Table of contents
- What is a payment processor and what do they do?
- What are cashless payments and how do they work?
- What are the two main ways payment processors accept cashless payments?
- Overall, how can my business benefit from adding cashless payment options?
- I already use a payment processor. How do I know if I should evaluate other options?
- What should I look for in a new payment processor?
- Standard features
- Perks that can make a big difference
Picture this: It’s the next day after having worked an event late into the night before. Sipping morning coffee, you open your laptop to check on the activity in your credit card merchant account, hoping to see a nice bump in payments from the night before.
Much to your chagrin, an unexpectedly large processing fee shows up in your account activity. “What is that?” you ask.
Now that you’re thinking about it, did they ever explain to you what all their fees are for?
If this has happened to you, you’re not alone.
Whether you’re perplexed by confusing fees, tired of dealing with frustrated customers whose card payments won’t go through, or dissatisfied with the inefficiency (and long waits) of check payments … there’s a better way.
The right payments partner can help you maximize revenue and improve your customers’ experiences for all kinds of events and transactions. Not to mention, you can get more time to focus on delivering a magical experience for your attendees.
Now, we understand it’s a challenge to know what to seek out and what to avoid when evaluating your payment processor options. So to help you choose the best payment processor for your events business – or evaluate if your current processor is a good fit – we’ve put together this comprehensive guide.
Pro tip: Planning Pod offers innovative invoicing and reporting tools that integrate with reputable payment processors. Learn more here.
What is a payment processor and what do they do?
Think of your payment processor as the invisible “middleman” between you and your customers. Their job is straightforward:
- Take your customer’s payment details in a secure fashion through cashless methods, like an online payment form.
- Verify the payment details, including the credit card information and billing address, and authorize the transaction.
- Move the money from the customer’s account to yours. This may take anywhere from several hours to several days, depending on the:
- Type of transaction
- Age of your account
- Risk profile of the transaction or card owner
- Payment processor you’re using
Processors offer a variety of services and combinations of them that may make it hard to compare apples-to-apples. But don’t worry – we’ll go through most of the options in this article.
What are cashless payments and how do they work?
Cashless payments are transactions that don’t involve physical cash or checks. There are two main types of cashless payment options:
- Credit cards – Physical cards that customers use in-person or online to borrow a limited amount of money from a financial institution.
- Card payments can take on average 1-2 business days to clear.
- Credit cards are the most popular payment methods for consumers, due to their convenience.
- Automatic Clearing House (ACH) – Electronic transfers of funds between financial institutions (like banks) using routing and account numbers.
- ACH payments are processed in batches, so they take longer to complete than credit card payments.
- ACH transactions are processed through the NACHA (National Automated Clearing House Association) network.
So why are credit cards often preferred for event businesses and their customers?
Credit cards offer:
- Convenience compared to cash or check — Flexible options make it easier for customers to pay you, in-person and online. Plus many customers use cards as their primary payment method to accumulate card benefits (like miles, cash back, etc.).
- Faster access to funds — Unlike ACH, credit card payments are processed individually and only take 1-2 business days to clear. Depending on the processor, you may even qualify for instant deposits.
- Note: Your first payout may take longer while your relationship builds with the processor.
- Increased spending — Studies show that accepting credit cards encourages customers to spend more.
However, credit card payments do come with their drawbacks. Including:
- Customarily higher processing fees than ACH or cash and check, partially due to the quicker payout times.
- Risk of customers filing chargebacks with their financial institution (often involving disputes and administrative costs).
Why would I use ACH when credit card payments come with so many benefits?
Accepting ACH comes with unique perks:
- Reduced processing fees — ACH payments customarily have a percentage fee between 0.5 and 1.5% and/or a flat fee, sometimes under $1 per transaction.
- Simple setup for recurring payments — ACH simplifies the process of setting up installment plans.
- Improved user experience — Customers can enjoy a streamlined payment experience compared to manually processing checks or cash.
While ACH totes several benefits, there are other factors to consider:
- Payments can still be declined due to insufficient funds.
- Note: To compound the problem, the customer may be subject to an overdraft fee from their bank … and you might have to wait even longer to receive their payment.
- ACH takes longer to complete than credit cards due to being processed in batches. On average, ACH payments take 1 to 3 business days to clear.
