Flute
Convenience. It’s the cornerstone of every modern innovation. Smartphones give you access to the world from your palm; self-driving cars make traveling effortless; delivery apps let you order food with the touch of a button. Every aspect of our lives revolves around convenience. Which makes it all the more jarring when we encounter a payment experience that obviously wasn’t designed with simplicity in mind.
There’s nothing more frustrating than getting to the front of the line at your local coffee shop or boutique to realize that you left your wallet in the car, and you can’t tap your phone to pay. It may seem like a non-issue at first, but those moments can mean the difference between a customer coming back to your shop or going to a competitor.
In our latest research report, we found that more than 50% of shoppers would reconsider shopping at a place after one bad payment experience. PYMNTS Intelligence also reports that 70% of consumers consider the availability of their preferred payment method very or extremely influential when deciding where to shop.
And that need for convenience goes both ways — to offer the best experience for their customers, business owners need payment solutions that go beyond basic, cookie-cutter features. That means flexible payment options, access to capital, and a dashboard that lets them manage everything from a single login.
To better understand how consumer demands are shaping the landscape and how payment platforms affect an operator’s ability to meet those expectations, we conducted two surveys: one of 1,000 consumers and a second of 210 small-business operators.
Across the respondents, we found that payments influence loyalty, trust, and growth. Consumers expect local businesses to offer the speed, clarity, and flexibility they get from larger chains and online retailers, while operators need payment tools that help them manage sales, cash flow, and day-to-day work without adding more complexity.
Keep reading for a highlight, or download the full report here.
The thing about payment friction is that it rarely makes noise. Unlike a bad product or a rude interaction, a frustrating checkout experience usually ends with a polite smile and a customer who has quietly resolved not to come back.
Data from our survey puts hard numbers to that pattern. Fifty-five percent of consumers said one bad payment experience would make them stop or seriously reconsider shopping at a local business. Another 37% of consumers have already decided not to complete a purchase at a local business because paying felt too inconvenient or confusing — not because of price, not because of the product, but because of how they were asked to pay.
That means the majority of your customers are deciding whether to keep shopping with you based on a single interaction.
Business owners have some sense of this, even when they can’t trace it directly. Thirty-eight percent of operators said their current setup has definitely or probably cost them a customer or sale. What’s harder to account for is the customer who left without a word — the sale that never happened and the loyalty that never had a chance to form.
The good news is that what consumers are looking for isn’t complicated. When asked what would make them more likely to spend at a local business, the answers were consistent:
Speed, transparency, and flexibility. These are the same things large retailers have been building into the checkout experience for years. As consumer expectations are shaped by those interactions, independent businesses are increasingly held to the same standard.
There’s also a gap between how business owners see their checkout experience and how customers actually experience it. Of the operators surveyed, 37% believe they offer a more personalized checkout than large chains. Less than 24% of consumers agreed. In fact, 63% said that checking out at an independent business feels exactly the same as at a chain.
The competitive edge local businesses believe they have at checkout isn’t registering the way they expect it to, and it’s cutting into their margins.
This isn’t just a “today” problem. The data shows clear generational patterns in how consumers respond to checkout friction — patterns that will shape the market for years.
More than half of Gen Z consumers have already abandoned a local purchase because the payment process felt too inconvenient or confusing. That compares with 44% of Millennials, 29% of Gen X, and 22% of Baby Boomers. Younger shoppers have grown up with fast, frictionless transactions as the default, and those expectations don’t soften as they age — they get stronger.
As Gen Z’s spending power grows, so will its influence over the checkout experience. The businesses that get ahead of that expectation now, with faster checkout, flexible payment options, and transparent pricing, are building relationships with a customer base that will define the market for decades.
More is riding on that moment at the counter than most business owners realize. The customer who can pay quickly, easily, and the way they prefer is more likely to come back. On the other hand, the one who hits a confusing or limited checkout usually won’t say anything about it. They’ll just stop coming back.
At the same time, local businesses need payment tools that are simpler, clearer, and faster. They need enterprise-level convenience without the high costs, faster access to funds, clearer pricing, fewer systems, and human support when money gets complicated.
Payments have moved from a back-office consideration to a competitive differentiator, and the growing businesses that treat it like one — by giving customers the speed, flexibility, and pricing clarity they’re already asking for — will be better positioned to build the kind of loyalty that sticks.
Download our full report to learn more.
Cash flow is one of the most persistent challenges growing businesses face. You might have strong sales, a loyal customer base, and a product people love, but if money isn’t coming in fast enough to cover what’s going out, growth can stall.
