What Does E-commerce Look Like in 2021?

Electronic Payment Systems: Moving Beyond Cash, Checks

Through 2020, the world has seen an increase in consumers turning to e-commerce and electronic payment methods. Did you know that Forbes magazine says there has been a 149% increase in US and Canadian online retailers since April 21st, 2020? Along with that, shopping at small and medium-sized businesses are becoming more popular. With the online payment methods that PaymentCollect ® supports, local businesses have the ability to successfully explore a digital space. With a new year upon us, e-payments will further advance and change to the current situation. Here are the upcoming predicted e-commerce trends for 2021, and how PaymentCollect ® and QuickBooks® Plugins can help your business stay current and efficient. 

Creating a Personalized E-commerce Experience 

Users have moved away from generic experiences, and everything is beginning to be more customized and personal. This includes the experience consumers are looking for when using online customer service. Personalization can include product recommendations, human interactions, and helping customers achieve their goals. With fully integrated online plugins, PaymentCollect ® and QuickBooks® can assist in providing the personalization you are searching for. With our POS Payment Processing, information reaches the user quickly, in real-time, making their experience specific to them. Also, by using PaymentCollect ®, your QuickBooks® receipts are organized to your preferences. If you have questions regarding ways to incorporate your business’s unique needs into your current QuickBooks® online systems, please contact us!

Providing the Best Electronic Payment Environment for the Customer

Over 50 million users are relying on electronic payment systems such as Intuit QuickBooks® to operate their businesses comfortably. With e-payments being such a large part of people’s lives, it is important for customers and business owners to feel safe. In 2021, security is everything, from your smartphone to your online purchases. PaymentCollect ® allows you to feel confident that essential information remains private during credit card processing and other online payment activity.

Advanced Speed and Workflow

According to Shopify, 10 years of e-commerce growth happened in just 90 days. As more users are seeking digital options to retail, the competition in the online space is growing. More brands are introducing online stores, which means consumers will have more providers to choose from. In order to make your business stand out, your software must be simple, and efficient in order to maintain the consumer’s attention. By choosing PaymentCollect ® you will have access to the new features in QuickBooks® Online Advanced Speed Workflow, including streamlined invoicing without upgrading your current system. QuickBooks® Desktop 2021 also offers more options to save time and boost productivity. We are always thinking about user solutions as we design our software, so you can focus on building brand loyalty from your beloved customers.

Choose PaymentCollect ®

Allow PaymentCollect ® to guide your business through 2021. We will be a partnership that is consistent, efficient, and will always keep your brand at the top of our priority list. You can feel confident that we are constantly studying the e-commerce trends, and will work hard to ensure your current systems are able to manage all of your electronic payments.

How Credit Card Processing Works

Important Information About Credit Card Processing for Business Owners

Although the entire transaction only takes seconds to complete, the credit card processing system is a complex process that takes multiple parties and steps to complete. The bankcard networks handle billions of transactions between merchants, processors, and banks around the world. And these bankcard networks must be as secure as possible to prevent credit card fraud. Learn more about the parties needed in order for a transaction to be completed, as well as the steps of the credit card processing system.

Parties Involved in Credit Card Processing

To understand credit card processing, you first must understand the players involved. They include:


These are your customers. Cardholders are people who obtain a credit or debit card from an issuing bank and use it as a payment method.


Merchants are any businesses that sell goods or services. If you are a small business owner, you are the merchant. A merchant account is needed for your business to accept credit or debit cards from cardholders.

Card Associations

More commonly known as Visa and MasterCard, card associations are responsible for working with credit card processors to transfer data between the issuing bank and the merchant. They also are in charge of setting the interchange and assessment fees, although they do not collect all of them. For example, the interchange fees are passed onto the issuing bank.

Card associations, or networks, don’t actually issue credit cards or merchant accounts. They function as the governing body of a community of financial institutions, ISOs and MSPs that work together in association to support credit card processing and electronic payments.

