Will that be Cash or Credit?

Dennis Norman

If you are a small to medium sized property manager or landlord odds are you receive your rent payments in the form of cash or a check. Why not accept credit cards and debit cards for rent payments in addition? This is something I did for years and think for many landlords it is worth the effort to get your self set up to accept these forms of payment.

While I wasn’t looking to help my tenants run up credit card debt I did realize there would be times when a tenant may not have the money available to pay rent on time but would have room on their credit card to cover the rent, which would mean I was going to be paid on time since I accepted credit cards.

There are other benefits though as well, even benefits to the tenant. One such benefit is almost every credit card out there today offers airline miles, points towards gifts or some other incentive to use their card. This gives tenants the ability to rack up some miles with their rental payments. There is also the convenience factor; if the tenant is out of town, or has waited unti the last minute to pay the rent, they can call you and take care of it over the phone using a credit card. Oh yeah, my favorite part is, with a little time creating a form authorizing it, you could have the tenant authorize you to automatically charge their card each month for the rent!

Step 1:

Determine if Accepting Card Payments is for You

Choosing to accept debit and credit card payments is a big step, but often a necessary one when running a successful business. Should your business accept debit and credit cards? To answer that question, you’ll need to understand the associated costs and benefits of card payments and laws that regulate their use. To better inform your decision, read these resources from Business.gov before you get started:

• Will That Be Cash or Credit?
  Pros and cons of accepting cash only and card payments

• Accepting Checks
  Quick guide to accepting checks as a form of payment

Step 2:

Understand the Difference Between Credit and Debit Cards

Credit and debit may sound similar, but they are actually two very different processes. Credit cards allow customers to make purchases by drawing on their reserved line of approved credit. Debit cards let customers make purchases by withdrawing funds directly from their personal checking account. Before your business begins accepting credit or debit cards, make sure you know the ins and outs of each. Read Accepting Credit Cards vs. Debit Cards to determine which forms of payment are best suited for your business.

Step 3:

Understand Applicable Laws and Regulations

Businesses that accept card payments must comply with certain privacy laws that aim to protect customers:

• The Fair Credit Reporting Act is the federal law that is the foundation of consumer credit rights. This law regulates the collection and use of consumer credit information by businesses.

• The Fair and Accurate Credit Transaction Act (FACTA) was passed in 2003 as an amendment to the Fair Credit Reporting Act. FACTA updated consumer credit protections, including a requirement for businesses to truncate consumer credit card information on receipts.

Many states have laws that dictate what kind of information businesses can and cannot ask for or write down when a customer makes a transaction using a credit card. For more information on your state’s regulations, visit your state attorney general’s website and read more about state merchant laws.

Step 4:

Open a Merchant Account

For a business to accept credit and debit card payments, it must set up a Merchant Account. A Merchant Account directs funds into a designated “bank” account where all credit and debit card transactions are verified and approved. This process allows your businesses to accept card payments directly from customers.

If you’re already in business and have a reliable sales history, you should be able to get a Merchant Account from your personal bank or through another financial institution that specializes in e-commerce. If you’re just starting up or don’t have a sales history, you may need to work with an independent sales organization (ISO) that acts a reseller, or middleman, between your business and the account processor.

Step 5:

Install Processing Equipment

Next, you’ll need to install the necessary processing equipment, such as a credit card terminal, that will enable you to physically make card transactions. Rates and features often vary from product to product so it’s important to research the best equipment for your business needs.

Older equipment models, like manual processors that imprint card data on carbon paper, are still used by many businesses. It’s important to remember that manual processors are also susceptible to security risks. You are equally responsible for protecting consumer data whether you use older models or the newest technology.

Once you identify the right products and have them installed at your business location, you’re ready to start accepting card payments.

Step 6:

Begin Accepting Credit Cards

When you’re ready to accept credit cards, make sure your customers know about it! Place stickers for accepted credit card companies on the door of your business and inform your customers of their new payment options through a marketing campaign.