In our retail locations, we have noticed a 55% cash/45% card transaction split with the number of card transactions continually rising. We're in a small town with a high retirement population, so I often wonder what those numbers would look like in a more urban setting. My best guess is that card processing would be north of 70%, but that's speculation. If you have hard numbers, please feel free to comment with your experience.
There are so many options, some more popular than others with different demographics. Just to name a few:
- Traditional Merchant Services/Credit Card Processing
- This is the standard terminal, contract with your bank and negotiated rates that have been the standard for businesses for many years. Many of these newer services either integrate into this or seek to replace it. ApplePay & Samsung Pay are simply a convenient phone-based link to a credit card on file that integrates into your existing terminal (if you have upgraded your hardware). There was a time that merchants were at the mercy of the banks and processing companies for their rates, but with the expansion of some of these other options, that is now changing.
- This is what everyone is used to. Young or old, no one bats an eye at this and it's just what we've come to expect when we check out at nearly any store.
- Mobile Processing (Square, Paypal & others)
- These new companies have entered the marketplace and allow even the smallest of businesses to accept credit cards anywhere you can grab a data connection. Convenient and portable, with rates that are competitive with traditional processing, these companies are quickly becoming the mainstay of small businesses. They are certainly the savior of craft vendors and other mobile businesses that no longer have to turn away a sale because the customer didn't have cash, or risk the dreaded bad check. Again, who writes checks anymore?
- For in-person transactions, this is still fairly new, and many customers find it somewhere between cool and convenient. There are quirks. Some cards just won't read. But for the convenience, no contracts, and decent rates, most of us won't complain. And we get to sign our name with our finger - something most of us haven't done since pre-school fingerpainting, or at the beach in the sand.
- For internet transactions, Paypal was one of the pioneers in this area, as any eBay seller can attest. Etsy and others have their own direct checkout, but PayPal has been there all along, quietly processing credit card payments for eBay sellers and website stores for over a decade. Square offers a free online store and the ability to integrate their processing into your website, giving PayPal a nice little dose of competition.
- Person-to-Person Payments (Square Cash, Paypal, Venmo, Google Wallet & others)
- These app-centric options are becoming a popular alternative to traditional bank transfers and personal checks for individuals as well as providing an option for businesses to accept payments as well. Most of these services keep funds in the app for instant transfers, or you can transfer it to your bank, which may take anywhere from one to ten days. Ten days? Really, Google? Typical transfer times are one to three days, but that's something you really want to check into with your favorite money app before you decide whether to leave it in the app or transfer it out.
- You'll notice Square & Paypal are listed twice. Well, that's because they are playing for both teams here. They both have the nice little card readers that work with your phone or tablet, but they also have the P2P market. Paypal, one of the first players in this game, started with this method and then ventured into the card reader processing. Square started with the card readers and then added the Square Cash option.
- These apps are wildly popular with millennials, less so with older demographics. Still, you can split the check, send birthday money, or pay for just about anything and leave your card at home. Just use your phone, because it never leaves your hand anyway.
- Bitcoin
- I'll leave bitcoin alone as I have yet to venture into this volatile market. I'm intrigued, and perhaps it's worth exploring, but I haven't done so yet.
This is just a simple view of the landscape, not a review or recommendation of any particular service. I've used them all, and like them all for different reasons. For mobile processing, I use Square & PayPal interchangeably depending on my needs.
Square has a nice referral program, so if you're able to grab their free processing, then that's worth focusing on. The funds are deposited into your account the next business day, and their customer service has always been great.
PayPal allows you to have multiple log-ins with separate permissions for additional staffing, Square charges $5/month/employee for that. So, where I have staff, I use PayPal. PayPal funds stay in your PayPal balance until you decide to transfer it to your bank account, but they have a debit card that you can use so you always have access to your money. Their customer service has always been great too.
So what is the best option? Well, that's easy. The best option is the one that works for you. The one that you're most comfortable with. And you can always use more than one. Heck, you can even use them all!
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