Acquiring Bank

Think of the acquiring bank as the merchant’s bank, as they contract with merchants to create merchant accounts. An acquiring bank is a registered member of the card associations (for example: Visa and MasterCard). They are the ones who provide equipment and software to merchants so they are able to accept cards and other necessary aspects involved in card acceptance. The acquiring bank is also responsible for depositing funds from these sales into a merchant’s account.

Some merchants don’t see their acquiring bank as the primary provider of their merchant account. This is because acquiring banks play more of a hands-off role and enlist the help of third-party independent sales organizations (ISO) and membership service providers (MSP) to conduct and monitor the day-to-day activities of their merchant accounts.

Issuing Bank

An issuing bank is the consumer’s bank; they are responsible for issuing credit cards to consumers. Like an acquiring bank, an issuing bank is also a member of the card associations. An issuing bank pays the acquiring bank for any purchases the cardholders make. Cardholders are then responsible to repay the issuing bank under the terms of their agreement.

Credit Card Processing Steps

Now that you know who’s involved, it will be easier to understand how the process works. While you don’t necessarily need to understand the inner-workings of the bankcard system, knowing how it works can potentially help you save on credit card processing fees. The steps are as follows:

1. The Consumer Makes the Purchase

In order for the process to begin, a consumer must purchase a good or service from the merchant using a credit card. This can be done in person, online, by phone, or by mail.

2. The Transaction is Entered

The consumer will either swipe or enter their card or insert it into the payment processor. For online purchases, the consumer will manually enter their credit card information.

3. The Processor Collects Data

The payment processor collects the consumer’s credit card information, as it is responsible for routing that data across to other stages and facilitating communications between the parties. Their first role is to send the payment information to the card network.

4. The Card is Approved or Denied

After the data has been received, the credit card issuer will either approve or decline the transaction. Common reasons for cards to get declined are the card is no longer valid or the consumer does not have enough funds available. Additional security measures may be taken to verify whether the purchase is legitimate or not.

5. The Transaction is Completed

If the transaction is approved, the processor and merchant receive an authorization response. The merchant then goes ahead and completes the transaction. But just because the transaction is complete does not mean that the funds are released yet. This is a separate process that takes several days to complete, depending on the card networks involved.

6. The Merchant Submits a Batch Closure

In order for the merchant to receive the money, it must first complete a batch closure at the end of the day. This will close out all of the transactions that have been processed on that day. This allows the processor’s acquiring bank to collect the money from the credit card issuers.

7. The Funds are Deposited to the Merchant

Once the funds have been collected, the acquiring bank then deposits the money into the merchant’s bank account.

Now that you know how the process works, be sure to visit our blog to learn how to determine your credit card processing fees!

EMV Compliance Explained

While EMV compliance has been around for quite some time, there still tends to be a lot of confusion around the subject. What is EMV compliance, and how can you as a merchant ensure your business is EMV complaint? Find all of your answers below!

What is EMV Compliance?

Have you ever wondered what caused the switch to go from sliding your credit card to inserting it into the terminal? The EMV, short for Europay, MasterCard, and Visa, is behind that. They are the three companies who established the computer chip technology to help combat against credit card fraud. In addition to the traditional magnetic stripe, EMV credit cards now also feature smart chips and are seen as the new industry standard around the world.

Why are EMV Cards More Secure than Traditional Cards?

Cards that only have a magnetic stripe are at a higher risk for fraud because the stripe contains unchanging data. If someone copies the stripe, he or she can easily replicate the data because it doesn’t ever change.

However, when a credit card with an EMV chip is used to make a payment, the chip creates a unique transaction code that cannot be used again. So even if a hacker was able to steal the chip’s information from one specific sale, card duplication will not work because the stolen transaction number expires after one purchase. The card would ultimately get denied. It’s important to note that while this technology makes it more difficult for criminals, it will not completely prevent data breaches from occurring.

The Importance of EMV Compliance for Small Business Owners

EMV compliance rules officially went into effect in October 2015, but they are not a legal matter. So while you cannot be arrested for non-compliance, there are some costly risks associated with not following the rules. If your business is still processing credit cards with the magnetic stripe, it will be held automatically responsible for any fraudulent charges made with a chip card.

