If you’re considering opening or have recently opened a grocery store, you know the importance of having a solid point of sale (POS) system.
You need efficiency. You need industry-specific features. And you need to know that your POS transactions are handled safely.
As a new business owner, you may have questions about payment processing — here’s an overview of everything you need to know about secure POS transactions.
Payment Processing 101
Simply put, payment processing is how businesses accept card transactions.
Payment processors handle all payments other than cash — this includes credit and debit cards. Some processors accept electronic benefits transfer (EBT) payments, gift cards, loyalty cards, and checks. Up-to-date processors also accept EMV cards, which have an embedded smart chip. This technology was designed as a security measure to further protect against data breaching and counterfeiting.
Merchant Accounts vs. Third-Party Payment Processors
There are two types of payment processors: in-house and third party.
In-house processors handle payments through an individual merchant account held by the business itself, offering more control over POS transactions. Merchant accounts must be applied for.
Third-party processors are used when a business outsources to another business that specializes in payment processing — these businesses make money by taking a small percentage of each transaction, usually ranging from two to three percent.
Decide which option makes the most sense for your business, do your research, and find a payment processor that works with, or is part of, your point of sale system.
Cash discounting passes the third-party credit card processing fee onto the customer, reducing costs for the business. If a customer makes a $10 purchase and pays with a credit card, for example, they may be charged the 2.5% processing fee — their total becomes $10.25. If they pay in cash, there is no processing fee — they pay an even $10.
Keep in mind that there is a difference between cash discounting and surcharging. While a cash discount offers a discount to customers that pay in cash, a surcharge is an added fee for those who pay with a card. Make sure you know your state laws — cash discounting is legal in all 50 states, but many states have restrictions on surcharging, and 10 states outright ban it.
You should also think about whether cash discounting is right for your business, so consider factors like its acceptability in your industry, your customer’s willingness to pay an additional percentage, and your business’ ability to handle more cash payments.
For the safety of your business and your customers, it’s crucial that you perform secure transactions — this means that if you accept, transmit, or store credit card information, you should be PCI compliant.
The Payment Card Industry Data Security Standard is a security standard set to ensure all companies carry out credit card transactions safely to prevent data breaches. The 12 requirements include installing a firewall configuration, updating anti-virus software, and restricting physical access to cardholder data.
Although you can still accept credit cards without being PCI compliant, doing so presents a huge risk to both your business and your customers. A data breach will significantly affect your reputation, impacting profits and the future of your business.
Credit card companies will issue fines for non-compliance with PCI standards — ranging from a monthly fee until you are compliant, to a hefty fine of up to $500,000.
Data breaches are still technically possible if you don’t adhere to these standards, but complying covers a lot of the associated risks. Ensuring the security of your customers’ private financial information is an important part of being a responsible small business owner.
How to Handle POS Transactions Safely and Securely
As a new grocery store owner, you need to make sure all your bases are covered — especially when it comes to carefully handling your customers’ sensitive financial information.