The best payment processor will benefit the following aspects of your retail business:

The tips below will help you to choose the best payment processor for your retail business:

  • Security

Retailers of any size can become the victims of security breaches. Issues, like identity theft and breaches involving sensitive financial information, can cost your retail business dearly. A study found that security incidents cost small business around $8,000. Security breaches do not only have financial consequences. They also can result in reputational damage. Larger retailers can afford to hire the best public relations firms to manage security breaches. However, it may be difficult for smaller retailers to absorb the costs of financial and reputational damage.

Technology moves at a fast pace, so it is important to choose a payment processor that is Payment Card Industry (PCI) compliant. Payment processors that meet this standard apply the latest security features during every aspect of the transaction to protect your customers’ data. This includes data encryption prior to being transferred for payment authorization.

  • Usability

The type of payment processor you choose will depend on the needs of your retail business. If you have a small retail store, a mobile payment processor may be ideal for you. With mobile payment processors, there is no need to buy a traditional point of sale (POS). You will be able to use your existing account to receive credit card payments via the internet.

On the other hand, if you have a larger retail store, you may want to use a fixed POS to deal with a high number of purchases, refunds and other transactions. Generally, fixed POSs give you the option to customize features to address your business needs. If you forecast a spike in business growth, you can invest in a fixed POS even if you are a small retailer. Keeping one system that grows with your business minimizes the chances of disruption when introducing a new system.

  • IntegrationYour retail business needs interconnected systems to operate efficiently. The payment processor you choose needs to be compatible with your existing software or the most trusted and recognized solutions for different parts of your business. For example, you should ensure that your payment processor integrates with your staff scheduling tool. Deputy integrates with POSs, like Square, to ensure that customer transactions are uninterrupted when your staff need to clock in and clock out. If your payment processor does not integrate seamlessly with your other retail business software, you will end up having to spend more time managing different systems. This could also lead to confusion because your crucial systems are not ‘talking’ to each other to keep your business running smoothly.

Sign up for a free trial to find out how we integrate with reputable business software to provide you with a complete retail business management experience.

  • Payment schedules

Different payment processors have varied schedules in relation to when transactions are verified. The timelines also differ according to when you can access and withdraw your cash from credit card transactions. Cash flow is a vital aspect of running a successful retail business. Therefore, you need to find out what impact the payment processor you choose will have on the cash flow of your business. Think about how your business  bank account operates and the effect that payment processor transfer times will have on accessing your cash. Generally, cash is transferred to business bank accounts approximately 72 hours after the transaction. However, some payment processors may have longer transfer times.

  • Costs

Failing to be aware of your payment processing options could result in your retail business paying unnecessary costs. The traditional method of accepting credit cards imposes a fee (usually 2%) of every card transaction. Retailers are responsible for paying this charge. Modern companies, like Stripe and Square, are challenging the traditional fee structure of processing credit cards by offering lower fees. If you stick to the usual method of credit card processing, you need to know the different types of fees that your retail business will be responsible for. For example, some payment processors may ask you to sign a service contract while others will charge a fee for each separate transaction. Review every type of credit card processing fee structure to ensure that you choose the right one that makes a positive difference to your retail business profits.

You also need to think about how much you will need to pay for any hardware and devices that come with your payment processor. Your payment processor provider may offer you dongles free of charge or you may need to pay a nominal charge for a Europay, MasterCard, Visa (EMV) chip card device.

  • Support

It is inevitable that you will experience some issues with your payment processor at one time or the other. It is critical that you have access to your payment processors’ team during your business hours. If your retail store operates in a shopping mall that closes at 10 pm, you will need to access your payment processor’s team outside of traditional hours. Choosing a payment processor that only provides support during typical office hours will negatively affect your retail business if something goes wrong later on in the evening. When choosing the perfect payment processor for your retail business, review the terms of their help and support.

You need to determine:

  • Whether they charge extra for out-of-hours support.
  • The terms of their service level agreement.
  • Whether you will have access to live support if any issues arise.

The best online payment processors

You will be spoilt for choice when choosing online payment processors. However, there are some brands that appear time and time again on the list of the best payment processors. These include:

Stripe is highly customizable and provides the functionality for developers (or anyone with the necessary skills) to tailor payment processing to fit your business needs. Setting up an account with Stripe is simple and you will be able to start processing credit cards immediately. You can also integrate Stripe with hundreds of different software and apps. Stripe’s pricing is transparent, so you know exactly how much you will be paying for the service.

PayPal is a household name in the payment processing market. Founded in 1998, PayPal is used in over 200 countries in 25 different currencies. You can integrate PayPal directly into your website. The flexibility of PayPal means that you can use it on your website, app or in-store. If your retail business attends events, like markets, you can use PayPal’s card reader to accept payments on-the-go. If you are just starting your retail business and are not expecting to make many sales, PayPal may be a good choice for you. You can use the pay-as-you-go options, which also has a POS system. You will also have the ability to give your customers credit as well as have access to 24 hours a day support by phone and email.

If you want to sell both online and offline, you should consider using Square. You will need to pay $20 for the Square Card Reader which you can place on your mobile device. This means that you will be able to accept payments at anytime and wherever you are when using Square. Square also provides you with a free POS. Your retail business might also benefit from Square’s free advance features, which include:

Paying for these features separately on a traditional POS system would work out to be very expensive for your retail business. Setting up Square is easy. You just need to download the Square credit card payment app after you sign-up. Your Square card reader can then be plugged into your iOS or Android device.

Helcim is recommended for small businesses. Therefore, if your retail business has revenues of around $1,500 to $2,000 per month, you may want to consider Helcim. Their fee structure is transparent, so you know exactly how much you will pay for their service. Helcim is suitable for both in-store and online payment processing. You can get volume-based discounts and a guarantee that your margin will not be increased throughout the duration of your account.

You can also access advanced features. For example:

  • Recurring payments.
  • Invoicing
  • Multicurrency processing.

Helcim provides 24/7 phone support for your retail business. Additionally, you can pay for your card processing services on a month-to-month basis and you do not have to pay any fees for early termination.

If you are looking for maximum flexibility in relation to the payment processor for your retail business, you should review Flagship Merchant Services. This is because you will have no set-up fees, you will be able to pay on a month-to-month basis and you will not be charged gateway set-up or early termination fees. You can choose between the tiered and interchangeable pricing to get the most benefit for your retail business. Flagship Merchant Services provides payment processing for in-store, online and mobile credit card processing. They also have an iPad POS system if your retail store needs something more advanced. Additionally, you will get 24/7 support when using Flagship Merchant Services.

First Data is considered to be one of the best online payment processors for retail business because it is especially equipped to deal with businesses with a high number of transactions. It is also one of the leading processors of credit cards in the U.S. You can accept different types of payments with First Data, including the popular Chinese payment app, AliPay. You can also negotiate fees since this helps First Data to remain competitive in the payment processing market. You have access 24/7 support via live chat and phone.

Choosing the perfect payment processor for your retail business needs to be done carefully. You first need to review your business requirements and then consider which payment processors come close to giving you everything you need. It is important to keep your goals and objectives in mind when choosing your payment processor.

As mentioned above, a key consideration of choosing the perfect payment processor for your retail business is its ability to integrate with other apps and business software.

Deputy not only makes staff scheduling, communication and performance management easy but it also integrates with different software, like payroll and POS, to help you to operate a smooth retail business.

More than 90,000 businesses (including major retailers, like Nike) trust Deputy with their employee scheduling needs.

Click the button below for a free trial to find out how we can save you time and increase the efficiency of your workforce management, irrespective of the size of your retail store.

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