For example, if a customer comes in and completes a $500 transaction with a chip card and you use the card’s magnetic stripe to ring them up, that customer can potentially dispute the change. And because you are a non-compliant merchant, you would have no legal recourse.

EMV compliance protects your small business from liability. It doesn’t matter if some of your customers are still using cards that only have a magnetic stripe, as long as you are EMV compliant, you will not be liable. This includes both chip transactions and swipe transactions.

How to Become EMV Complaint

So what does this new technology mean for your business? The first step is to upgrade your POS systems to ensure compliance. The new terminals feature the option to insert the card at the bottom, while still offering the swipe feature for customers who do not have EMV credit cards.

The next step is to look into the EMV Value Added Reseller Qualification Program. This is a certification that was developed by the PCI Security Standards Council and the Payments Security Task Force for VARs. During this process, an EMV terminal and toolkit are used. Special test scripts will be executed with the help from the EMV toolkit. The results are submitted to the acquirer who then forwards the results to the associations for final approval.

EMV certification typically includes an administrative fee that ranges between $2,000 and $3,000 for every formal test script run. Re-certification is required every time a new hardware device, using a different EMV kernel is added to the previously certified EMV-processing pad. For example, if you have a specific type of device that has been previously certified, any other device of that kind is automatically covered. But if you use a different type of device, your business will need to initiate another EMV certification, even if you are utilizing the existing host integration and back end.

Challenges to Becoming EMV Compliant

One of the main reasons why businesses have yet to become EMV compliant is how much it costs, especially for retail or other businesses with multiple locations. But what many of these business owners do not understand is that the liability switch leaves them at a higher risk for having to pay fraudulent charges.

Another challenge is getting the appropriate certifications in a timely fashion. Many software providers underestimated the complexity and time of getting certifications completed. This means that even if merchants have their new terminals setup and ready to go, if they are waiting to be certified, they can be held accountable for any fraud that occurs with chip cards.

Benefits of Being a EMV Compliant Business

The biggest payoff is fraud reduction. While the level of success is suggestive, MasterCard has reported that fraud has decreased by 60%, in terms of dollars among its top five EMV-compliant merchants. Reducing the risk of fraud helps your business save money on credit card processing fees. But saving money isn’t the only benefit.

New EMV-compliant terminals offer add-ons that customers are starting to become more accustomed to, like Apple Pay and Android Pay. While it is unlikely for any other form of payment will surpass cards anytime soon, the payments mix is becoming more complicated. With more users looking for alternative payment options, being EMV compliant provides a better customer experience. In addition, the new technology makes it easier to integrate systems into legacy POS.

Moving Forward

If your business hasn’t upgraded to EMV technology yet, it is strongly advised you do so. While these upgrades can be expensive, merchants risk facing a much greater cost if they get stuck with bills for credit card fraud.

EMV compliance has helped significantly reduce card-present fraud. But it does not protect consumers from all data breaches. Liability for fraud on a non-chip card remains with the banks. In addition, card-not-present fraud (online or phone purchases) is on the rise. Regardless of what new challenges may be on the horizon, it’s important to make the switch to EMV technology. This worldwide standard is shaping the future of payment processing, and we will continue to see development of contactless technologies to help reduce fraudulent activity.

How to Determine Your Average Credit Card Processing Fees

Business owners have been relying on traditional merchant accounts to process credit and debit card transactions for years. But with the industry expanding and evolving more rapidly over the past few years, including the introduction of the industry has expanded and evolved over the years, it’s even more important to know the processing fees your business is being charged.

As a business owner, you may be wondering, “what’s the average credit card processing charge for my type of business?” There is not one simple answer. Many different variables impact the fees a merchant pays. The more you know, the more likely you are to save on your credit card processing fees. Below you will find our guide to calculate your credit card processing cost.

The Average Credit Card Processing Cost

If you’re looking for the short answer: the average credit card processing cost for a business where cards are swiped is typically 2.3%-2.4%. For ecommerce and other card-not-present businesses, the average cost is usually between 2.3%-2.5%. Of course, these costs can fluctuate depending on a variety of factors.

