How to Accept Credit Card Payments on Your Smartphone

More and more businesses around the world are turning to mobile POS payments for B2B and B2C payments to the tune of $745 million in 2019. That number is expected to grow by 30.1 percent annually reaching approximately $2 billion in payments by 2023. 

Credit card payment by phone makes transactions possible and easy for many types of businesses. These include the predictable retailers, restaurants, food trucks, artists, and farmers markets.

But phone credit card processing on the spot also works for any type of mobile business or sales that previously used invoicing and checks to get paid. Plumbers, hairstylists, event planners, gardeners, massage professionals, HVAC professionals, independent physicians, tutors, and home-service physicians are just a few examples.

But how exactly do you accept credit card payments on your smartphone, you’re wondering?

To help, we’ve put together the basics of accepting mobile credit card payments. Keep reading to learn about the apps and hardware that you’ll need and the payment provider plans.

Then, you’ll be ready to get your own credit card payment process set up on your phone so you can start accepting payments right away for your business.

Phone Credit Card Processing Basics

To accept credit card payments on your phone, you’ll need to download a processing app onto your smartphone and get a credit card reader that sends the credit card information to the app.

A payment processing company gives you the app to download. The company processes the credit card information, takes a small fee, and deposits the rest of the payment into your company’s bank account. 

Payment processing companies offer different types of plans for you for their processing service. These include flat-rate, tiered, and interchange-plus pricing plans. Your best bet is to talk to the company offering the plans to get a clear understanding of all prices and then do the simple math to see which is most cost-effective for the size of your business and, therefore, the volume of your sales.

The Credit Card Reader

The credit card reader is a small piece of equipment lets you swipe or insert your customer’s credit card to read the electronic information on the stripe or chip.

Mobile phone credit card readers either plug into your smartphone in the earbud jack or use Bluetooth technology to send the information to the app on your phone.

The information is encrypted and sent directly to the payment processing company. It is not stored on your smartphone. This protects the credit card owner and you from theft. 

Some credit card readers only let you swipe the magnetic stripe. These are not as safe from credit card fraud as the readers that read chip cards using EMV technology.

With losses of up to $400 million a year from mag-stripe credit card transactions, this is key.

EMV technology is another layer of data protection. EMV stands for Europay, Mastercard and Visa. It authenticates the credit card transaction which protects both the merchant and the customer. 

It can detect unusual transactions and alert your payment processing company if something seems strange and might be fraud.

The Payment Plan Options

Most credit card payment processing companies offer several pricing plans for their service to you. 

A flat-rate plan is great if you’re starting out and only expect to earn several thousand dollars a month. The plan charges you a set percentage of each transaction, somewhere around 2.75 percent, for example.

You may also be charged a small transaction fee around $0.15 per transaction. Some flat-rate plans also charge a monthly fee. 

A tiered-pricing plan is similar to the flat-rate plan but gives you different rates based on the type of credit card used at the point of sale. Debit and credit cards have the lowest rates. Then, the rates go up for rewards cards. The highest rates are for corporate credit cards and cards that aren’t at the POS but rather keyed in by you. This would happen for a phone sale, for example.

An interchange-plus pricing plan is based on pricing that the processing company has to pay to the credit card companies. The percentage is based on the profit the processing company makes. Merchants like this type of plan because they say it’s most transparent but it’s also the most complicated. Do your math before you sign up.

Signing Up for a Plan

To sign up for a processing plan, you generally fill out an application first. Most have a downloadable application on their website.

You will be asked the basics about your company, like tax ID and company status. Once verified and approved, you will let the company know where you want your funds deposited.

For your basic plans, this should only take a few days at most. You will then download the company’s processing application onto your smartphone.

You can use a credit card reader that your payment company provides but make sure it has the chip reader with the EMV technology to protect you and your customers from fraud. If needed, you can purchase a smartphone credit card reader with chip reader separately.

Credit Card Payment by Phone for Your Business

Now that you know the basics on how to set up credit card payment by phone, you’re ready to get the app, processor and plan that best suits your needs.

To start, get in touch with us by phone or on our website so we can take a look at your business and help you select the best smartphone payment solution. We’re here to answer questions and make it easy for you to boost your profit margin by being able to efficiently accept payments from customers wherever you go.

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