Now that you understand what your cashless payment options are and how they differ, let’s talk about how you can accept them…
What are the two main ways payment processors accept cashless payments?
Point-of-Sale (POS) terminals
These are physical systems that enable customers to swipe, tap or insert their payment method. You probably use these on a daily or weekly basis to make credit card payments at restaurants or stores.
Advantage: You don’t have to worry too much about upkeep on these devices — your processor is responsible for keeping them secure and running smoothly.
Disadvantage: You usually have to pay for the purchase cost of these devices, so you should try to negotiate these costs when you’re in talks with a new payment processor.
A payment gateway is an online platform that authorizes transfers of funds between financial institutions. These gateways enable your customers to submit their payment details through an online form. If you pay for goods or services online, then the payment forms you use on those e-commerce websites are connected to a payment gateway.
Advantage: Many gateways offer both credit card and ACH options.
Disadvantage: Some gateways are built to only process credit card payments, so make sure to ask when evaluating processors.
Different payment gateways have unique perks. One of the most common is automated payments — these are recurring payments for preset amounts that you can schedule ahead of time.
Whether you opt to use one or both of these cashless payment options, it’s important to make sure your payment processor meets current PCI Security Standards.
What are PCI Security Standards?
PCI Security Standards are regulations instituted by the Payment Card Industry Security Standards Council to protect consumer information. All major credit card brands (Visa, MasterCard, Discover, etc.) and most payment processors worth their salt enforce these requirements to protect their customers against data leaks.
If your method of processing cashless payments isn’t PCI compliant and a data leak occurs, you may be subject to legal action from affected customers and may be on the hook for hefty fines.
How can I benefit from offering both POS terminals and payment gateways?
- Customers are 90% more likely to purchase from the most convenient option among the competitors they are evaluating. This means that if you offer credit card and ACH payments (on top of cash and check) but your main competitor only offers cash and check, you are more likely to land customers who prefer credit card payments vs. your competitors.
- You’re more likely to get paid on-time due to the variety of methods available that allow people to make payments immediately and easily.
Overall, how can my business benefit from adding cashless payment options?
1. Land more customers who prefer the convenience of paying by credit card or ACH. By not offering these options, you may be pushing them to competitors who do.
2. Get paid faster and more reliably. Credit card and ACH payments are fast and easy ways for people to pay you online vs. cash and checks. They are also secure methods of payment.
3. Ensure smoother cash flow for your business. Features like payment installments, email/text reminders and past payment tracking help ensure your customers pay on time, are aware of upcoming bills and know their payment history at-a-glance.
I already use a payment processor. How do I know if I should evaluate other options?
Identifying an inadequate payment processor isn’t always cut-and-dried. Here are some symptoms of a below-average payment processor:
- Lost revenue from high processor fees.
- Note: Scan your bank statements for ambiguous charges like “monthly minimum” and “gateway” fees.
- Unreliable cash flow due to payout delays or flagged payments.
- Frustrated customers due to poor support from the processor.
- Poor tools and interfaces, leading to lots of human error with clients and staff.
- This can look like customers frequently missing important payment steps or staff members accidentally issuing refunds twice.
If you have doubts about your current processor or want to consider your options, here are some important things to keep in mind when researching other processors…
What should I look for in a new payment processor?
Transparent pricing structures vs. hidden fees
A mystery charge or two from your processor may seem harmless, but they add up quickly if left unchecked. These ambiguous charges, often with names like monthly “settlement” and “statement” fees, eat into your profits and make it challenging to forecast your net revenue.
If you want to reliably predict your profits and growth, you need a payment partner that offers transparent price breakdowns. Don’t sign with a processor until you completely understand their fee structure.
As for fee structures, let’s look at the most common pricing models among payment processors:
- Flat-rate — A fixed amount or percentage charged for each transaction.
- Flat-rate is typically the most expensive option. You can find out more about flat-rate pricing here.
- Tiered — The processor splits transaction types into categories and each category carries a different fee.
- Each payment processor offers varying rates and may categorize transactions differently. You can find out more about tiered pricing here.
- Interchange — You only pay the base credit card processing rate with a small markup.
- Interchange can be the most cost-effective but it’s only available to businesses that process a high-volume of payments. You can learn more about how interchange fees are calculated here.
