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Credit and debit card payments: Top tips for your small business

Credit and debit cards are cards issued by the bank or financial institution that let your customers pay for goods and services. A credit card lets your customers pay for your goods and services by incurring a debt with a credit card provider. Debit cards deduct the amount of money from a sale from a customer’s bank account.

The difference between a credit and debit card is not usually important for running a business. On the front, credit and debit cards have an issue date, expiry date and credit or debit card number. On the back, they usually have a security code and signature.

Some debit and credit cards have a chip for contactless payments using technologies such as MasterCard PayPass and Visa PayWave. Credit and debit often have a Personal Identification Number (PIN) that customers need to use to authorise payments, although this can depend on the purchase amount.

Contactless payment technologies

Contactless payment technologies, such as MasterCard PayPass and Visa PayWave, let your customers pay without scanning their card and typing in their PIN. Not all credit and debit card terminals are compatible with credit and debit cards with contactless payment technologies. There may be upgrade costs if you want to let your customers use them.

Benefits of credit and debit card payments

Credit and debit cards have several advantages over other payment methods that can be used by your business. Check out these examples:

  • Low labour costs

    After short delays, debit and credit card payments go directly into your bank account. You don’t need to pay people or spend time to bank them.
  • Less risk of theft

    Credit and debit card payments go directly into your bank account, so there’s less risk of theft.
  • Fast transaction speed

    Credit and debit card payments are very fast to process.
  • Proof of payment

    Credit and debit card providers keep records, which act as proof of payment. Proof of payment can help resolve disputes.
  • Convenience

    Some customers may prefer credit and debit card payments due to convenience.
  • Can be automatic

    Credit and debit card payments can be more efficient, since they can be automatic.

Disadvantages of credit and debit card payments

Credit and debit have several disadvantages over other payment methods. Consider these examples:

  • Service fees

    Processing credit and debit card payments usually requires paying service fees to banks, credit unions or online third-party payment services.
  • Transaction fees

    Some credit and debit card providers may charge you a fee per transaction.
  • Lack of privacy

    Credit and debits cards create a record of each transaction. Some customers may prefer cash for private goods and services, such as medications.
  • Reliance on electrical and telecommunication infrastructure

    Processing credit and debit card transactions requires electricity and sometimes needs access to a phone network. Cash may be more reliable if these services are unavailable or unreliable.
  • Customers can challenge credit and debit card payments

    Dissatisfied customers may challenge debit and credit payments.
  • Reputational risk

    Mishandling credit or debit information can damage your business’ reputation. Make sure you keep all customer data private and secure.
  • Technical problems

    Machines to process credit and debit card payments can malfunction.

Processing credit and debit card payments

There several different ways you can process credit and debit card payments. Check out these examples:

  • Online

    Credit and debit card payments let you sell your goods and services online. Processing a credit or debit card payment online usually requires the card’s expiry date, security code and credit or debit card number. Check our Online payments page to learn more.
  • Point of sale

    You can accept debit and credit card payments at the point of sale using certain types of EFTPOS machines. Processing payments at the point of sale usually requires scanning the card and getting the customer to type in their passcode. Read our EFTPOS payments page to learn more.
  • Over the phone

    You may be able to accept credit card payments over the phone
  • By mail

    You can accept credit and debit card payments by mail. Processing a payment by mail usually requires getting your customers to write the card’s security code, expiry date and debit or credit card number on a form.

Remember, regardless of how you process credit and debit card payments you need to make sure you keep your customers personal and payment details secure.

Tips for using credit and debit card payments

If you want to offer debit and credit payment offers, there are a range of tips that can help your business. Check out these examples:

  • Use debit and credit card payments for high-value items

    If you sell a lot of high-value goods or services, encourage your customers to pay by credit card, debit card or another electronic payment method to lower cash’s risk of theft. For example, you could charge extra if they want to pay by cash. Receiving too much cash increases labour costs and the risk of theft.
  • Make sure credit and debit card sales are profitable

    Transaction costs can make credit and debit card sales unprofitable.
  • Offer debit and credit card payments for online sales

    Other payment methods for online sales are slow, such as money order and cheque. Customers may prefer credit and debit card.
  • Securely handle credit and debit card information

    It is good to only retain credit and debit card information if you need it. Make sure online credit and debit card payments use encryption. If you can, discourage sending credit and debit card information through the mail.

This content was first published on business.gov.au

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