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How Credit Card Processing Works for Hardware Stores

Credit card processing is essential in order for hardware stores to conduct business. Offering a variety of home improvement tools, landscaping materials, painting tools, and remodeling equipment for contractors and DIY home projects, you need to be able to accept different types of payment. Most American homeowner projects are under $5,000, but larger kitchen and bathroom renovations are growing in popularity. Consumer purchases can range from a small hammer to a truck full of lumber. While many make purchases online, 82% of homeowners enjoy exploring products and displays in-store to see all that is available.

The DIY home improvement industry has grown exponentially during the pandemic lockdown, especially through gardening projects. This is promising for small hardware stores, as they typically excel in customer service and building customer relationships.

Most customers prefer to pay for all of their goods by credit card. According to Statistica, 38% of point of sale payments are made by credit card. You want to accommodate all of your customers, from those who spend thousands on their home improvement project to individuals who come in for a hammer or nail. Whether your business is an established hardware store or a start-up, you know you must be able to process credit and debit cards easily and efficiently.

Credit Card Processing for Hardware Stores Basics

When you accept credit cards, you give your customer an alternative method to pay you. In order to receive funds from the credit card company, you need to choose a credit card processing company. Credit card processors are the partners that make the transaction possible and ensure that you get paid.

The cardholder is the person who has a credit or debit card. Merchants are the businesses that accept the payments for products and services. A merchant bank creates and maintains the merchant accounts. Merchant banks enable merchants to accept payments from credit and debit payments.

The payment processors are companies that process debit and credit card transactions. They connect merchants, merchant banks, and card networks to make credit card payments possible. An issuing bank is a bank, credit union, or other financial institution that issues debit and credit cards to the cardholder through card associations.

When we say card associations this encompasses Visa, Mastercard, American Express, and Discover. The card associations create the interchange rates and set the qualification guidelines. They act as the mediator for issuing banks and acquiring banks.

Credit Card Processing for Hardware Stores Steps

Credit card processing has three fundamental processes. It begins with authorization of the transaction. The next step is the settlement of the charges. The last step is funding the account.

The authorization is the process of approving the transaction. It begins when the cardholder presents their card at a merchant’s place of business. The merchant sends a request for approval to the payment processor. The payment processor submits the transaction to the card association. This transaction then goes to the issuing bank.

The issuing bank will either approve or decline the transaction based on whether the cardholder has sufficient funds or credit. Transactions may be declined if the account is expired. The issuing bank then sends the approval status back to the card association and the merchant bank. This all takes place in a matter of seconds while the customer is at the payment terminal.

The next step is the settlement. The processor reconciles the authorization and submits the batch to the card association network. The processor deposits the funds into the business’s account and deducts the fees. Settlement can sometimes take a few days.

The last step is funding. The funds are then deposited and fully available to the merchant.

Credit Card Payment Pricing

Since there is so much work involved in the transaction, the people involved want to get paid. The payment processor, merchant bank, issuing bank, and credit card association all charge a small fee. 

There are four main fees that are typically bundled into the credit card transaction. The issuer gets a percentage of the sale called an interchange. The credit card association charges a fee called an assessment. The merchant bank takes their cut by charging a percentage. The payment processor charges an authorization fee.

The percentages are all added together and quoted as a single rate. Companies quote the transaction fee separately. For example, 2.9% plus $.30.

Since hardware store margins can often be razor-thin, hardware store merchants must negotiate with every vendor or supplier to be profitable. Their dedicated research could help them find the credit card payment processor with the lowest processing fees since there is the risk of running into a wide range of those fees in the process. 

The most important thing to consider is the volume of sales versus your per-sale dollar amounts. If you have a high volume of low-dollar value sales, you will have different needs than if you have higher value sales. Selecting the right payment processing structure is key to your success.

Hardware E-Commerce Shopping

Many brick and mortar hardware stores have an online store to accommodate more customers. This online presence attracts individuals who like to do their research from their computer. They can easily reference their home appliance numbers or parts they need and enter them into the computer to see if it is available at the hardware store.

For online shoppers, paying with a credit or debit card is essential. Hardware stores must have a merchant account set up for online purchases. Industry standard protects all personal information from each credit card transaction through end-to-end encryption. 

Hardware Store Delivery Services

To keep a competitive advantage, small hardware businesses started providing delivery of their products for all projects big and small directly to their home for a fee. This is extremely convenient for the customer that doesn’t have a truck to haul construction materials home, but may be interested in a DIY deck project.

Customers who want to have services delivered to their homes will pay at the time of delivery. A mobile payment processing feature can enable home delivery type services for hardware stores making it so hardware stores may want to find payment processors that offer a mobile processing terminal.

Hardware Store Account Optimization

Hardware stores need to ensure the optimization of their account on every level. They must select the right payment processing structure and any other additions. They should do regular reviews of their merchant accounts to ensure that they aren’t overpaying on their credit card processing fees.

LOLA POS. works with members to meet your payment processing needs and optimize your account to ensure that your hardware store is profitable. They evaluate your account each month to ensure that you are paying the least amount possible. They also conduct quarterly account reviews to optimize your account.

Selecting a Credit Card Processor

When choosing a credit card processor, it is important to find one that Works For You(tm). They should be able to customize your payment processing solutions to meet your particular needs. You should select a payment processing service that provides excellent customer service, top-notch security, and has a proven track record of experience in your industry. National Merchant Association combines personalized service with industry experience to create a positive experience for your business. Visit National Merchant Association today to find out if it is the right payment processing for your business.

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