Credit for Contractors: How to Take Credit Card Payments

Your clients already use credit cards. Get this: 82% of Americans have at least one of these cards in their wallets. Stats like these prove credit cards are one of today’s most popular payment methods. 

And who can blame customers? Credit cards are fast, accessible, and convenient. Adding credit cards as a payment option to your contracting business lets you take advantage of all these desirable traits, too. 

Luckily, many payment processors make it simple to integrate with credit cards. Here’s a guide on how to take credit card payments in person, online, and through mobile devices. 

How Does the Credit Card Payment Process Work?

When someone makes a credit card payment, it usually goes through three stages:

• Authorization. This happens when the customer swipes, inserts, or taps their card. For online purchases, customers enter their details on your eCommerce portal. Regardless of how your system receives this info, it sends the details to the card’s associated bank.
• Authentication. Here, the payment processor communicates with the customer’s issuing bank. The purpose is to verify there are available funds and no outstanding issues.
• Approval or Denial. If everything clears, the issuing bank approves the transaction. You’ll receive a confirmation back through the payment processor.

Even with all these checks and balances, it usually takes seconds to complete a card transaction. Just know you may have to wait a few days to receive the funds. Unlike debit transactions, credit cards don’t pull money straight from a bank account. 

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What Do You Need to Accept Credit Card Payments as a Contractor?

To start accepting credit cards, you must create a merchant account with a payment processor. A merchant account is a business bank account that lets you accept secure credit card transactions. 

Payment processors handle the technical aspects of transferring credit card payments. A few examples of payment processors for contractors include Square, Stripe, and PayPal. Be sure to compare fees and features to find the best partner for your business.

Once you have a merchant account, you have to choose how you want to accept payments. For instance, you may need hardware devices to read credit cards in person. Otherwise, you’ll need a secure software interface for online orders. 

Each payment processor offers unique solutions for credit cards. As you review different options, consider whether it fits your business. You should also consider how intuitive using this system is for your customers. 

Joist offers a simple way to add credit card payments to your invoicing software. All you have to do is enable Payments in the Joist app settings. With Payments on, you can accept payments via credit card,  PayPal, Venmo (US only, Apple Pay, Google Play, and more online options).

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How to Accept In-Person Credit Card Payments 

Point-of-sale (POS) systems offer a robust solution for accepting in-person payments. Most modern POS systems offer the hardware and software you need to provide clients with credit card touchpoints. POS systems also provide ways to manage aspects of your business, including receipts and inventory. 

If your business hasn’t grown to the point where you feel the need for a POS system, no worries. Many payment providers offer compatible card reader devices for on-site payments. These card readers usually connect to your smartphone or tablet. You can then let people swipe or tap their card and pay. 

How to Accept Credit Cards Online

If you’re interested in an online payment portal, many processors offer digital payment gateways. For example, you can embed a “Pay Now” button in your domain. After users fill their cart and click this link, they enter their credit card information to pay.

By contrast, a software solution like Joist lets you create custom invoices with payment links. These links direct your clients to a secure payment page to complete the transaction. 

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How to Accept Mobile Credit Card Payments

As mentioned above, some payment processors offer compact card readers. These portable devices usually connect to a smartphone or tablet via Bluetooth and work with an app. 

When you’re ready to take a credit card payment, open the app, connect your card reader, and enter the payment details. Customers can pay by inserting, swiping, or tapping their credit card. Often, these card readers recognize electronic cards on smartphones like Apple Pay. After the transaction clears, you could provide a printed receipt or send one by email or text. 

Credit Card Processing Fees

Accepting credit cards is great for efficiency and customer satisfaction, but it costs extra. Consider the common fees and average rates that go along with taking credit cards:

Transactional Fees 

Credit card processors often charge a percentage of every transaction for this convenience. While these rates vary between providers and services, they frequently range between 1.5% – 3.5%. 

Also, keep in mind some payment processors add a flat fee per transaction on top of this percentage. These fees usually cost less than a dollar per transfer, but they do impact your bottom line.

One option you have as a business owner to reduce the impact of processing fees is to have customers cover the cost.

Interchange Fees 

Interchange fees are the costs networks like Visa and MasterCard charge to process card transactions. These fees are passed on to payment processors, who charge you a portion of the fee. 

Interchange fees vary depending on a few factors, including the card type, the method of payment, and the transaction amount. Most often, interchange fees are a part of the 1.5–3.5% fee charged per transaction. 

Monthly or Subscription Fees 

Your payment processor might use a subscription-based model where you pay a flat rate. This monthly or annual fee system is most common with POS solutions. However, some providers like Joist offer tiered subscriptions so you can choose the features best for your business. 

Chargeback Fees 

One hassle of allowing credit card payments is the potential for chargebacks. These happen when a client disputes a charge and the payment processor reverses the transaction.

Not only are refunds costly for your business, they come with “chargeback fees” for the payment processor. Even if you win a dispute over a payment, you can’t recoup the chargeback fees. 

Setup and Equipment Fees

Payment processors might include a one-time charge when signing up for a credit card option. These fees may cover the cost of account setup, hardware, and network configuration.

If there aren’t setup fees but you’re receiving hardware, watch out for extra equipment fees. These costs might include a one-time purchase or ongoing rental fee for devices like card readers. 

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Security Tips for Accepting Credit Card Payments

On top of fees, there are unique safety considerations with accepting credit cards. Thankfully, simple security strategies and standard protocols prevent fraud. 

• Use Approved Software and Hardware. Don’t stray from the portals and devices provided by your payment processor. Also, double-check that everything is compliant with the Payment Card Industry Data Security Standards (PCI DSS) to avoid vulnerabilities.
• Use EMV-Enabled Card Readers. Europay, Mastercard, and Visa (aka EMV) is the industry standard for card reader chips. Be sure your devices are EMV-enabled rather than magnetic stripe card models.
• Don’t Store Clients’ Credit Card Data. To cut your liabilities and protect clients’ information, never store credit card data. If you must store client payment data for some reason, encrypt it per PCI DSS.
• Provide Security Training. Schedule time to train any employees on payment security and best practices. Be sure everyone feels comfortable with these systems and address troubleshooting scenarios. 
• Verify Shipping and Billing Addresses. Always verify the shipping and billing addresses provided by the customer. Look for a match with card details to reduce the risk of fraudulent transactions.

Make Collecting Payments the Easiest, Most Efficient Part of Your Business

Joist simplifies the process of accepting credit card payments from your clients. Just switch on Payments through the Joist App when submitting your invoices to offer this service. Joist also integrates with PayPal and Stripe for even easier ways for your clients to pay.

Check out all the ways Joist can add extra efficiency to your contractor business today.