Business Financing Tips

How Does Mobile Credit Card Processing Work?

Many people make most or all of their purchases, even small ones, using credit and debit cards. In order to compete and thrive, your business needs to be able to accept cards. This can be a challenge if your business operates in more than one location, rather than a brick-and-mortar storefront. Fortunately, there is a solution: smartphone credit card readers.

You can process credit and debit card payments using your smartphone and a credit card reader peripheral. Most peripherals are attached to a phone via the headphone port. You will need to use an app to handle taxes, tips, and receipts and a service provider to transfer funds from your phone to your bank.

Mobile payment services, apps, and credit card readers are available that work with most smartphone models. The card reader and app are usually free. The service generates money from fees. Before you choose a service or card reader, make sure they are compatible with your smartphone model.

In order to process payments from your smartphone, you will probably need a merchant account. This is a special bank account that works with a processor service to transfer money from a customer’s credit or debit card to your bank. Some mobile card swiping services can be connected directly to a bank account, which eliminates the need for a merchant account. The availability of the funds varies from service to service.

Most mobile payment services charge a fee of around 2.7 percent per swipe. The fees are higher for transactions that are keyed in instead of swiped. Some services have a tiered system with lower fees for more transactions.

Using a smartphone to process credit and debit card payments requires that data be sent over a Wi-Fi connection or cellular service. Depending on your data plan, you may incur fees for overages.

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