Cashing in: How to take payments when you’re starting a business

By Antonia Chitty
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Taking payments is key to the success of your new biz. Read on to uncover your options.

You’ve got a great business idea, a name, and maybe even a website, but have you thought about how money will come into the business. I mean, customers are going to want to pay you. And even if your first paying customer seems a long way off, it can take weeks or sometimes months to set up all the ways that your business might need to be able to take payment.

Read on to find out what you need to know, from opening your first business bank account to having a fully functioning merchant account allowing you to take credit and debit cards online and face to face.

Business beginnings

First step: opening a business bank account. This can seem complicated so here are some key things to remember:

Make your life easier and take some ID with you, like a passport and driving licence. You may need proof of your address, like a recent bill. And if you have a company or partnership you’ll need documents about the business, such as a certificate of incorporation. This is all important stuff, because it means you can start taking cash and cheque payments and have somewhere to pay them in to. Find more business banks to compare here: it’s worth shopping around to avoid charges.

Cashing (and chequing) in!

While cash and cheque payments are still important, online payment is key to almost every business nowadays. To take online payments you’ll need a bank account, but you’ll also need some way for the money to make it from your website shopping cart to your bank.

That happens via a payment gateway.  What’s that? I hear you ask. It’s simply all about where people enter their credit card details, and how the money makes it from their account to yours. But more of that later.

People prefer Paypal

Most people have heard of PayPal, and that’s a great place to start when taking online payments. If people are familiar with the payment system, they will trust it. If they trust it, they’ll be willing to pop those important card details in the little boxes and make a purchase. It’s easy to apply for, PayPal supplies you with the code for basic integration with your website, and you can be up and running within days.

PayPal charges you 1.9% + 20p per transaction. What’s more, for a fee, PayPal now offers a card machine too that you can link to your account via your phone. There are downsides to PayPal: it’s fees are relatively high so it’s best for small transactions. Find out more about this and some alternatives to PayPal like Amazon Pay and Google Wallet here.

Getting card-critical

PayPal is great for online businesses, but if you’re serious about your business we need to go back to merchant accounts and payment gateways.  You need a merchant account with a company like Elavon, Worldpay or Sagepay to take credit and debit cards. This is different to your bank account - your business bank may or may not offer a merchant account - but you’ll need a business bank account as a starting place.

The application process for a merchant account can take longer than setting up your regular bank account or PayPal, so start early, especially if you are opening a bricks and mortar business and want to take payments from day one.

A heads up...

Merchant account providers charge fees, so it is worth checking out a range of providers. You may have to pay a flat fee for a card machine, and a fee per transaction. Find out how quickly your money will reach your account, which is important for cashflow. You can compare merchant accounts here. Ask yourself, does the payment gateway operate in the right countries and currencies for your customers?

For some businesses, setting prices in dollars can increase sales as you are seen to have a global market, but check the rates you get charged for dollar payments. For example, Stripe charges fees of 1.4% + 20p for European credit and debit cards, but 2.9% + 20p for non-European cards. On the positive side, it accepts 135+ currencies! You also need to ensure you’re insured to ship globally.

Bricks and mortar

For some businesses, online payments may be unimportant, so why not check out iZettle? Currently charging only £25 for a card machine, plus from 2.75% per transaction, it doesn’t require a merchant account, but might be good if you are running a bar, café, hairdressers or any other sort of shop without a website.

Up to spec with tech

Once you have a merchant account, you will need to add the relevant code to your website. Unless you’re a top tech wizard, this is probably the stage where you’ll hand integration over to your web guys. They need to make sure that your site is PCI DSS compliant – follow the link for a detailed list of what this means, but basically it is all about making sure card data is kept safe.

Top Takeaway

If you only do one thing after reading this article, make a start! If you have a business idea but not a bank account, check out the different business bank accounts available. If you have a business and a bank account but aren’t yet able to take cards, start comparing merchant accounts.

Author bio: Antonia Chitty is an award winning entrepreneur and author of books on business and enterprise. She blogs at www.familyfriendlyworking.co.uk Her latest books include Blogging: The Essential Guide (Need2Know) and Making Money Online (Hale Books).

 

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