Accepting Credit Cards

Are you accepting credit cards or planning on doing so. This has been several years of trial and error and just when I thought I had it all figured out I learned something new. Let me share with you what I have learned.

All the different ways to have a merchant account:

Virtual terminal (online) – this usually means the card is not present and you are manually keying in a credit card or you have a shopping cart or purchase button on your website.

Mobile (phone, iPad/tablet or computer) – the Square, most merchant accounts will offer you a swiping device or PayPal type of accounts.

Card reader (card reader machine, magnetic swipe and now chip) – where you swipe the card and you can also manually key in the purchase. cardreader

Telephone – with almost all of these you can call in a charge at usually a higher rate.

Merchant fees

The state of California does not let you pass off the merchant fees to the customer. What you are allowed to do is offer a discount for paying by cash or check.

The most common credit cards are Visa and MasterCard. American Express recently sent me a notice that they were changing their fees to be the same as the fees for Visa and MasterCard.

There are two fee structures:

  • The percentage rate you are charged for each transaction and a transaction fee.
  • The merchant fees you are charge
  • The flat fee programs like Square or PayPal

Costco is a good example:

On Site & In Store = 1.38%    .19 each transaction (card swiped)

Online = 1.99%                        .25 each transaction

On-the-Go = 1.38%                 .19 each transaction (card swiped)

The cheapest rates you will get are for when you have the card present and swipe it. Costco does seem to have the cheapest rates. You pay $5.00 fee for your monthly statement and if you have the card present and swipe it you can have 1.38% rate and .19 per transaction.

12/10/16 – Update
I have recently experienced using Stripe as a merchant account. It only allows for a shopping cart on your website or mobile device and the use of a plugin to create the shopping cart. Though it does seem to have the lowest of merchant charges. 2.9% + .30 per transaction, no monthly fees and no PCI charges. Stripe to me is a bit confusing and does need a web developer to set up. They are constantly coming up with new platforms that may eliminate the need for plugins but I would encourage you to look closer and what it offers. 

I prefer to have the ability to place a purchase button on my website for workshops or groups. This is a virtual account. What I have learned is that if you want to swipe cards you should get a merchant account for that, you will get the best rates and fee structure. Then if you wanted to do virtual you can still log in and run credit cards, you can also use a card swiper (but you will be charged at your virtual account rate) and you can place purchase buttons or a shopping cart on your website.

Sounds clear but it gets more complicated.

There are 4 types of cards for the most part:  (this is just an example)

  • Basic Credit Card = Qualified Card @ a rate of 1.99%
  • Rewards Card or Business Cards = mid qualified @ rate of 2.65%
  • Corporate cards = non qualified @ 2.89%
  • International Cards = I didn’t use this but I think the rate was over 3%

I understand why merchants often want to switch to square or PayPal where you are charged 2.75% as a flat fee.  Fact checking the rate I see that Square is going to offer a chip reader. This may be the best way to go. What I still need to find out is can you swipe or chip the card as well as do online purchase buttons.

So far with all of the companies I have spoken with you would need a merchant account to use a card reader machine and a second account if you wanted it to be virtual. I can swipe cards with my virtual account but I will not benefit from the lower rates I get when the card is present. It all has to do with risk, they prefer you have the card present and now use a chip reader, second is card present and magnetic swipe and last is not having the card present and either manually keying in the charge or having them online with a shopping cart or purchase button.

Having the ability to log in and make the charges when I want to has been useful to me. I have many clients that will pay me at the end of the month and I can log in when it is convenient for me to run the charges. I like to do all my billing at one time. The marketing rule of thumb has been that the easier you make it for someone to sign up and pay for a workshop or group you increase your registration by 8%. I know if print out a form and plan to send a check or credit card information I might procrastinate and then not do it at all. So accepting credit cards has been helpful in my practice. Learning about the right merchant account has been a nightmare. A final example of the nightmare. When I was speaking with the account person, asking them to go over my account, I learned the rate charged could change by how much information I put on the form. I had noticed with Costco all they wanted was the card information and zip code. With the current service I use I put in credit card info as well as name, full address and email if the person wants an email receipt. I had no idea this made a difference apparently to MasterCard, Visa and American Express it does.

I hope that my research has been helpful and if I can help in any way developing your practice or accepting credit cards please contact me at

Licia Ginne