Unfortunately, traditional funding options that are supposed to help often make things harder, with lengthy applications, credit checks, collateral requirements, and weeks of waiting, all for an uncertain outcome.
The good news is that the landscape is shifting. A new generation of working capital solutions has emerged that’s faster, more accessible, and built around how businesses generate revenue.
So, whether you’re eyeing a bulk inventory order, planning to bring on staff before a busy season, or just trying to keep operations steady during a slow stretch, there’s a path forward that doesn’t involve a bank branch or a pile of paperwork: working capital loans.
Working capital, at its most basic, is the money a business has available to fund its day-to-day operations. It’s the difference between your incoming revenue and your short-term expenses — cash on hand versus bills due.
For many growing businesses, that balance is tighter than it should be. According to PYMNTS, roughly 50% of small businesses rely on day-to-day sales or existing cash to stay afloat. That can leave small- and medium-sized businesses (SMBs) without the funds they need for:
Working capital solutions are funding products designed to bridge that gap. You may also see them described as revenue-based financing or merchant cash advances, depending on the provider. Rather than large, long-term loans intended for capital investments, these products provide shorter-term access to cash that you can put to work right away.
Here’s how it works:
Repayments are based on a small percentage of your daily or weekly sales, which means what you pay back rises and falls with your actual revenue. And because payments are automatic, you never have to keep track of deadlines or invoices.
Traditional bank loans are built around a lending model designed for a different era of business. To qualify, you typically need several years of operating history, strong personal or business credit, collateral like real estate or equipment, and a detailed business plan. Even then, the process can take weeks or months, and approval isn’t guaranteed.
That model leaves a significant portion of businesses behind. Goldman Sachs research found that 77% of small business owners worry about access to capital. And PYMNTS data shows that only about 39% of Main Street SMBs have access to financing sources like business credit cards and working capital loans.
Newer working capital solutions take a fundamentally different approach.
Rather than leading with credit history, they look at actual business performance: how much revenue a business is generating, and how consistently. That shift matters because a business with healthy sales but a limited credit history can still qualify, opening the door to funding for a much broader range of owners.
Speed is another factor. While traditional loans can take 30 or more days to fund, most working capital solutions are designed to provide businesses with funds in one to two business days. In many cases, offers are pre-generated based on existing payment processing data, which means you’re looking at a real, personalized number before you’ve filled out a single form.
Because working capital solutions are built around revenue rather than credit, the eligibility framework is different from what you’d encounter at a bank.
Providers that offer this type of financing typically assess eligibility based on four key factors:
Credit scores and collateral typically aren’t part of the equation. That makes these products accessible to businesses that are operationally strong but may not have a long credit history. It’s also great for newer businesses and those that have dealt with financial setbacks in the past.
One practical upside of this model is that the more consistently you process sales, the stronger your eligibility will be. For instance, some providers update offers dynamically as your revenue grows, so access to capital can scale with your business
SMBs face a lot of challenges when it comes to accessing financing through traditional channels. For instance, the World Bank Group found that there’s a $5.7 trillion financing gap across 119 emerging markets and developing economies. Revenue-based working capital offers a meaningful alternative for the businesses that gap leaves behind.
On the repayment side, it’s important to look for working capital solutions that calculate repayment as a percentage of daily sales rather than a fixed monthly payment. That’s because a fixed payment stays the same whether you had your best week of the year or your slowest. On the other hand, a sales-based repayment adjusts automatically, which means you pay less on slower days and more on days when sales are high. This framework protects your margins on slow days and helps prevent cash flow issues.
The best capital solutions also charge a single, fixed fee (sometimes called a factor rate) rather than an interest rate that compounds over time. That means you know the full cost of your loan upfront, with no surprises as you repay it.
One of the advantages of most working capital solutions is that they don’t come with strict restrictions on how the funds are used. That’s intentional — because every business’s priorities are different, and the most urgent opportunity today may look nothing like the one next quarter. Let’s break down a few examples.
Inventory is one of the first areas businesses often invest their new capital. Whether you’re stocking up ahead of a high-demand season, taking advantage of a bulk-pricing opportunity from a supplier, or trying to avoid stockouts that cost you customers, fast access to capital lets you act when the timing is right rather than when your bank account allows it.
Equipment upgrades follow a similar logic. New equipment often means higher capacity, better efficiency, or services you couldn’t offer before. But the cost is typically front-loaded while the benefit takes time to materialize. Working capital can close that gap without disrupting day-to-day operations.
