Payment Processing for Businesses: A Comprehensive Guide

Getting paid is the foundation of any business. This guide includes a comprehensive overview about payment processing, how it works and the latest payment technologies you should be aware of.

Table of contents

Intro

Intro to Accepting Payments

Getting paid: the foundation of any business. But if you’re just starting out, the world of payments may feel a bit overwhelming. If you’ve been operating your business for years, you may even notice that the payments landscape is constantly changing. But not to worry — this guide walks you through everything you need to know about payments as a business owner.

Payment processing at a market

FAQ

Five Frequently Asked Questions About Payments

1. How do I accept payments?

To accept payments, you need to get a point-of-sale system (aka POS). Your POS should be able to handle cash payments, eftpos payments, and mobile payments (such as Apple Pay or Android Pay).

2. How are sales deposited?

You need to link your bank account to your POS so your funds can be deposited. Square’s deposit schedule is fast — typically as fast as the next business day. It’s critical to have fast access to your funds to ensure your cash flow remains positive and that you’ve got money available to reinvest back into your business.

3. What are chargebacks?

Chargebacks occur when a customer disputes a charge from your business with their card-issuing bank. When a chargeback happens, the funds in dispute are held from the merchant while things are being worked out.

4. How can I accept international credit cards?

Your payment processor and POS should enable you to accept any credit card that comes across the counter — that includes international credit cards from tourists, too. Check the cost of acceptance (also known as merchant services fee) for accepting international credit cards. Some providers may charge you a higher fee than what you’d pay to accept an Australian credit or debit card. Square charges the same low fee for all card types, whether they’re local or international (Visa, Mastercard or American Express).

5. How can I accept mobile payments?

Contactless payments are secure, fast and convenient. To accept mobile payments like Apple Pay, Android Pay and Samsung Pay, you need a payments reader equipped with NFC.

Start selling with Square Reader for chip and contactless cards.

Connect wirelessly, accept payments quickly for one low rate, and get your funds fast.

Deep Dive

Choosing a POS

To accept and manage payments, you need a point-of-sale system — also known as a POS. A POS has hardware that allows you to process payments and software that lets you add items, track inventory and tender a transaction. Your POS system also takes care of directing your funds to your bank account after you make a sale.

Credit card readers and payment processing hardware

When considering a POS for your business, make sure that it accepts not only cash, but also credit and debit cards and mobile contactless payments (NFC). Increasingly, people are moving away from cash, and instead opting for the convenience of paying with credit and debit cards and mobile wallets.

Your POS system should be able to do a lot more than just process payments. Choose a POS system with software that can help you run your business from top to bottom (things like sales reporting, inventory management, employee management, customer directory management and more). Think of your POS as a command center for your business. Read our guide to choosing a POS system to learn more.

Getting deposits

To get deposits from sales, you need to link your POS to your bank account. This is quick and simple with Square (Learn how to link your bank account to Square here). It can take up to five business day to verify the bank account, but during this time you can still accept payments with your POS — Square will hold your funds and deposit them as soon as your bank account is linked and verified successfully. Read more about how to connect your bank account to Square.

Effectively managing your cash flow can have a massive impact on your business success. Look for a system with reliable, fast deposits.

Square’s deposits are reliable — and fast. With our standard deposit schedule, funds are typically deposited as fast as the next business day. If your business has unique hours, you can customise the time you’d like transactions grouped for a daily deposit (this is called your “close of day” time).

Accept credit cards anywhere

Connect wirelessly, accept payments quickly for one low rate, and get your funds fast with Square Reader.

Managing receipts

You need to give your customers a record of their transaction (or offer to do so). Your POS system should be able to take care of that as well, either through a peripheral paper receipt printer or through digital receipts sent via SMS or email. Increasingly, businesses and customers are finding digital receipts — that is, receipts that are emailed or texted — to be the preferred type of payment confirmation. Digital receipts save paper, reduce reliance upon secondary hardware and connectivity, and overall are much more convenient. They’re also a lot easier to keep track of (because let’s be honest, paper receipts often end up in the garbage).

Receipts have seen a revolution in the past several years. Digital receipts are convenient and can offer features like customer feedback.

In addition to all the transaction details (including taxes, fees, or any discounts), your receipts should include your business’s name and contact information. Square digital receipts (which you can email to a customer directly after you make a sale) also come packed with other goodies — including a place where customers can quickly send you feedback about their experience. Read about all the features of Square receipts here.

Online invoices payment processing integration

Managing invoices

If you’re in the services industry, it’s likely you have to create and send invoices to get paid. Just as with receipts, you can opt for paper or digital invoices. On your invoices, always make sure to include your business information (name, email address, physical address, telephone number); customer information (full name and address); the invoice number (for your records); date and terms (specifically outlining the time period in which you expect to be paid); price and description of the items (as well as quantity); and taxes, fees and discounts. By providing a more robust level of detail, you’re helping to protect your business against chargebacks.

