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Turn Smartphones Into Small Business Transactions

Turn Smartphones Into Small Business Transactions

by Mark Swartz

More than 90% of commercial transactions in Canada are cashless. Much of this revenue is still from credit and debit card purchases made in person. Swiping, tapping and inserting are hugely popular.

That’s been an issue for small businesses that constantly move around. Schlepping a heavy POS terminal to trade shows, street fairs or a client’s home can be impractical. 

But there’s good news. A seller’s smartphone or tablet can be turned into a virtual cash register by adding a portable card reader. With its accompanying app taking payments anywhere becomes a possibility for small businesses.

Not Your Typical Point Of Sale (POS) Machine

Traditional portable POS units, like the kind a waiter brings to your table for payment, are wireless terminals. Their sole purpose is to process sales by credit or debit card. While these are great for heavy-duty use, their bulk limits transportability.

Portable card readers are different. They’re lightweight accessories that can easily fit into a pocket. One type is a mini-swiper that attaches to smartphones or tablets. The other is a lightweight handheld pinpad unit that also enables tap and go. They work anywhere there’s an Internet connection, Wi-Fi or mobile signal available. 

What Card Reader Add-Ons Do

Whether it’s a plug-in swiper or separate handheld pinpad, card readers are portable POS terminals. The hardware is paired to the seller’s smartphone (or tablet) that operates on iOS or Android. 

A free accompanying app must be downloaded to the mobile device as the app completes the transaction and tracks sales. It also issues an electronic receipt to the payer vie email or SMS. That’s cloud computing made seamless.

Each system is provided and supported by a particular payment processor. In Canada they’re currently available from Moneris, Square.ca, FirstData, Shopify.ca, MyTime via YellowPages.ca and DreamPayments.

Some providers allow for the processing of both debit and credit cards. This requires a pinpad unit. For acceptance of credit cards a mini-swiper will suffice.

Suitability for Small Business

Does your business travel from place to place and get paid on the spot? These types of businesses include food trucks, delivery services, pop-up retailers, landscapers and flea market vendors. Then there are all the self-employed freelancers who make house calls (e.g. personal trainers, financial advisers).

Is your business in a fixed location but staffed by a number of independent professionals? Quite a few beauty salons and hair dressers are. This also applies to groups of physiotherapists, psychologists and other healthcare providers who are not covered by government funding. For these types of businesses, a portable POS can serve as another sort of small business collaboration tool.

Costs Involved

The payment processing companies that issue card reader add-ons often provide a suite of services. They carry a seller’s credit card receivables, absorb fraud losses and ensure timely delivery of funds to a designated account. These services require a fee.

All processors have a swipe rate for credit cards. Fees can range anywhere between 2.4% to 2.8% per transaction. If the payment has to be keyed in, the rate might be higher due to added security risks. There may also be a transaction fee of 10 to 20 cents (depending on the card reader company) on top of the swipe rate. 

Several processors charge a flat monthly fee in addition to the swipe rate. This could run in the range of $29 to $299 per month. Generally, the higher monthly fee guarantees a lower swipe rate.

Beware of additional expenses. While some processors offer the card reader hardware for free, others require the unit to be purchased. That can cost another $150. Optional accessories may add costs as well, such as a stand that turns tablets into cash registers or a Bluetooth printer that generates hardcopy receipts for customers.

Should You Get An Add-On Card Reader?

Small employers have many special challenges. For businesses and freelancers that need lightweight payment portability, these solutions are a windfall. They’re simple to install and use. Ongoing costs are quite reasonable, and the app is often compatible with the seller’s accounting software.

Just make sure to compare offerings. Review the payment processor’s terms. Decide if you need the swiper or separate pinpad. Then you can process card payments wherever you meet your customers.