Staffing and training are other common use cases. Bringing on an extra team member before a busy season gets underway, instead of scrambling to hire once it’s already peaked, requires capital that most businesses don’t have just sitting by. The same applies to training a team on a new system or service.
Marketing and business development round out the picture. Running a campaign, attending an industry event, or investing in a new channel all require upfront spending. Working capital lets businesses act on those opportunities without drawing down the operational reserves they depend on.
Beyond those specific categories, a lot of businesses simply use working capital to strengthen their cash position. A buffer provides flexibility when unexpected expenses hit or when a major customer takes longer than expected to pay.
PYMNTS research found that 90% of SMBs say access to embedded financial products and services is essential to their operations. However, separate PYMNTS data shows that only about 44% have access to the working capital solutions they need.
The best working capital solutions are ones that fit into how your business already operates. Look for providers that evaluate eligibility based on your actual sales volume, offer funding without a drawn-out application process, and structure repayment in a way that adjusts with your revenue. Transparency around fees matters too; a clear, fixed cost upfront is much more manageable than a rate that shifts over time.
If you’re already processing payments through a platform that offers embedded capital, start there. Ideally, your offer will be built around your transaction data, with minimal processes and quick funding.
Flute Capital is designed to do exactly that.
As part of the Flute payments platform, eligible businesses receive working capital offers based on their actual payment processing history — no credit check, no collateral, and no separate application required. The process takes minutes, funding arrives within one to two business days, and repayment adjusts with your daily sales, so your cash flow stays protected.
If you’re already processing with Flute, check your dashboard to see if there’s an offer ready for you. Or reach out to a member of our team to learn how to get started.
Every time a customer swipes their card, money moves. The problem is, it can take a while for those funds to finally get to you.
On average, it takes between two and three business days for card sales to reach your business bank account. That might not sound like much time, but for businesses managing payroll, restocking inventory, and covering daily operational costs, settlement times create a real cash-flow gap.
Research from U.S. Bank found that 82% of growing businesses experience cash flow problems, even though most generate revenue. That means the problem isn’t what’s coming in; it’s when it actually arrives. The Federal Reserve’s Small Business Credit Survey confirms this. They found that access to card payment funds is one of the most frequently cited challenges small business owners face, with most waiting an average of two to three days after a transaction to see those funds.
Running out of cash is a contributing factor in 38% of business failures — a number that speaks more to timing than to performance.
Today, there are tools designed specifically to address this: instant payouts. These solutions give growing businesses access to earned revenue in minutes, any day of the week — including weekends and holidays — without applying for credit or waiting on traditional banking timelines.
Let’s take a look at what instant payouts are, how they work, and how they compare to other funding options.
When you accept a card payment, the transaction doesn’t immediately translate to accessible cash. There’s a settlement period, which is the time it takes for the card networks, the acquiring bank, and your payment processor to complete the transfer of funds. For most businesses, this takes two to three business days.
Instant payout solutions eliminate most of that wait. Instead of holding funds until the settlement cycle finishes, these tools allow businesses to access revenue from their completed card sales on the same day. That means, unlike banks, which operate on strict schedules, instant payouts are available around the clock, including on weekends and holidays.
What makes instant payouts distinct from a same-day ACH transfer or next-day deposit isn’t just speed, but availability. You’re not filing a transfer request during business hours and hoping it clears. Instead, you initiate the payout when you need it, and funds arrive in your debit card or bank account within minutes. Because the process works within your existing payment setup, you don’t have to deal with any third parties. Everything is available in the payment software you already use every day.
Most solutions charge a small fee per transaction, typically a percentage of the amount you access. Look for solutions that show you the exact cost before you confirm, with no hidden fees and no ongoing subscription costs, so you only have to pay when you take out funds.
On the surface, both options put money in your hands more quickly than traditional settlements. But the way they work and what they cost are vastly different.
A merchant cash advance (MCA) provides a lump sum of capital upfront in exchange for a portion of your future sales. You repay it through automatic daily or weekly deductions from your card receipts, plus fees expressed as a factor rate.
Because you’re receiving money you haven’t earned yet, an MCA is a form of financing, which means businesses are often left with a bigger bill than they bargained for. MCA fees often translate to annual percentage rates that are higher than what traditional business loans charge — sometimes reaching triple digits depending on the terms.
