Coming changes in payment processing… is your biz ready?

by on December 4, 2012

This is a guest post by David Rodwell of

Credit card processing is an industry that’s constantly adapting to the needs of its users. Two decades ago, few credit card transactions were processed absent a physical swipe of the card. In fact, you had to have a special type of merchant account if you wanted to be able to take credit card orders for catalog items, for example. Today, many companies process credit cards frequently without ever swiping a card.

The changes to credit card processing have never come as rapidly as they have in the past few years. Accordingly, we can expect major changes to the industry over the next decade.

Here are some of the trends to watch for:

1.    The line between online and offline businesses will continue to blur.

There was a time when brick and mortar stores almost exclusively processed payments via merchant accounts and included a card swipe. Today, many offline businesses actually use online credit card processing gateways, rather than traditional merchant accounts. As these credit card processing gateway companies continue to grow, expect more and more offline businesses to accept credit cards the same way online businesses accept cards.

2.    Merchant accounts will decline significantly.

For many small businesses, it just doesn’t make sense to have a bank-based merchant account for credit card processing. In many cases, the fees for such an account are significantly higher than what they would be with a payment gateway. While this has already occurred in the online world, expect it more and more for offline businesses.

3.    Payment processing will become more mobile.

We’re just now starting to see user-friendly ways to process credit cards remotely. Square is perhaps the most visible example of this trend. The ability to accept a credit card with nothing but a smartphone and an optional card swiping dongle opens up all sorts of possibilities. Salespeople can collect payment at the moment of sale. Business owners traveling to a trade show can make sales right on the spot. The days of calling in credit card numbers for approval and waiting for clearance are over; smartphone agility has made it quick and easy.

4.    Physical card use will decline.

As offline businesses start using the same payment gateways as online businesses, there will be fewer and fewer reasons to actually swipe a physical card. Many payment processing systems that scan a credit card today don’t actually do more than read the number and expiration date, and feed it into the payment processor, rather than identifying whether the card was swiped or not. This trend will continue.

5.    Changing security priorities.

Traditionally, credit card processing security has been more of a concern online than offline. However, the major breaches in security that have made the news in recent years have been more about overall business network security, rather than the security of a payment processing system. Look for new industry standards when it comes to the security of systems involved in processing credit cards.

As consumer habits and business needs change, the credit card processing field is changing to meet those needs. It’s important to think about how these new developments will impact your small business.

David Rodwell is an expert writer all subjects relating to payment processing and mobile payments technology. You can find many more of his articles at

Image source: worradmu / Free Digital Photos

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