Invoices are an extension of your brand and the right templates can help establish a sense of trust and professionalism.

As with receipts, it’s much more streamlined to use digital invoicing. Square has professional-looking, ready-to-go invoicing templates that you can email out to clients. From there, they can pay you by credit card with a click. You can also keep track of all your invoices in one place in your Square Dashboard — and sort them by what’s been paid and what’s outstanding. Learn more about Square Invoices here.

Managing chargebacks

Chargebacks occur when customers dispute a transaction on their statement with their card-issuing bank. People contest charges for a number of reasons: Perhaps they don’t recognise the charge, or feel the services supplied didn’t meet their expectations. Whatever the reason, the process can be a headache for business owners. When there’s a chargeback, the funds in dispute are held from the merchant while the card issuer works things out and decides what to do. “Working things out” can be a complicated, slow and time-consuming process involving a lot of paperwork and documentation.

Providing a high level of detail on your customer’s invoice or receipt, as well as keeping a paper trail (whether that’s physical or digital) can help you build a strong case to respond to a transaction dispute. Read the top FAQs for payment dispute resolution here.

Accepting debit and credit cards

If you don’t accept debit and credit cards, it’s likely you’re missing out on sales. Customers are carrying around cash less and less, and the friction of having to find a nearby ATM may be enough for them to forgo a purchase. Here are more reasons why it makes sense to accept debit and credit cards at your business:

Payments have gone through several changes — including the shift to contactless cards and the introduction of mobile payments like Apple Pay and Android Pay.

You’ll improve your cash flow

Why issue an invoice and then wait by the phone for someone to call — or worse — start chasing that unpaid invoice. Card payments are fast and secure, and can be deposited directly to your bank account as fast as the next business day. That means you have access to your funds quickly to reinvest back into your business and team.

You’ll make more sales

The Reserve Bank of Australia (RBA) indicates that cash has dropped to less than half of all payments — a 22 percent drop from 69 percent in 2007 to 47 percent in 2013. By these numbers, Australia is number six in the world’s top 10 cashless economies. If you’re not set up to accept debit and credit cards, you’re going to miss out on sales.

Customer payment with credit card

Your customers will spend more

People tend to spend more when they pay by card. Studies show that people spend 12 to 18 percent more when using debit or credit cards instead of cash. That means more impulse buys at the counter, and more funds in your bank.

You’ll instill a sense of trust

If you have the recognisable logos of all of the major, global card brands that you accept in your business — Visa, Mastercard and American Express — that’s likely to instill a sense of trust with your customers.

You’ll attract more customers

Customers love convenience. Save them a trip to the ATM to withdraw cash and you’ll not only be in their good books, but for those convenience purchases (like their morning coffee) your business will become their go-to destination.

It’s a (very) cheap investment for a lot of upside

Even if you’re on a shoestring budget, it’s easy to get set up to accept debit and credit cards. Square offers very affordable payment processing hardware — as low as $19 to purchase — at a competitive rate of just 1.9% per tapped, dipped or swiped card payment.

Payment processing on the go

The ability to accept debit and credit card payments while you’re on the go can get you paid faster and also reduce your time issuing invoices after a long work day. The Square Reader for chip cards is small enough to fit in your pocket, packs a powerful battery and is very affordable at just $19 to purchase.

The device is connected via the standard headphone jack, and your customer dips the accepted chip card vertically (chip part down). If your customer is paying with an accepted international credit card that doesn’t have a chip, it will be swiped horizontally through the rear slot instead.

Processing a payment on the go

Future-proof your payment processing by ensuring you can accept every form of payment that comes across the countertop.

Payment processing at the countertop

A streamlined countertop can completely transform the way your business operates. A fully integrated point-of-sale and payments solution that gives you everything you need to power your checkout process and run your business — such as Square Stand for contactless and chip — can ensure you’re set up to accept every payment, whether it’s contactless, chip card or mobile wallet.

Processing payment at a counter

Your countertop POS is designed with different needs and use cases in mind. Your POS should complement your business environment without creating a barrier between you and your customer. It should also allow you to connect compatible hardware — barcode scanners, receipt printers, whatever your business needs — to improve the customer and staff experience. If you’d like to get your staff out from behind the counter and accepting payments directly with customers on the shop floor, you can combine a countertop POS with a mobile POS (using Square Reader for chip cards, for example) to provide an improved level of customer service.

Square Stand for contactless and chip is compatible with iPad 5th generation 2017, iPad Pro 9.7”, iPad Air 2 and iPad Air, and is available online in the Square Shop (with free shipping nationally) and exclusively in Officeworks stores.

Accept credit cards anywhere

Connect wirelessly, accept payments quickly for one low rate, and get your funds fast with Square Reader.