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Busy Salons Thrive Even in This Economy When They Accept Credit Cards via Phone

Credit card processing via phone.

Diana Ennen

June 08, 2009

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Today’s stylists face many challenges, demanding clients, long hours on their feet, even a lack of work in this economic climate just to name a few.  One challenge they don’t need is getting paid! Since most stylists work in salons as independent contractors renting their booth or stations, they are responsible for billing their own clients. To be successful, a stylist needs the ability to conveniently and quickly accept payments from their customers, and as more and more customers are paying with credit cards these days, it’s imperative that the stylist is able to do just that, accept their customers’ credit cards.

But what are the stylist’s options in order to accept credit card payments? Well, most salon owners will allow the stylist to process their transactions through the salons’ credit card terminal, but the salon owners typically charge a premium for this service (typically between 6-8%). Not necessarily because they want to make more money off of the stylist, but because of the accounting nightmare of keeping track of all of the different transactions coming through from each independent stylist. Also most salon owners either pay just a couple of times a month or we have even seen where the salon owner only gives credit toward the stylists’ next month’s rental fees.  For the cash-strapped stylists, this is not a great option.

Not to mention the fact that under Visa and MasterCard’s rules and regulations, it states that you cannot run other peoples transactions through your merchant account.  Therefore, when a salon runs an independent stylists transaction, they are actually in breach of their merchant agreement.  This is known as factoring and they could face fines or even worse be put on the TMF or Terminated Merchant File.

Another option is for the stylist to get their own swipe terminal, but access to an open/nearby phone line is typically an issue and not really a viable option. Then there are wireless terminals, traditional swipe terminals that work off the same network as your cell phone. This method is still very expensive with equipment costs reaching upwards of $900.00 and monthly fees up in the $30.00-$40.00 range and you haven’t even charged a single card yet. This option is just not cost effective for most independent contractors. 

So what’s left? Well the most cost effective way is to setup a merchant account that enables stylists to process the cards through their existing phone. With this option the stylist doesn’t need to buy or lease any equipment, they simply dial a toll-free number from any touchtone phone and key in the pertinent card information into the computer system requests. Now you do pay a slightly higher rate when you key a transaction compared to swiping it through a terminal, but it is still cheaper than what most salon owners are charging and the funds are deposited directly into the stylists account in 2-3 business banking days.  You can then say goodbye to your cash flow issues.

See what a difference having the ability to accept credit cards via phone by the stylist themselves would make.  Also, let’s not forget the time factor.  As time is such a vital aspect of a successful salon, this too can be an advantage.  Stylists can easily be working with two to three customers at a time.   All these customers have a destination in mind and need to get there as quickly as possible.  By not having to go through the chaos at the front desk, and instead processing the credit card transaction while the customer readies to leave, the stylist saves valuable time.  And with some credit card processing companies that money can be in the stylist’s account within 3 days.  Now we’re talking.

We all know the benefits of a merchant account.  A merchant account allows a business or person to accept credit cards as payment from customers. The account captures funds from the cardholder’s issuing bank and deposits the money into the business owner’s checking account. When you accept credit cards via phone, it’s the same process.  However, instead of using the traditional swipe machines, you utilize a unique phone system that once credit card information is keyed in, you can receive instant card approval.  Then the corresponding funds will be deposited into your existing checking account. It’s that simple.

Some small businesses still believe that getting a merchant account is costly and difficult to do.  It’s not.  Since your phone is the only equipment necessary to process transactions, you do not need to buy or lease anything else. Therefore, the high upfront cost of purchasing equipment is eliminated. 

Another big advantage is that with some companies, such as CellCharge, you can even process credit card transactions through your iPhone.  Most are aware of the amazing apps you can get with your iPhone, but having one that enables you to accept credit cards anytime/anywhere is definitely a plus, especially for salons. As more and more stylist utilize iPhones, this is extremely beneficial to be able to do this.

Stylists, salon owners, and customers benefit when being able to offer innovative ways to do business.  Accepting credit cards transactions via phone is just one way to keep a salon running at optimal speed.  Better service. Happier Clients. That’s the way a smart business succeeds.

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