For longer than anyone can remember, business owners have worked hard to woo and keep their customers with captivating products, a friendly atmosphere, and that mysterious “X factor” that causes them to rise above their competitors. Only in recent years has the payment process become an equally important component in the complete package offered to buyers. Once you learn how small business credit card processing works, including its most recent innovations, you can begin to bring its advantages to your physical or ecommerce retail store.
A brief history of the evolution of credit cards.
In 1949, a New York businessman came up with the first credit card after forgetting to bring his wallet to an expensive dinner with some of his clients. Once people began using his brainchild, Diners Club, they could for the first time make charges throughout the month that they paid in full when the bill came. By 1957, Bank of America’s BankAmericard allowed consumers to carry over their existing balance to the following month – as long as they also paid a small fee.
In 1959, American Express replaced the cardboard credit cards they had formerly been using with the first plastic credit card that featured the cardholder’s name, address, and payment information in embossed characters. As a result of this invention, sellers could now imprint the details on carbon paper strips that were then provided to the bank, merchant, and seller as proof of purchase. By 1960, they were doing so with the help of what was known as a credit card imprinting machine.
Widespread use of this device meant that merchants no longer needed to go through the time-consuming process of painstakingly copying customers’ payment information. It also cut down on human transcription errors. Even today, some shops continue to keep an imprinting machine, also known as a “knuckle buster” as a backup should their more sophisticated systems fail.
The next leap forward happened in 1970 with the addition of the magnetic stripe to credit cards. All the necessary data needed to validate the payment (the cardholder’s name, card number, expiration date, and security code) could now be stored on this small area of the card. The electronic payment terminal was invented to read this information. Additionally, this new type of terminal provided a much higher level of security to both merchants and customers. Even so, consumers still needed to provide their signature after each transaction.
The chip or smart card was patented by French innovator Roland Moreno in 1975. Although it did not gain prominence in Europe for a few decades and took even longer to be embraced in the United States, it possessed many compelling features. Most notably, it could store a great deal of information and could securely communicate in real time with the other actors in the payments process. Furthermore, the chip embedded in the card made cloning and other fraudulent activities virtually impossible.
A word about credit card machines.
Initially, credit card machines used landline connections under the public switched telephone network to pass payment data between a merchant’s terminal and their bank. By necessity, the seller’s device was connected via hard wires, which meant that the terminal was stationary by default. Today, of course, there are several faster connection options, some of which do not require any cables at all.
The mobile phone has revolutionized the way retailers accept credit and debit card payments from their customers. Devices like smartphones and tablets can easily connect to card reader peripherals that enable sales associates to take customer payments from anywhere: on the sales floor, in a pop-up store or trade show, and even at curbside or in the customer’s home. Although flexibility and portability are enhanced exponentially, security remains robust. In addition, sellers can continue to access many of the business management features they have grown to depend on from their stationary point of sale (POS) solution.
Contactless card readers are another innovation that has transformed the digital payments universe, particularly after the coronavirus pandemic swept the world in 2020. These tap-and-go payments use devices such as card readers, customers’ mobile phones, and credit cards equipped with near-frequency communication (NFC) that exchange payment information back and forth when within close proximity of each other. Also, consumers can use this touchless technology in conjunction with the digital wallets on their smartphones to make Apple Pay, Google Pay, and other digital payments.
Increasingly, even owners of small businesses are coming to appreciate the benefits of the smart terminal technology that has become so readily available. These multi-functional hardware-software combinations consist of touchscreens and third-party apps that work together to do much more than simply process customer payments. Other capabilities include the following:
• Employee management, including payroll and productivity reports, scheduling, and onboarding software.
• Inventory management, including the ability to record and track stock levels for easy reordering, as well as invoicing and delinquent payment contact capabilities.
• Report generation, including profits and losses, sales, tax data, and forecasting capabilities.
• Easy integration with other software and systems already in place.
In the seven decades since the first credit card came on the scene, the payments universe has expanded in ways its pioneers could not have possibly imagined. No doubt, the innovations will continue to make it even faster, easier, and more secure to buy and sell products using electronic means. If you’re still on the fence about whether to integrate modern credit card processing into your company, take a minute to consider the advantages.
Why should you integrate a modern POS solution into your retail operation?
If the coronavirus pandemic taught entrepreneurs anything, it was the importance of remaining nimble and resilient. Adopting cutting-edge technology such as contactless card readers demonstrates business owners’ commitment to both security and safety while simultaneously offering enhanced efficiency and flexibility.
Furthermore, state-of-the-art credit card processing systems allow businesses of all sizes to offer customers a wider array of choices when it comes to how they make their purchases. For instance, these systems allow you to set up recurring or subscription arrangements that take most of the guesswork out of ongoing or big-ticket payments that happen over time. If you choose, your system might even allow you to accept cryptocurrencies such as Bitcoin.
Along with this enhanced degree of choice and flexibility come security features that encrypt the transaction from start to finish, minimizing the chance that data can be intercepted or misused along the way. Meanwhile, you can use your mobile card reader to facilitate fast, easy, and safe payments from anywhere at any time.
Maximum choice and a first-class buying experience are the hallmarks of today’s nimble, successful businesses, regardless of their size. If you want to stand out above your rivals, one of the best ways to shine is by embracing the speedy, safe, and feature-rich payment processing options that are now both affordable and widely available.
