OK, we have covered every aspect of preparing your retail establishment, what to look for in finding a merchant account, and lastly the information you’ll need to obtain your retail merchant account. Let’s switch gears a bit and look into choosing a POS terminal for your business. Do you need a full-featured all-in-one solution? Perhaps just a basic swipe terminal solution is all that’s required. This section will aid you in the decision-making process.
Determining the Features Your Swipe Terminal Needs
Before you begin looking at swipe terminals, you need to come to a conclusion on what types of payment you will want to accept. POS terminals have the ability to accept much more than just traditional credit cards. Here are some of the other types of payment that can be processed, in addition to credit cards:
- Debit Cards
Most all POS terminals have the option of allowing you to accept debit cards like Star, Interlink, Pulse, Maestro, and others. Some terminals have an internal PIN pad which your customers use to enter their PINs. Others have a port to connect a hand-held PIN pad. The biggest benefit to accepting debit cards is the fact that only a transaction fee is charged, almost never a discount rate. Choosing whether to have a POS swipe terminal with an internal or external PIN pad depends on some factors like:
1. Do you mind customers handling your terminal to enter their PIN? Or would you be more comfortable with them using a hand-held PIN pad instead?
2. There is less clutter with an internal PIN pad since it is an all-in-one unit
External PIN pads usually can be purchased for between $100 and $200.
- Electronic Check Conversion (ECC)
Simply put, ECC will allow you to process paper checks electronically. In order to do this you’d need to have a check imager/reader. These run a few hundred dollars. What they do is scan the MICR line at the bottom of the check and take an image of the entire check to store for your records. You might see this at some bank ATM machines, where they scan your check and print a copy of it out on your receipt.
Here’s some advantages to using Electronic Check Conversion:
1. Money is deposited into your account faster
2. Reduces paper check handling, like eliminating the need to deposit checks at your bank
3. Eliminates risk of losing or having paper checks stolen
4. Returned checks are reported sooner so you can collect more effectively
- Loyalty Cards (gift and rewards cards)
Accepting loyalty cards is great if you plan to be very promotional with your goods. This solution is good for primary cash environments like grocery, movie rental, hardware stores, etc. Accepting loyalty cards will help increase business. You’ve seen these at grocery stores where they scan a little card that gives you “bonus points” for shopping. They also allow you to take advantage of current promotions. Many terminals can be programmed to accept loyalty cards.
- Smart Cards
Updated April 3rd, 2012: Mastercard and Visa is doing what they can to spur the U.S. adoption of EMV chip card technology (smart cards). This makes it even more important to take into consideration. You don’t want to end up having to change terminals after 6 months.
More information on the EMV standard:
Smart cards are still very new. In addition to paying for goods, like a credit card, smart cards have a special chip in them that allows you to store specific information. College campuses have begun using these to keep information on students, in addition to allowing them to “charge up” their cards with money.
Smart cards will probably take over the traditional credit card market within the next 5 to 10 years. It would be in your best interest to invest in a terminal that can be upgraded for smart cards, either with an internal smart card processor or the addition of a hand-held smart card reader/writer. These external units cost about the same as external PIN pads.
- ATM/Check Cards
These are commonly referred to as debit cards, however they are actually check/ATM cards. You can tell their difference from typical debit cards because they will have a Visa or MasterCard logo on them. These cards can either be processed the same as credit cards or you can accept them as debit cards where the customer enters in their PIN. It would be beneficial to you if you accept them like you would a PIN-based debit card, then you’d only incur a small transaction fee and no discount rate. This will save you money in processing costs.
- Electronic Benefits Transfer (EBT)
If you wish to cater to food stamp and cash welfare benefit customers, then accepting EBT cards is for you. EBT isn’t just good for food purchases, but can include many non-food items. EBT works just like debit card processing. You will either need a POS terminal that has an internal PIN pad or purchase an external PIN pad. EBT customers need to be able to enter in their PIN during checkout.
Retail Merchant Accounts & POS Swipe Terminal Guide (page 4 of 6)