Credit card processing for small businesses

Want to accept credit card payments through your small business? Learn about the different credit card processing options available with this simple guide.

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If your business isn’t set up to take credit cards, you’re no doubt used to customers asking if they can use one. Then when you say no, your customers will either not make the purchase or sigh as they consider alternative methods of payment. You know the only way forward is to expand your payment options to include credit cards, but it can seem an overwhelming and expensive step to take. However, this isn’t always the case.

Thanks to modern technology, there are now many ways for small businesses to process credit card payments, each with their various pros and cons. This guide outlines the main options, potential costs and other relevant factors to help you find the right credit card processing system for your small business.

Rates last updated December 15th, 2019
Details Features
  • 24/7 local support available
  • Countertop and mobile EFTPOS terminals
  • 11+ payment forms accepted including Apple Pay and Android Pay
  • Least-cost routing available via Tyro Tap & Save
  • From $29 a month for terminal hire with no lock-in contracts
  • Compatible with any Australian financial institution
  • Integrates seamlessly with your existing point of sale
  • Used by over 20,000 Australian businesses
  • Available linked interest-earning transaction account
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Looking for a credit card payment processing system?

You can compare merchant services for businesses here.

EFTPOS machineseftpos machine

This is probably the most familiar option. EFTPOS (electronic funds transfer at point of sale) machines are secure and simple to use, allowing customers to swipe, insert or tap their cards against a reader for payments. They accept most cards and there are several options to cater for different types of businesses:

  • Countertop machines. These machines are attached to your Point of Sale (POS) computer system via cords. They allow you to process card payments from a fixed location in your store, and they are stable and efficient even in areas of poor mobile reception. They are suitable for retail stores and professional offices where transactions are processed in one location.
  • Mobile EFTPOS machines. These allow you to process payments wherever you go, which gives you a lot of flexibility. They are ideal for cafes and restaurants because you can process card payments where your customers are seated. They can also be convenient for delivery services or outdoor market stalls.
  • Integrated machines. This option is integrated with your POS system, usually via the Internet, to help simplify sales reporting and reconciliations. They are best suited for businesses with higher transaction volumes, such as supermarkets.

What are the costs of getting an EFTPOS machine for my small business?

Depending on the vendor, you could be potentially charged any combination of the following fees:

  • Set-up fee
  • Rental fee
  • Servicing fee
  • Printer cost (most machines have internal printers)
  • Interchange fee

Note that fees and price configurations can vary significantly between companies. For example, one vendor may charge a fixed monthly contract with no set-up fees, while another may charge a set-up fee plus monthly usage-based charges. It is important to weigh up these costs and make sure that an EFTPOS machine is a sound investment for your business.

Smartphone and tablet credit card payment processing optionspayment using tablet

There is now a range of services and providers that allow you to process payments directly from your smartphone or tablet. This mobile option usually involves a card reader which you plug into your mobile device or an app you download and use for payments. You can also get a combination of both. Some popular smartphone and tablet payment processing choices include:

  • Square
  • PayPal Here
  • Westpac Genie
  • CommBank Albert, Emmy and Leo

These products are compatible with iOS and Android devices and you can easily manage them with an app. They are convenient, mobile and suit sole traders and smaller businesses that trade on the go, such as vendors at a market, food trucks, plumbers and electricians.

What are the costs for smart device credit card processing services?

Potential costs include the following:

  • Card reader cost
  • Debit transaction fee (usually a fixed fee per transaction, eg, $0.30)
  • Credit transaction fee (usually a percentage of the transaction, eg, 0.8%)

Generally, you pay the fee for the card reader and then the processing service charges you per transaction as described above. However, some providers offer the card-reading device for free when you sign up for a monthly plan and then charge you a fixed monthly rate for transaction values below a certain amount.

For example, CommBank offers one free Albert device for any fixed-rate plan, with options including $60 per month for a turnover of up to $3,000 and $90 per month for a turnover of up to $6,000. You can request additional Albert devices at a cost of $29.50 per month.

These devices will appeal to the smartphone savvy, as well as to small businesses looking to keep down processing costs. When considering this option for your business, it’s important to decide whether a smart device payment system will offer everything you need.

Online credit card processing for small businessesonline payment

With everything moving online, payment methods have also trended towards cardless, contactless virtual transactions. If you’ve shopped online, you probably understand how this works. If you have a PayPal account, you definitely do.

Online credit card processing allows your customers to pay for your services remotely and efficiently via a secured Internet connection. Companies that provide online credit card processing include PayPal, payWave eWay and BPAY.

This system is most suited to online businesses (eg, eBay or Etsy vendors) or freelancers that operate in phases or on contracts (eg, builders, designers or writers). Online payments can also be convenient for companies that offer services remotely, such as travel booking providers and airlines.

What are the costs of setting up online credit card processing for a small business?

A big advantage of online payment processing is that you can do away with set-up fees, monthly and annual fees, and contracts. Each online transaction usually attracts a fixed-percentage of the transaction amount.

Some providers charge an extra fixed fee on top of the percentage fee, for example 2.6% plus $0.30. Note that some companies may charge a higher rate for processing international payments that need to be converted into another currency. For example, PayPal charges 3.6% plus a fixed fee.

Depending on your type of business as well as your transaction size and volume, you may find that online credit processing is an affordable and convenient choice.

Key factors to consider when selecting a credit card processing option for your small business

You need to consider the following factors when choosing the ideal processing option for your business:

  • The type of business. Businesses involving face-to-face customer service or high volumes (eg, traditional retail stores and cafes) may find conventional EFTPOS machines are still best suited to their environment. Mobile or seasonal businesses may prefer smartphone and tablet processing to give them the mobility and freedom they need. Online businesses are most likely to appreciate the convenience of online credit card processing.
  • Software integration. If you have existing POS software, you will need to find out whether the processing service will integrate with your current software. On the other hand, it may be time to migrate. When doing your research, look out for EFTPOS or smartphone/tablet processing devices that offer the most comprehensive solutions, such as accounting or sales reporting features. This can help streamline your other business costs.
  • Card acceptance. Most options accept all major cards, but make sure you pay attention to such details when making a decision. Also consider if you need a card reader that’s compatible with contactless payment methods such as Mastercard PayPass or Visa payWave.
  • Revenue. Your revenue should be such that it more than offsets the cost of setting up a card payment service and any ongoing processing fees. Also consider whether you can realistically expect an increase in sales by offering credit cards as a form of payment. For example, if you have a market stall and regularly find people turning away because they don’t have cash, accepting cards could boost your revenue.
  • Surcharges. It is common for businesses to pass on the cost of processing to the customer by applying a surcharge if they pay with a card. If you choose to do this, make sure you have clear signage to inform customers. Also think about how your customers are likely to react when deciding if this will be favourable for your business in the long run.

With so many methods of accepting credit card payments now available, you might be feeling spoiled for choice. But remember that some payment processing options will be more suitable than others, so it is always good to start by considering the needs of your business. It is also important to do the maths and weigh up the extra costs against your business profits to decide if it’s worth the investment.

Picture: Shutterstock

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