- Note: Each processor has different criteria for what they consider “high-volume”, and they may ask you for past processing statements from your current/previous processor to determine what rates you qualify for based on your historical volume.
A variety of accepted payment methods vs. limited options
Offering multiple payment options has a load of benefits:
- Attract more customers — You can access a wider audience by catering to each customer’s preferences.
- Increased chances of getting paid — By making the customer experience more convenient, you’re more likely to get paid on time.
- Improved customer satisfaction — Customers can easily pay you with their preferred method, leaving them more satisfied and likely to recommend your business to others.
- Competitive edge — A variety of payment methods gives you a competitive edge over other event businesses that have limited payment methods.
As far as credit card types go, you should at least accept Visa, Discover, Mastercard and American Express.
Frequent or custom payout times vs extended payout time frames
Payout time frames (or the amount of time it takes for money to land in your account) may take longer while you initially start building a relationship with your payment processor. Once a relationship is established, payment processors typically offer payouts between same-day and 3 days post-transaction.
However, it may be time to look at other options if you notice these red flags:
- Timeframes are perpetually extended due to system issues.
- Authorized payments are frequently flagged as fraud, delaying payouts.
Obviously, the more frequently you receive payouts, the more reliable your cash flow will be, so it’s important to ensure that the processor you choose pays you often. This enables you to have more cash on hand to pay bills or cover things like payroll. And you won’t have to dip into lines of credit as frequently to pay regular business expenses.
Pro tip: When researching options, double-check to see if the processor issues payouts on weekends and holidays.
Responsive support with multiple ways to contact and 24/7 coverage vs. poor support with limited hours
Payment issues are inevitable. When they happen, getting in touch with your processor to resolve them quickly keeps the customer happy and gets you paid faster.
And many situations are unique and require a different solution. Because of this, it’s vital that your processor:
- Offers email, phone and live chat support to make sure you can connect with them via whatever channel is at your disposal.
- Provide 24/7 support or something that is very close so that you or your customers can reach them after regular business hours.
A payment processor that offers multiple support channels will give you the flexibility to choose the most efficient option based on each situation.
These features are considered the basics and are provided by most reputable payment processors, but you should still make sure any company you’re considering offers them:
- Reporting capabilities — Sales reports and payment tracking are crucial for business stability. Your payment processor should offer detailed reports that offer valuable insight into your business’ finances. Routine report analysis will help you make better data-driven decisions as time goes on.
- Pro tip: if you use Planning Pod, you can integrate your processor with our software to gain deeper insight into your finances with customizable reports (including revenue tracking and forecasting).
- Fraud prevention and chargebacks — Advanced fraud detection is a must to protect your business from financial loss resulting from stolen credit cards.
- Integration with your existing tools — Connecting your payment processor with your main business software platforms and/or event CRM is vital in streamlining your operations and boosting efficiency.
- Secure processing — While PCI compliance is not federally required in the U.S, you can be fined by credit card companies for not being compliant with these industry regulations.
- Note: Sensitive information like credit card numbers and addresses are frequent targets for data leaks.
Perks that can make a big difference
These services are not available with every payment processor but can provide you some big (and profitable) advantages:
- Fee reimbursement — Pass credit card fees to your clients. This feature allows you to recover some or all of the revenue you lose to transactional credit card fees.
- Note: Make sure to verify that your state allows passing along credit card fees before setting this up.
- Deposit management — Preauthorize deposits, which clears the path to be able to push through charges later on for things like damages or unpaid bills. This simplifies your deposit process and makes for easy tracking. (And no more holding onto deposit checks or having to write reimbursement checks!)
- Card-in-hand transactions — Use physical card readers to collect payments onsite. This is handy for processing day-of payments for food-and-beverage items or in-person payments on final invoice balances.
- Automated payments — Set up recurring payments for preset amounts ahead of time. With automatic payments, clients don’t have to submit a new payment for each due date. As a result, you’re much more likely to get paid on time.
Whether or not you already use a payment processor, your event business can benefit from finding the ideal partner. Change can be daunting, but it’s all about asking the right questions and finding the best option for you. Happy searching and remember, you got this!
Still have questions? Comment below and we’ll answer them!
All-in-one solutions like Planning Pod integrate invoicing and payment tools with trusted processing partners to streamline your revenue operations. Click to learn more.