Fintech Insights

How to find the right credit card system


July 09, 2019

It’s an exciting time to own and operate a business. There are more tools than ever to help businesses operate efficiently. Mobile technology allows us to conduct business virtually anywhere. Barriers to entry are dropping making the sky the only limit on the business horizon.

Payment technology has come a long way, too. That makes now the perfect time to explore what’s new in credit card systems. By crafting the perfect payment mix for your business you can better serve your customers and boost your bottom line.

We’ll begin our look at credit card systems with payment processors. We’ll then dive into how credit card processing works, both in-store and online. We’ll wrap up touching on the importance of payment security and looking at look at how the rise of omnicommerce is transforming how we do business.

What is a payment processor?

Selecting the right credit card acceptance system starts with a payment processor. A payment processor (also known as a credit card processor) allows businesses to accept credit, debit and other forms of electronic payments. Payment processors connect businesses, consumers, banks and card networks in order to conduct transactions that fuel the global economy.

Imagine having to create the infrastructure to connect your business to the bank of every customer who ever makes a purchase. Thankfully payment processors make all those connections for you. Payment processors make payments easy for customers and businesses alike.

How do businesses accept credit cards in-store?

Payments have come a long way from the days of manual credit card imprinters and carbon copies. Accepting credit cards today is easier than ever.

Accepting credit and debit cards in-store are called “card-present” transactions, because the cardholder is in possession of the card and uses it to make a payment in-person. “Card-present” (CP) and “card-not-present” (CNP) are the terms used to classify payments at the highest level. Payment classifications are important because they impact the cost of payment acceptance.

Let’s look at four major methods for accepting card payments in-store: credit card terminals, integrated POS systems, self-service checkout and mobile payment acceptance.

Credit card terminals

Credit card terminals are perhaps the most familiar credit card system as they’ve been the workhorse of electronic payments for decades. These durable and effective devices connect to payment networks to perform essential credit and debit cards transaction processing. Credit card terminals endure because of their low cost, easy maintenance, durability and ease of use.

Though simple in appearance, newer credit card terminals are smarter than ever. Even today’s basic terminals are equipped with sophisticated EMV chip card security. Many “simple” credit card terminals use NFC technology to accept smartphones payments with popular digital wallets.

Integrated point of sale (POS) systems

An integrated point of sale (POS) system combines the functionality of a robust terminal with other essential systems for businesses, like accounting and inventory. “Integrated” in this context simply means the payment software is built directly into the point of sale system.

Integrated POS systems are directly integrated with platforms of leading payment processors, like Worldpay. POS systems are highly customizable, and can evolve as the business grows and changes. Integrates systems are often optimized for use in particular industries where they play a larger in business operations:

  • Restaurant POS systems are available for every type of food and beverage service to help manage menus, kitchen and bar orders, delivery schedules, inventory, sales and more
  • In addition to accepting payments, retail POS systems can check inventory in real-time across multiple locations, scan items, manage pricing updates and add custom inventory
  • Hotel POS systems offer built-in folio management software to handle reservations and third-party bookings, room service charges, and cancellation fees
  • Service providers benefit from integrated POS software that helps manage client scheduling (even for multiple providers or vendors), product add-ons, co-pays, billing, and subscriptions

Self-service checkout

Self-service checkout is a rapidly evolving feature of the retail landscape. Self-service checkout allows customers to can scan items, select options from a touch screen, and pay with a credit or debit card all in one place. The customer’s card is present, but the sales clerk may not be, or is only nearby to assist customers when needed.

Self-checkout kiosks are common in grocery stores, movie theaters, quick-serve restaurants and parking services. Most customers love self-service—it gives them the freedom to guide their own checkout experience. Businesses appreciate self-service because it introduces operational efficiencies and cost savings, freeing staff to add value in other areas.

Mobile payment acceptance

Mobile payment acceptance is another way that payments are changing the ways we do business—for the better. Mobile card readers attach to ports on mobile devices like smartphones or tablets forming a mobile point of sale terminal that can accept payments virtually anywhere.

Mobile card readers and other innovations in mobile acceptance free businesses to accept credit cards wherever you connect with customers. That means businesses that operate on the go can enjoy the benefits of credit card acceptance. From food trucks to babysitters, from service calls to emergency towing, mobile payment acceptance is allowing commerce to take place anywhere.

Mobile acceptance is changing the ways we accept payments in-store as well. Mobile payment acceptance empowers any employee to take payment—not just those at a fixed checkout station. Mobile payment acceptance allows servers to accept payments tableside, or for “line-busters” to add checkout capacity when you need it most.

