A 2024 Federal Reserve study shows that American consumers under 55 years use cash for only 12% of payments, while those 55 and older, use it for 22% of payments. What’s more, for the first time in the history of this study, cash wasn’t the most popular payment method for smaller amounts ($25 or less).
The research once again confirms that consumers appreciate hassle-free, cashless, savvy payment transactions. As a small business owner, the ease, efficiency, and convenience of non-cash payments can benefit you too.
To accept credit card payments, you need access to a critical piece—your point of sale (POS) or payment terminal. While going cashless is great, your choice of payment terminal will influence costs, integrations, cash flow, and other factors.
In this article, we’ll discuss some of the top things merchants need to know about credit card terminals and how to select the right one for your business.
What Is a Credit Card Terminal?
Card terminals are hardware or software that enable merchants to accept contactless, mobile, online, or card payments. Cardholders can swipe, tap, or dip their cards into them to make payments.
Alternatively, they can scan QR codes on the terminal screen and pay using their mobile wallets (e.g., Google Pay or Apple Pay). This versatility offers ample flexibility and convenience, as consumers can pay using any method of their choice.
Types of Credit Card Terminals
Essentially, payment terminals provide an interface between the customer’s payment card or digital wallet, the payment processor, and the merchant’s acquiring bank. Let’s take a look at the most common types of terminals.
1. Traditional payment terminals
Traditional payment terminals are stationary devices placed on table tops or checkout counters. They typically have a display screen, a keypad, a card reader, a cash drawer, and an internet connection (via phone lines, Wi-Fi, or Ethernet). These are best-suited for merchants with a single, physical store or business establishment such as small retail shops, cafes, gyms, and hotels.
2. Mobile credit card terminals
For businesses on the move, such as delivery services or food trucks, a mobile terminal is crucial. These are smaller, portable, battery-powered units that can connect to the internet via smartphones or a local Wi-Fi connection.
3. Wireless credit card terminals
Wireless terminals are quite similar to mobile terminals (being small and portable). However, unlike mobile terminals, they can operate independently of a smartphone. In other words, they can connect wirelessly via cellular networks or Bluetooth to provide services on the move.
4. Virtual terminals
A virtual terminal is a software that uses an online payment gateway to process payments. Merchants can use it from their computer or tablet, to process online orders or over-the-phone payments when a physical card isn’t present (card-not-present transactions). These are ideal for restaurants or cafes that accept online or phone orders.
5. POS systems
A point of sale (POS) system is an integrated, all-in-one device that can combine functions including that of a card reader, a cash register, a receipt printer, and even a CRM system. The exact functions will depend on the type of POS system you have. However, the idea is to provide you with an all-in-one payment solution.
Choosing a Payment Terminal: What to Consider
Now that we’ve covered the basics, let’s look at the things that matter the most in a payment terminal for your business.
Ease of use and setup
Having an easy-to-use terminal can minimize the need and cost of training employees. A smooth setup can avoid unnecessary hassle and downtime, especially during peak times. It can also enable a quick and efficient checkout experience for customers.
Secure transactions
Cashless transactions are susceptible to data fraud and breaches. Any breach of security could have drastic consequences for your business’s reputation. To ensure secure transactions, prioritize confirming that your card reader or point of sale is compliant with industry standards such as PCI DSS.
Customization and integration
Find out how customizable the terminal is at meeting your unique business needs. Custom integrations often require an API from the provider. Check if the solution can integrate seamlessly with your existing systems such as accounting software or loyalty programs for smoother processing.
Cost and pricing
Upfront costs of the software/hardware is an important consideration when choosing a payment terminal. Be mindful of any long-term or hidden costs as well. These may include fees for application, compliance, chargebacks, or minimum transactions. If your provider asks you to sign a contract to this effect, make sure to read the fine print carefully.
Offline capability
Check if you can use the credit card terminal even without an internet connection. This can help you avoid any disruptions during unexpected internet or power outages, providing better customer experiences and avoiding any loss of business.
Customer support and warranties
Find out how quickly and easily you can contact the provider in case of technical issues. Often, this could happen during crunch times with an annoyed customer waiting at the billing counter. Look for information about support and warranties from the provider as well as online reviews.
Accessories
You may also want to check if the device comes with any useful accessories. These may include simple add-ons like chargers, receipt paper, or a carrying case.
Add-ons
Check if the equipment offers any other features, besides payment processing. Some useful ones could be inventory management, customer tracking, and sales reporting. These can improve efficiency, provide customized insights, and enhance customer loyalty.
Where to Buy
When it comes to actually buying a terminal, you have a range of options:
- Dedicated payment processors: Many payment service providers, including Payment Depot, offer a range of credit card processing services along with compatible hardware. It’s generally better to purchase equipment instead of leasing it as the latter turns out to be more expensive.
- Retail stores: Marketplaces like Amazon and Best Buy also sell credit card terminals. However, the range of products may be limited.
- Manufacturers: While you can directly buy from manufacturers like Verifone, this may not be suited for all kinds of businesses. This may also require detailed technical research.
Making the Right Choice
While sifting through the range of options available, keep the following criteria in mind.
- Consider your business needs. These could revolve around your checkout process, the ease of use, cost, or hardware needs. Your business requirements should be the starting point of your search.
- Compare different options. Look for customer reviews on reliable forums, social media, and product websites. These can give you a fair understanding of the benefits and services bundled in with the credit card terminals.
- Prioritize ease of use and security. Choose the option that provides the highest levels of ease, security, and useful features. Remember, your credit card terminal is a key device for seamless checkout, building customer trust and enhancing the efficiency of your business.
Final Words
As customers increasingly go cashless, credit card processing has become a necessity for merchants. When it comes to procuring a credit card terminal, make an informed decision based on facts rather than whims. Keep your business needs at the heart of the decision-making process and conduct thorough research.
When you buy a terminal, look for features and services that align with the needs and preferences of your customers. To learn how Payment Depot can help with this, contact us today.