An instant payout solution works differently. You’re not borrowing anything; you’re just accessing money from card sales you’ve already completed. There’s no repayment schedule because there’s nothing to repay — the accessed amount reconciles automatically through your normal payout process.
Here’s a quick breakdown of the differences between merchant cash advances and instant payouts:
Merchant cash advances are best for larger capital needs like big expansions, major equipment purchases, or gaps traditional lenders won’t fill.
Instant payouts are best for bridging short-term gaps between when you earn revenue and when it lands in your account
If you’re looking for more capital to fund an expansion or a purchase that exceeds your recent card volume, a business loan or line of credit may be the right option. But if your goal is to close the gap between earning revenue and spending it without taking on new debt, an instant-payout solution is worth a closer look.
Waiting a few days might be manageable in most cases, but when your business runs on tight margins or needs a last-minute replacement, waiting periods can feel like an eternity. Seasonal businesses feel this most acutely. For instance, a restaurant packed every Friday and Saturday still needs to pay suppliers and staff by Monday, and traditional banking timelines weren’t built with that in mind.
The broader issue is that cash flow constraints don’t always signal a struggling business. Many growing businesses that run into cash-flow friction are doing everything right — they’re just waiting longer than they need to for their payouts.
There are typically no restrictions on how funds accessed through instant payouts can be used, so you’re free to use the money however you need to.
A few common use cases include:
When sales are steady, but the settlement timeline creates a gap, having funds on demand can mean the difference between keeping up and falling behind.
Most instant payout solutions are embedded directly within your existing payment platform, so there’s no separate account to open, no new application to complete, and no additional software to learn. Once you’re enrolled (typically a one-time process based on your payment processing history), you can initiate a payout at any time.
First, choose the amount you want to access, up to the available balance from your card sales. Solutions will typically set a per-request maximum to manage risk on both sides. Before you confirm a payout, double-check any associated fees. The best solutions will require a one-time, upfront payment and nothing else. Once everything is approved, funds will be credited to your debit card or bank account within minutes.
One thing to remember is that your standard payout schedule won’t be disrupted by using an instant payout solution. You’re not pulling from future sales; you’re just accessing money from sales you’ve already completed. That means the funds you pull out early are reconciled through your normal settlement process.
Eligibility is generally based on your payment processing history, including how long you’ve been active with your processor and your transaction volume over time, rather than a credit check. That makes the process faster and more accessible to growing businesses that may not qualify for traditional financing.
When evaluating instant payout solutions, look for:
For growing businesses that process card payments, the gap between earning revenue and accessing it is a real operational challenge. Thankfully, it’s one that can be solved. Instant payouts won’t replace your standard settlement process, but they’ll give you a reliable, on-demand option for the moments when timing matters most.
At Flute, our Instant Payouts solution was built for exactly this. Eligible Flute merchants can access up to $10,000 from their daily card sales in minutes, any time, any day — including weekends and holidays — directly from the Flute dashboard. There’s no credit check, no borrowing, and no new tools to learn. We’ll show you a simple, transparent fee upfront, and you only pay when you choose to use it.
If you’re already a Flute merchant, navigate to the “finance” section of your dashboard to see if you’re eligible. If not, reach out to our team to learn more. Your earned revenue shouldn’t have to wait. With Flute, it doesn’t.
Maria runs a specialty kitchen store just off the main square. For one week every summer, the sidewalk outside her shop gets quiet, and it has nothing to do with the heat. Her customers are scrolling Prime Day deals, loading digital carts, and waiting for a little grinning box to show up on their doorstep. Foot traffic moves to someone else’s cart, and Maria spends the week watching it happen.
If you run a business, you know the feeling. Amazon Prime Day has grown into one of the largest shopping events of the year. In July 2025, U.S. consumers spent an estimated $24.1 billion online across the four-day event, nearly the same as Black Friday and Cyber Monday combined.
That’s a lot of money flowing away from independent retailers, service providers, and local businesses.
Thankfully, Prime Day doesn’t have to be a total loss. Growing businesses have real advantages that the biggest players can’t match, like personal relationships, flexible payment options, and hands-on service.
Let’s look at six sales strategies to help you stay competitive during Prime Day and the weeks that follow. We’ll focus on how your payments setup can do a lot of the heavy lifting and how to prepare before the big day this June.
Prime Day does two things well:
People who might have walked into your store in August are now checking whether they can get something similar online for less. But you don’t need Amazon’s scale to give customers a reason to buy from you. You just need to meet them where they are, with the offers, payment options, and experiences that fit how they actually want to shop.