What about accepting credit cards online?

eCommerce is no longer a novelty, “up-and-coming trend” or next big thing. In fact, eCommerce has changed the fundamental ways businesses and their customers interact.

That revolution is made possible by emerging options in online payments. We’ll look at a few of the most common credit card systems for online acceptance: hosted checkout shopping carts, payment gateways, in-app purchasing and virtual terminals.

Hosted checkout and shopping carts

Hosted shopping cart solutions are an excellent choice for small businesses. Hosted shopping carts allow businesses of all sizes to offer modern checkout experiences with cutting edge security, simplicity and affordably. You continue to run your web site. At checkout, customers are sent to a payment page hosted by a payments partner or other third-party service provider.

A hosted shopping cart protects your website from handling sensitive card data, reducing exposure (or “scope”) of PCI requirements. This keeps sensitive card data from ever touching your systems, saving your business money and making it safer from the threats of suffering a costly data breach.

Payment gateways

Many expanding businesses find themselves in need of a payment gateway. Payment gateways provide a connection point between different systems, such as point of sale systems and card processing platforms.

Payment gateways offer maximum flexibility to work with different software vendors and credit card processors. For example, online payment gateways make expanding online easy for established business with a physical presence and existing payment processor.

Gateways can also serve as important links connecting in-store acceptance to the broader payments ecosystem. Payment gateways allow for businesses to work with more than one payment processor when the need arises.

In-app purchasing

In-app purchasing refers to a customer using a mobile application to make purchases without ever leaving the app. The popularity of in-app purchasing began with digital services that allowed consumers to buy additional digital content within the app, like music, games and movies.

Today, in-app purchasing is thriving in countless industries, from gaming to newspapers, while the quick-serve restaurant industry is on the cutting edge of in-app payments and mobile commerce. While some of the most popular innovations are made by large enterprises, app development and integrated payments are accessible to almost all business.

Virtual terminals

As the name implies, a virtual terminal is a credit card terminal without the physical terminal. Virtual terminals allow you to accept credit cards, debit cards and other electronic payments with a computer and web browser. No additional hardware needed.

Virtual terminals have a wide range of business utility that make them a popular addition to the payment mix for almost every business type:

  • Securely accept credit card payments via mail order or telephone order (MOTO)
  • Process electronic checks and ACH payments
  • Process recurring payments for subscriptions and other ongoing services

The importance of payment security

The security of payment and other personal data is an essential part of keeping your business safe. The negative impacts of data breaches and fraud are measured in financial and reputational losses that can be devastating to businesses of any size. That makes creating a payment security plan every bit as important as locking yours doors and using a security system.

In-store, EMV “chip-and-pin” technology has significantly reduced counterfeit fraud while reducing the likelihood of a data breach that help fuel future fraud. Online, the fight against eCommerce fraud continues to count victories even amid ongoing challenges. Widely-used tools such as CVV and AVS add additional data dimensions to help verify online transactions as legitimate.

Another vital technology at the heart of safer payments is tokenization. Tokenization helps to protect your business from the negative effects of a data breach by rendering sensitive data useless if stolen. Tokenization can reduce the scope of your systems that fall under PCI DSS, reducing the costs and time associated with compliance auditing.

Machine learning and AI are the newest tools in the fight against fraud. This technology is constantly learning to identify good transactions while keeping out the bad. Your payment processor can help you develop and implement customized payment security programs, no matter how you do business.

All together now: the rise of Omnicommerce

This overview of credit card systems described are known as shopping channels, like online, mobile or in-store. Channels have long offered a simple and often logical way to organize our businesses and serve our customers. Yet in an age where commerce is everywhere, integration is everything.

Omnichannel simply means “all channels.”  Your customers aren’t thinking in channels—they’re thinking about experiences. Serving your customers well means delivering experiences that are consistent, regardless of how and where they want to connect with your business. Customer experiences are everything these days. Omnichannel starts with customer experiences and works outward.

Omnicommerce inspires businesses to deliver consistent, simple experiences—whether online, in person or on-the-go. Omnicommerce delivers experiences that connect and transcend channels: the ability to get coupons and offers in-app, browse and purchase inventory online, exchange goods purchased online in-store, or share positive shopping experience on social media.

At the heart of successful omnicommerce solutions are payments. Businesses seeking to serve their customers across all channels need a payment processor that offers payments across every customer touchpoint. Having a single payments partner also simplifies support issues, billing and accounting.

Worldpay is a global leader in payment processing that helps business of all sizes enable every payment made anytime, anywhere and anyway. Connect with one of our payments experts today to learn more.