Picking the right credit card reader for your phone or tablet
For some business owners, being able to accept credit cards on the go may be the difference between making a sale and missing out.
Few people pay with cash these days. A Gallup poll conducted in
2016 found that only 24% of Americans reported making all or most of their
purchases with cash, down 12% from 2011.
Given the shift toward credit cards and electronic payment methods, one
thing seems clear: Accepting credit cards is a no-brainer for most small
businesses. That’s where mobile credit card readers come into play.
A mobile credit card reader is a dongle that connects to your phone or
tablet via a headphone jack or Bluetooth. The vendor typically types in the
transaction amount, swipes or dips the customer’s card, obtains a signature,
and emails or texts a receipt.
There are many mobile credit card processing options to choose from, and
pricing structure isn’t the only factor to consider when picking one. We’ll run
down some of the features and other factors you should consider before deciding
which one is best for your businesses.
Credit card reader
features
Every business is different. Whether you’re a freelancer who needs to
accept an occasional credit card or an artisan selling your work at festivals,
there’s a mobile credit card reader to meet your everyday needs.
Here’s a look at some features to consider when choosing a credit card
reader for your phone.
Ease of set up
Some mobile credit card readers make it easy to start making sales.
Others may require you to jump through some extra hoops, like credit checks and
background checks. Keep that in mind if you’re hoping to start processing
transactions as soon as possible.
EMV support
You’re probably familiar with the newer chip-and-PIN debit and credit
cards. They follow a global standard — EuroPay, MasterCard and Visa, or EMV for short — by using
chips to authenticate transactions.
The better modern credit card readers have two slots: one for accepting
magnetic strip cards and another for EMV chip cards. Just be aware: If you run
a customer’s chip card through a magnetic strip reader instead of inserting it
into an EMV chip reader, you (i.e. the merchant) will generally be liable for
any counterfeit or fraudulent transactions.
Speed of bank
deposits
Some credit card readers require you to set up a merchant account, which
acts as a holding tank for your money. Funds from your credit card sales are
held in a merchant account before being transferred to your business bank
account, typically on a daily or weekly basis.
Other credit card readers link directly to your bank account, allowing
for deposits to be made as soon as the next business day. The process your
reader uses could impact how long you’ll wait for funds to get to your bank
account.
Connection to
accounting software
Many mobile credit card processing solutions can also be integrated with
your accounting software, such as Xero, QuickBooks or FreshBooks. This could
make it easier to keep track of your finances without manually entering
transactions.
Customer service
Some credit card processing companies like Salequick offer 24/7 live support. Others are
only available during standard business hours. If you process a lot of
transactions on nights and weekends, you could have an issue reaching some
customer support teams when you need them most.
Lauren Hansen, owner of Lunabear Studios in Phoenix,
Arizona, says she researched her options when she decided to start accepting
credit cards. She ultimately decided to use PayPal Here. Because she was
already using PayPal for online transactions, it made for easy, seamless
transfers to her bank account.
Pricing
considerations for mobile credit card readers
Pricing structure is one of the most confusing aspects of accepting
credit card payments. Pricing varies from one mobile credit card processing
solution to the next.
Here’s a look at the different cost components and other fees you should
look out for.
·
Processing costs: This is the amount of money
you’ll pay for each transaction. It may include a small percentage of the sale
amount plus an additional flat fee for each transaction.
·
Monthly fee or pay-as-you-go: Some mobile
credit card processors charge a monthly fee in addition to the processing fee,
and others just charge per transaction. If you handle very few credit card
transactions, you may be better off choosing a pay-as-you-go plan.
·
Keyed-in card fees: Most mobile
credit card processors allow you to manually key-in card information if you
don’t have a reader or are having issues with the reader. Heads up: Most
processors charge a higher processing rate for keyed-in transactions than they
do for swiped or dipped transactions.
Hansen says she felt most credit card readers have very similar pricing
structures. Cost wasn’t a huge differentiator, so Hansen focused on features
like ease of use and simple integration with her online banking, which ensures
she gets paid in a timely and efficient manner. “I didn’t want to spend a lot
of time getting paid,” she says.
Any one of the major credit card readers should meet your most basic
needs. Here’s a look at some of the most popular readers on the market right
now.
At a glance: Mobile
card readers for your phone
|
Credit card reader
|
Per U.S. swipe transaction fee for
mobile
|
Keyed U.S. transaction fee for mobile
|
|
PayAnywhere
|
2.69%
|
3.49% plus 19 cents
|
|
PayPal Here
|
2.7%
|
3.5% plus 15 cents
|
|
QuickBooks GoPayment
|
2.4% plus 25 cents on a pay-as-you-go plan
|
3.4% plus 25 cents on a pay-as-you-go plan
|
|
Square
|
2.75%
|
3.5% plus 15 cents
|
Bottom line
In the end, only you can decide which credit card reader is right for
your business. Before signing up for an account, it’s a good idea to call the
companies directly and get pricing quotes specific to your business.
Also, be sure to read through all contracts and user agreements so you understand
exactly what your processing costs will be and whether you’re locked into a
contract for a longer time than you need or want.
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