Let’s dive into six strategies you can follow to hold your own during the Prime Day rush. Mix and match what works for your business, and lean into the payment-focused tactics, since those are the ones big retailers can’t personalize the way you can.
Going head-to-head on price during Prime Day is usually a losing game. Instead, run your own event that leads up to or follows Prime Day. For example, a pre-Prime Day promo can capture shoppers who haven’t committed yet, while a post-Prime Day event can pull in people who missed out or are still comparison shopping.
Keep the sale focused and easy to understand. Bundles are fantastic for attracting buyers without lowering prices. If you’d prefer to offer a discount, a straightforward 10% off site-wide sale usually lands better than a complicated tiered promotion. And don’t forget the checkout itself; a great offer loses its shine when the payment process is clunky, so make sure your checkout supports repeat purchases, digital wallets, and online options that match how your customers pay.
One of the biggest reasons customers choose online giants during Prime Day is how little effort the checkout process requires. Your card, address, and preferences are already saved, so buying feels like tapping a button. The Baymard Institute found that 18% of U.S. shoppers abandoned an online purchase last quarter because the checkout process was too long or complicated, not because they changed their minds about buying.
The best way to fix this is with tokenized payment data. When a customer pays, their information is saved as a secure token that stands in for the card number. The next time they buy something, they don’t have to re-enter their payment details — they just click “buy now,” and they’re done.
Digital wallets like Apple Pay and Google Pay are also tokenized, so accepting them gives repeat customers a fast, secure way to pay online and in-store. The customer gets a premium, no-friction experience, and your business never holds the actual card data, which keeps most of the PCI compliance burden off your plate.
70% of consumers say the availability of their preferred payment method is very or extremely influential in deciding where to shop. That means offering flexible, one-click payment options is key to competing with bigger players during special events.
A small-business rewards program is one of the best ways to bring customers back, and Prime Day offers a great opportunity to launch one or to promote the one you already have. Research published in Harvard Business Review found that increasing customer retention by just 5% can boost profits by 25% to 95%.
The simplest loyalty programs tend to work best: a punch card, a points system tied to spend, or a tiered program that rewards frequency. You can also tie rewards to specific payment methods, like double points for customers who pay with a saved digital wallet or who enroll in autopay.
If you sell items or services that customers need more than once, consider setting up a subscription or membership program. Here are a few examples of what that might look like:
Subscriptions give you predictable revenue, smooth out seasonal dips like the Prime Day slump, and build the kind of relationship big retailers struggle to replicate. They also make life easier for your customers, since they don’t have to reorder, rebook, or remember to shop for necessities.
Prime Day’s real hook isn’t always the price. It’s the convenience: a customer gets something delivered in a day or two without spending hours browsing aisles. One way to match that convenience without slashing shipping costs is with click and collect. This option, also called buy online, pick up in store (BOPIS), lets customers purchase on your website and pick up their order within hours, not days.
The demand is already there. U.S. click-and-collect retail sales are projected to hit $177.9 billion in 2026, up more than 15% year over year, and 85% of BOPIS shoppers report making an additional purchase when they come in to pick up an order.
That’s a built-in opportunity to turn a single online purchase into a larger in-store sale, and it works across categories, from clothing and home goods to specialty foods and service packages.
A customer who buys from you during Prime Day and has a great experience can be yours for years. Use the weeks after Prime Day to follow up thoughtfully, with a thank-you note with a small credit, a text reminder about a related product, or an invitation to your rewards program.
Your payment data is a powerful tool here. Knowing when customers buy, how often, and what they prefer will help you personalize their experience. That personal touch is what turns a Prime Day impulse buy into a regular customer.
Here’s a list of things you can do right now to get ready:
Remember, doing two or three of these well will move the needle more than trying to do all five at once. If you’re not sure what to change in your payments setup, your provider is the right place to start — they can tell you what’s already built in and where to go next.
This Prime Day, the question isn’t whether you can outspend Amazon but whether you can provide a better experience. By offering a variety of unique promotions and simple, invisible ways to pay, you can make it easier and more rewarding for customers to buy from you than from anyone else.
At Flute, we build tools that turn checkout, both online and in-store, into one connected experience — the kind that keeps customers coming back long after Prime Day ends. Ready to see what that looks like for your business? Get started today.
Every time you buy something with a credit card, a small portion of that sale goes to processing fees. Most consumers don’t see those costs, but for small businesses, merchant processing costs can add up quickly.