While these numbers can give you an idea, it’s best to fully understand what goes into credit card processing costs so you can come up with a more personalized estimate. Underestimating your fees can hurt your new businesses when it is most vulnerable.

What is an Effective Rate and How Does it Help with Payment Processing?

An effective rate is the amount that your business pays in processing fees relative to your gross volume. It is especially useful when you are looking to determine your average processing expenses.

How to Calculate an Accurate Effective Rate

There are a few different factors that go into determining your business’ effective rate. They include:

1. Processing Method

Your processing method affects how many and which types of fees apply. A business can process a credit card in two ways: card-present and card-not-present.

As the names imply, card-present refers to a business that physically swipes cards, while card-not-present refers to e-commerce and other businesses that process transactions remotely. Your processing method affects your interchange fees, processing markup, along with other third-party charges. Card-Present businesses have better cost benefits compared to card-not-present businesses, including:

Card-Present Business

  • Lower interchange fees (roughly 1.60% plus $0.10 transaction fee)
  • Lower monthly fees (around $5-$15) and transaction fees ($0.08-$0.10)
  • Low risk and lower interchange plus rates
  • Lower occurrences of chargebacks and fraud

Card-Not-Present Business:

  • Higher interchange fees (roughly 1.90% plus $0.10 transaction fee)
  • Higher software costs associated with online gateways (generally $10-$15/month plus a $0.01-$0.08 transaction fee)
  • Higher risk and higher interchange plus markups from processors
  • Higher occurrences of chargebacks and fraud


2.    Average Ticket Size

Ticket size refers to the amount of a typical credit/debit sale. It has a large impact on your business’ processing fees. The greater your average ticket size, the more expensive your average processing costs will be. On the other hand, as the ticket size decreases, the number of transaction fees incurred increases. Because transaction fees have a larger impact on smaller transactions, they have a greater impact on overall cost. One way to save on processing fees is to set a minimum for credit cards. This will help decrease the number of smaller transactions.

How to Calculate Average Ticket Size for Determining Average Processing Fees

Divide your business’ expected/actual monthly processing volume by its average ticket. Then, multiply by the total transaction fee (roughly $0.18-$0.20 for card-present businesses, $0.25-$0.30 for card-not-present businesses). Divide by the processing volume before multiplying by 100. Your result will be the percentage of total volume that goes towards paying transaction fees.

How to Calculate Average Credit Card Processing Costs

  1. Calculate your average monthly processing volume and average ticket amount. As an example, we will use $10,000 and $50.
  2. Find the average interchange cost for your processing method (1.60% for card-present and 1.90% for card-not-present). We’ll be using card-not-present for our example.
  3. Add the processor’s interchange markup to the average interchange cost. For this example, we use 0.25% as the markup. Adding it to 1.90%, the total now is 2.15%.
  4. Next, determine the impact your average ticket will have on transaction fees by following the steps in the “How to Calculate Average Ticket Size” section, and add that number to your running total. In our example, we’re using the $0.25 transaction fee. Here’s how it works out:

$10,000 / $50 * $0.25 = $50
$50 / $10,000 * 100 = 0.50%
0. 50% + 2.15% = 2.65%

  1. Finally, figure the impact monthly fees will have by using the average monthly charges from the “Processing Method” section and the formula for determining average ticket impact. As a card-not-present business, we used monthly fees of $15:

$15 / $10,000 * 100 = 0.15%
0.15% + 2.65% = 2.80%

For our example, an online business that processes $10,000 a month with an average ticket of $50 will pay about 2.80% of volume or $280/month in credit card processing charges.

5 Ways to Save on Credit Card Processing

In today’s market, consumers are using less cash and relying more on credit cards for their transactions. According to the Federal Reserve, credit card payments registered the highest growth rate by number (10.2%) among the core payment types from 2015 to 2016.

