Understanding Online Payments: How to Process Without Special Equipment
When you think about credit and debit card processing, do you picture the stereotypical gray plastic and colorful buttons of a countertop card swiper or PIN pad? If so, the idea of processing credit cards without any special equipment might sound foreign.
In this post we’ll explain what it means to process payments without a physical credit card machine, and discuss why many professional services firms are making the switch to online payments.
The evolution of online payments
As recently as a decade ago, businesses had to sort themselves into one of two buckets when it came to credit card processing: businesses that took payments in person used a swiper or credit card processing machine; those that offered an e-commerce shopping experience on the web accepted payments online.
But as online payments technology has improved over the years, and as consumers have become accustomed to the ease and convenience of paying for goods online, demand for the online payment experience has spread to service industries. Today’s online payment solutions allow customers to type in a specific dollar amount, rather than simply paying for items in a “shopping cart.” This is great for professional firms looking to offer easy bill-payment functionality, either in the office at the time services are performed or for charges that are invoiced for payment at a future date.
The proliferation of smartphones and mobile credit card readers has made the shift to online payments even easier for businesses. Technologies like simple USB card swipers and online payment interfaces have reinvented what it means to process credit cards, allowing you to swipe a card directly into an online payment form without a physical credit card machine.
Today, online payment solutions increasingly offer more tools that cater specifically to professionals, driving the development of a seamless modern payment experience for both invoiced and in-person payments.
How online payments work, for you and your clients
So what exactly does this modern payment experience look like? It revolves around a secure online interface, or virtual terminal, that you log in to through your web browser, for example, Chrome or Safari.
To run a payment yourself, you can manually type credit or debit card information into a secure web portal, or payment form. If your payment processor provides a card swiper that connects to your computer or tablet, you also have the option to swipe a card directly into the virtual terminal. The card swiper reads the card information electronically and enters it into your payment form.
To let clients pay quickly and easily on their own, some payment solutions offer customizable, secure payment pages. With this option, you can link to your personalized payment page in an email, on your invoice, or on your website. Your client can then visit your payment page, type in their payment information, and submit payment.
If you or your client type or key payment info into the online portal, you’ll probably pay a card-not-present rate on the transaction, whereas if you swipe a credit card into the portal, you’ll probably pay a card-present rate. The important factor is to have the ability to run both types of transactions, since your client might not always be in your office for in-person payment. That’s why it’s crucial to choose a payment solution with pricing that’s optimized for both types, with competitive card-not-present rates.
Benefits of processing online, without a credit card machine
Essentially, an online payment solution eliminates the need for you to buy or rent additional physical hardware from your payment processor to accept credit and debit card payments. Instead, online payments technology allows you to transform your office PC or tablet, or even your smartphone, into a credit card terminal.
Online payments also introduce greater simplicity, speed, and efficiency into your payments process. When clients can pay on their own device—and their own schedule—it encourages faster payment. In fact, one study of the legal industry found that firms that accept online credit card payments get paid 39 percent faster on average.
If an update needs to be made to a web-based payment solution, your payments provider typically handles it with no effort on your part—you simply log in as usual and gain access to new features and system improvements. With some credit card machines, making updates is a manual process that requires connecting the hardware to a telephone landline and experiencing downtime while you wait for the update to download and install.
There are also security benefits to processing payments online. When you let clients enter their own payment information into a secure payment page provided by a third-party processor with top-notch security, you no longer need to take possession of sensitive cardholder data. This effectively shifts much of the liability related to storage and handling of cardholder data off of your firm.
Speaking of which, there’s some data you do want to have stored and easily accessible—your payment data. With many physical credit card machines, you can only access 30 days worth of historical payment data, and you have to print out long, cumbersome paper reports and keep them on file for future reference. Transactions might be listed as line items without a name attached to them, so you have no way of knowing who made each payment. This makes reporting and recordkeeping much harder than it needs to be in the digital age.
With an online solution, your data is digitized and searchable, making it easier to access, organize, and analyze. Today’s online payment systems also allow for custom form fields, which means you can collect information like invoice or reference number at the time of payment.
Finally, don’t underestimate the value of meeting your clients where they are, and offering the level of service they’ve become accustomed to. With online payment options, you can give clients the modern payment experience they’ve come to expect from businesses of all types. These days, you may have some clients you never see in person at all. They can upload their tax and financial documents into a secure portal and sign documents electronically. Why not let them pay online, as well?
To learn more about the technological innovations and client payment trends driving the shift to online payments, download our e-book, “Getting Paid: What CPAs Need to Know for 2018.”