Baylake Bank eNews. Member FDIC

Basics of Accepting Money from the Public
Source: FDIC Consumer News

card payment machineAs a small business owner, you need to think about the many ways your customers pay you for goods and services. When deciding which payment methods to accept (in addition to cash) you should be aware of : (1) the costs and benefits of each type; (2) the different responsibilities connected to each (including privacy and data security requirements); and (3) the protections available that will help protect your customers. Key examples follow:

Credit and Debit Cards
When you accept credit or debit cards, you work with a bank or other financial services provider that will give you access to a card network payment system. That bank will also oversee your compliance with rules from the card networks themselves (such as Visa) that govern many different aspects of card acceptance.

Recent rule changes made by the Federal Reserve Board under the Dodd-Frank financial reform law also limit the “interchange” or transaction fees that large debit card issuers can charge to merchants. This means that some merchants will pay lower fees for debit card transactions than for credit cards.

Remote Deposit of Checks
In addition to the traditional forms of depositing paper checks by delivering them to your financial institution, there are more convenient ways to remotely scan and directly deposit them to your bank account. You can also initiate one-time or recurring debits from a customer’s checking account with appropriate approvals.

Mobile Payments
“Mobile wallets” allow consumers to make payments using accounts---including traditional credit or debit cards linked to a smartphone without using the actual plastic card. Along with the investment in equipment that would be needed to accept mobile payments, you’ll also need to consider issues such as data security. Mobile payments also may mean dealing with companies other than card networks, which in turn may mean agreeing to different or additional terms for accepting mobile payments.

Items to consider with mobile payments may include data security, as well as the need to deal with companies other than card networks. This might mean that you will need to agree to additional terms for accepting mobile payments. However, these considerations may be well worth your evaluation depending on your customer base and their need for convenience.

To learn more, start by familiarizing yourself with rules and procedures from your bank, Visa, MasterCard, PayPal and other payment companies you may use. Some of those requirements may be imposed by federal law, others by state law, and others by industry requirements.


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