With more and more customers choosing plastic over cash, as a business owner, failing to accept credit cards isn’t in your best interest. But if you aren’t careful, your business’ processing fees can quickly add up. According to the U.S. Small Business Administration, typical merchant account companies can charge up to 5% on all of a company’s earnings from credit card sales, which can include the following fees:

  • Fee from the issuing bank: Known as an interchange fee, it is a percentage of each transaction. How a payment processor handles the different interchange fees will determine the rate your business pays.
  • Fee charged by the credit card providers: All providers (Visa, MasterCard, Discover, etc.) charge an assessment fee for every transaction.
  • Fee charged by the payment processor: In addition, your payment processor may charge additional fees for chargebacks, monthly minimum/maximum, as well as account start up and cancellation fees.

While credit card fees are inevitable, with proper planning, you can reduce these fees and save up to hundreds of dollars every month. Use our 5 tips below to help you cut some unnecessary costs from your credit card processing fees.

Tips to Reduce Your Credit Card Processing Costs

1. Do Your Research / Set Up Your Account Properly

Sometimes small mistakes can lead to higher credit card processing fees. Because the type of business, type of transactions, and frequency of transactions impacts your fee structure, it’s important that your account is set up properly from the beginning.

You should also thoroughly research your options to ensure you choose a structure that caters to your business and your consumer’s buying habits. If your business sells big-ticket items, choosing an interchange plus pricing system may help you save money compared to a flat fee payment processor. If your customers frequently use business credit cards, you’ll want to rule out the tiered pricing system, to avoid that expensive, non-qualified rate.

2. Reduce Risk of Credit Card Fraud

The higher the security risk you pose as a merchant, the higher your processing fees will be. Reduce your risk of credit card fraud by choosing to swipe/insert credit cards over manually entering the information. Credit cards’ microchips and magnetic strips have built-in security features, while manual transactions are more susceptible to fraud and human error. In fact, some banks charge more when card information is input manually.

If you have to input the information manually, be sure to provide the security information that protects the cardholder and validates the purchase, for example, the billing zip code and security zip code. This can help reduce the risk of fraud, which helps reduce your fees.

3. Set Credit Card Minimums

If your business handles small transactions, you may want to think about setting a credit card minimum for your customers, especially if your business uses the interchange plus pricing or the tiered pricing system. Setting a minimum can help reduce your credit card processing volume, which can keep your processing bill down. It’s important to not set the minimum too high though; you don’t want to deter your customers at their point of purchase!

4. Process Transactions Everyday

It is essential that you set up your terminal correctly. Many businesses are unaware that they are paying expensive processing fees because they are allowing their transactions to stack up throughout the week. When you wait multiple days to process transactions, the volume appears higher for that period, causing a spike in the processing rate. Getting into the habit of doing your batch processing at the end of each day helps lower the number of transactions per period. This will help you secure a better rate.

5. Ask for Help

Understanding all of the different variables that go into credit card processing rates can be tough, especially for business owners who are juggling multiple other roles. Speaking with an expert can help guide you through your payment processing options and ensure that your account is set up correctly.

Most experts would recommend negotiating lower rates with your payment processor, especially if you’ve been working with them for an extended period of time and you’ve increased sales. Your provider isn’t going to want to lose business to a company that is on the rise!

There are several factors to consider when it comes to your credit card processing. While credit card processing fees are unavoidable, following the tips above can help save your business money.

Credit Card Processing Fees Explained

Your Guide to Understanding Your Credit Card Processing Fees

With so many different fees involved with credit card processing, it’s not easy for you as a business owner to keep track of what you’re being charged. But the more you know, the more likely you’ll notice an unfair cost and look to dispute it. Not to mention, it will help you have a better understanding of what your true overhead is. Below is our complete guide to all of the different types of processing fees and everything you need to know to truly understand them.

Parties Involved with Credit Card Processing

Before you can understand your fees, you need to know who is charging you them! The parties associated with processing fees can be thought of as financial middlemen between you, the merchant, and your customers. Some of these middlemen include:

  • Credit Card Associations: These are your major credit card companies (Visa, Mastercard, American Express, etc.).
  • Credit Card Issuing Banks: These are the institutions that issue the credit cards, like Chase and Wells Fargo. Some card associations, like Discover and American Express, take on the role of a bank, developing and issuing their own cards.
  • Credit Card Processors: You may know them as Acquiring Banks or Acquirers, these institutions are the messengers between merchants and credit card associations. Credit card processors allow merchants to complete transactions.
  • Merchant Account Providers: These are the companies that manage all aspects of credit card processing. Depending on the situation, these providers can be financial institutions, independent sales, organizations, or double-duty acquirers.
  • Payment Getaways: These are special portals that route transactions to an acquirer (ex: an online shopping cart).

