Why we need of payment processing for small business

A payment processor facilitates transactions between two parties, such as a merchant and a customer, by transferring information from the customer's bank account or card issuer to the merchant's bank, ensuring a successful payment. They come into play when a customer provides their payment information through a payment gateway or physical terminal, verifies the data, conducts anti-fraud checks, and requests transaction approval from the issuing bank. Beyond simply processing transactions, payment processors offer services like reporting tools for sales tracking and advanced fraud protection. They often assist in setting up merchant and special bank accounts that allow businesses to accept credit and debit card payments.

What is Small Business Payment Processing?

Payment processing is the critical business function of moving payments for goods and services between bank accounts from the bank account linked to your customer’s debit card to your business’s merchant account. Small businesses need payment processors to manage money that isn’t cash and checks, from debit cards and digital wallets like Apple Pay and Google Pay to credit card payments. Payment processing is an essential merchant service. Other critical merchant services include payment gateways, point-of-sale (POS) systems, and merchant accounts.

How does the payment system for small businesses work?

• Transaction initiation
  A customer decides to make a payment using a credit or debit card. The customer’s card details are captured via a point-of-sale (POS) system, an online payment gateway, or other card-accepting devices.
   
• Authorization
  The card details are sent to the payment processor, which forwards the transaction details to the card-issuing bank for authorization. The bank checks the card’s validity and whether or not the customer has sufficient funds or credit. If everything is in order, the bank sends an authorization code to the payment processor, and the transaction can proceed.
   
• Settlement
  The authorized transaction is batched with other transactions to be processed, usually at the end of the business day. The payment processor facilitates the transfer of funds from the card-issuing bank to the business’s account. The business’s bank credits the business’s account with the transaction amount, minus any fees associated with the transaction.

Why to Choose Techzert for Payment Consultants

• Speed of transactions
  Small businesses tend to operate with limited resources. Fast payment processing means they receive money quickly, improving their ability to manage daily expenses.
• Customer experience
  Customers expect a variety of payment options, including credit cards, online payments, and mobile payments. By meeting these expectations, small businesses can improve customer satisfaction and encourage repeat business.
• Accuracy and record keeping
  Automated payment processing helps maintain accurate financial records. It is done to keep a watch on sales and manage inventory and for tax purposes. Rectifying errors in manual processing can be costly and time-consuming.
• Security
  Digital payment methods are always safe and more secure than cash because they reduce the risk of theft and fraud. Keeping customer and business finances safe is a key aspect of business relationships.
• Global reach
  Businesses that are about to enlarge themselves across the world, get the benefit of sending and receiving money easily from any corner of the world.
• Reduced paperwork
  Electronic payments reduce the need for paper-based invoicing and record-keeping, which saves time and reduces environmental impact.
• Management of recurring payments
  For businesses that operate on a subscription model or need to manage regular billing, automated payment systems simplify the process by guaranteeing timely and regular payments without the need for constant manual intervention.
• Cost-effectiveness
  They eliminate bank deposit fees, the labor involved in manual processing, and the need to physically transport money. Processing digital payments costs 57% less on average than processing nondigital payments.
• Analytical insights
  Many payment processing systems come with analytical tools that offer insight into sales trends, peak purchasing times, and customer behavior. These insights can inform business strategies and marketing efforts.

Best Payment Systems for Small Business

Payment gateways are a merchant service that processes credit card payments for both ecommerce sites and traditional brick-and-mortar stores. They can be thought of as the metaphorical cash register in an electronic transaction. A payment gateway acts as the central cog in the payment processing system, whether you are making a purchase online or in-store. Within a transaction, it is the front-end mechanism that collects, transfers and authorizes customer information in real-time to a merchant’s bank, where the transaction itself is then processed.

A merchant account is an account into which funds from debit and credit card purchases are transferred after they have been processed. It’s a very important part of the payments process, along with payment gateways and payment processors. While you own the account, you won’t have direct access to it. Instead, the funds in your merchant account are automatically transferred to your business banking account in 1-2 business days.

A payment processor is a company that manages the credit card transaction process, acting as a kind of mediator between the bank and the merchant. Put simply, the payment processor communicates information from your customer’s card to your bank and the customer’s bank. Assuming there are enough funds, the transaction goes through. There are a broad range of fees associated with payment processors, including start-up fees, transaction fees, chargeback fees, termination fees, and lease charges for credit card processing equipment (generally, the third-party payment processor provides the equipment you use to accept card payments, including the credit card machines)

Benefits of Using Payment services for Small Business

Analyze transaction volumes and patterns
Look at how many transactions your business processes on average and the variability of these transactions. If your business experiences seasonal spikes or has a fluctuating sales volume, you need a provider that can handle these changes without causing disruptions. 

Identify the types of payments you need to accept
Determine the types of payments your customers prefer. These could include credit cards, debit cards, online payments, mobile payments, and international transactions. Your provider will need to support all these payment methods. 

Consider your business model and industry-specific requirements
Your business model and industry might have unique payment processing needs. For instance, if you run an online store, you’ll need a provider that specializes in ecommerce and can integrate smoothly with your website. Similarly, a brick-and-mortar store would require physical POS systems. Other industries might have different compliance requirements for a payment processor.

Future-proofing
If you plan to expand, whether by growing your product line, increasing transaction volumes, or expanding internationally, your payment processing provider should be able to support this growth. This might include scaling up your processing capabilities, adding new payment methods, or providing support for transactions in different currencies.

FAQ’s

Which payment gateway is best for small businesses?
There are innumerable online payment platforms like Paytm, Instamojo, PayU, Razorpay, Stripe, CCAvenue, Zaakpay etc for safe and secure transactions.

How can small businesses take payment online?
Small businesses have a range of online payment methods that allow clients to pay their invoices online conveniently. Accept Online Credit Card Payments on Your Website and Accept Mobile Payments.

How do Techzert set up payment processing for small businesses?
Techzert ensures your chosen payment methods adhere to security standards such as the PCI DSS for card payments. Consider the security features each method has to protect your business and customers from fraud.

What is payment processing?
Implementing payment-processing best practices can enhance the customer experience, minimise the risk of fraud and maintain compliance with industry regulations and standards.