Types of Credit Card Processing Fees

There are three main types of fees that the above parties can charge you to complete a transaction. They are:

  • Transactional Fees: Transactional fees are charged per business transaction.
  • Flat Fees: Monthly flat fees are dependent upon the type of business you run.
  • Incidental Fees: Incidental fees are only charged when something happens (ex: a chargeback).

Each type can be further broken down into smaller fees that are dependent on the nature of your business.

Transactional Fees

Transactional fees represent the biggest cost of operating a merchant account.

Interchange Reimbursement Fee

The interchange reimbursement fee should be the largest expense paid both per sale and per month. This fee is charged by credit card associations and card-issuing banks per transaction. Wholesale rates for this fee typically consist of a percentage of the transaction as well as a flat per transaction fee (ex: 2.1%+ .10). This fee is usually based on a percentage of your total transaction volume for the month.

If you are on an interchange-plus pricing structure, your processor will quote you a price that will be added to the wholesale rate (ex: .25% + .10). For merchants on a tiered pricing plan, you will get a quote with a qualified, mid-qualified, or non-qualified rate. You will not see the markup, making it more difficult to know what the processors’ margin is.

Flat Fees

There are various flat fees you can be charged. While you may not encounter all of them, some of the more common flat fees in credit card processing include:

  • Terminal Fee: This fee only applies to businesses with physical locations.
  • Payment Getaway Fee: This is e-commerce’s version of terminal fees. Not all online businesses have to pay these fees; some processors have in-house payment getaways that are free.
  • Payment Card Industry (PCI) Fee: These are fees paid to the PCI either for noncompliance or compliance. In noncompliance cases, you pay because your business is not upholding the standards set by PCI. This could wind up costing you more money in the long run. In compliance cases, you have to pay the merchant account provider to ensure you follow the regulations at all times.
  • Annual Fee: These are fees charged every year for the basic use of a provider’s services. Not all merchant account providers charge this fee.
  • Early Termination Fee: This fee can be avoided, as long as you do not cancel your contract early.
  • Monthly Fee: This fee is mostly charged for the purpose of covering call center costs.
  • Monthly Minimum Fee: This fee is charged to merchants who do not reach a certain transaction total for the month and/or year. While the minimum transaction total varies by provider, most are around $50,000/year.
  • Statement Fee: This fee is charged to cover printing and mailing costs for your statements. Some merchants bypass this fee by using electronic billing statements.
  • IRS Report Fee: Merchant account providers charge these fees for reporting transaction information to the IRS (1099-K).
  • Network Fee: Card networks charge non-negotiable fees that are passed through to the merchant (ex: Fixed Acquirer Network Fee, or FANF).

Incidental Fees

While not all incidental fees can be avoided, the goal is to have as few of these charges as possible. Some examples of incidental fees include:

  • Address Verification Service (AVS): This fee is charged on every e-commerce or telephone order transaction. It is important for these types of businesses to keep an eye on their AVS fee. Retail businesses that occasionally need to key-in card information don’t need to worry about this fee as much.
  • Retrieval Request Fee: This fee is charged every time a customer initiates a dispute on a charge from your business. The retrieval request is the first step in the chargeback protocol. If the actual chargeback occurs, you will be hit with a chargeback fee (on top of losing the money from the sale).
  • Batch Fee: This fee is charged whenever you submit a batch of transactions.
  • Non-Sufficient Funds (NSF) Fee: NSF fees are charged if you do not have enough funds in your account to cover your merchant account expenses.


All credit cards and merchant account providers have their own set of costs associated with their services. The more you understand what you are being charged for, the more you can negotiate with your processor to help you save money.