Credit card fees usually range from 1.5% to 3.5% of the total sale. As a small- or medium-sized business (SMB), if you sell a $100 item, between $1.50 and $3.50 of that transaction will be divided among banks, networks, and processors before the rest reaches your bank account.
As your volume grows, so will the cost of taking payments. For instance, if your business does $100,000 per month in credit card transactions, between $1,500 and $3,500, on average, will go toward paying those fees.
In 2023, U.S.-based businesses paid $224 billion in credit card processing fees. Although there’s no way to get around card fees altogether, there are opportunities to minimize them. So, let’s break down the different types of credit card processing fees and what you can do to lower them.
Credit card processing fees — or processing rates — are the cost businesses pay to accept credit and debit card payments for their goods and services. Fees are split between a few people in the payments ecosystem, including:
Every time your customer swipes, dips, or taps their card, those organizations take a slice of the sale. Understanding who gets what will help demystify the cost of accepting credit cards and give you leverage when comparing providers.
Card-issuing banks like Citi, Chase, and Wells Fargo collect the largest share of fees, also known as interchange fees. These costs cover everything from assumed credit risk to fraud protection and transaction handling.
Card networks like Visa, Mastercard, Discover, and American Express charge assessment fees for access to their infrastructure. These costs support the secure global systems that make card transactions possible.
Payment processors are the companies that manage transaction logistics, deposit funds into your merchant account, and offer value-added tools like advanced reporting, customer support, or point of sale (POS) integrations. These companies often charge a markup or service fee to cover their services.
During online transactions, payment gateways securely transmit a customer’s payment information to the processor. Gateways are often built into the processor’s platform, but if you’re using a separate, third-party gateway, there may be additional fees.
Credit card fees often go beyond the standard percentage per transaction. Here’s a breakdown of the most common fees you might encounter as a business owner.
Interchange fees are set by the card networks and paid by a merchant’s acquiring bank to the card-issuing bank to compensate issuers for costs like fraud risk, transaction processing, and cardholder rewards. Interchange fee rates can range from 1.15% to 3.25% or more per transaction. These costs vary by card type, transaction method, and industry.
Assessment fees are charged by card networks like Visa and Mastercard for processing transactions through their payment networks. These fees are typically around 0.13% to 0.15% of each transaction. Although they’re more consistent than interchange fees, assessment fees can vary based on factors like transaction type or whether a payment is domestic or international.
Processor markup reflects what payment processors charge for providing the technology and services needed to manage transactions, including payment authorization, transaction routing, and customer support. Processors play an important role in the payments ecosystem by ensuring transactions move securely and reliably from one party to the next.
Processor costs vary based on pricing model, but the most common include:
Gateway fees are the charges payment gateway providers collect to handle online transactions. Gateway pricing often includes one or both of the following:
There are a few more costs to be aware of, ranging from monthly minimums to fraud-related chargeback fees. Here’s a quick look at some of the most common ones:
Payment providers structure their credit card processing fees in several different ways. Here are the three most common models you’ll see.
Flat-rate pricing is a fixed-fee structure in which businesses pay the same rate for each transaction. For instance, a payment company might charge 2.6% + $0.10 every time you take a payment, regardless of what you sold or the final price. It’s the most expensive pricing structure. While it’s convenient for some merchants, flat-rate processing rates can quickly add up and erode profit margins in high-volume businesses.
Here are the pros and cons of flat-rate payment pricing:
Pros:
Cons:
Tiered pricing divides transactions into three categories based on card type and payment processing method. Transactions are categorized as:
In tiered pricing, interchange rates are the lowest for qualified transactions and the highest for non-qualified transactions. This structure also includes a percentage-based fee based on the card type.
Overall, tiered pricing is generally less expensive than flat-rate pricing since you don’t have to pay as much for qualified transactions. Here are the pros and cons of this pricing model:
Pros:
Cons:
This model charges the actual interchange fee plus a fixed markup from the processor. For instance, you might pay 1.8% + $0.10, depending on the card and how it’s used. With interchange-plus pricing, you always pay the underlying rate plus a consistent, clearly defined markup that goes to the processor. This model lets you to cut costs on qualified transactions while knowing exactly how much will be sent to your processor.
Pros:
Cons:
Credit card processing rates aren’t just a transactional expense — they directly impact your total cost of ownership over time. That means a seemingly small difference in fees can translate into thousands of dollars annually, especially for businesses with high sales volumes. Thankfully, with the right strategies, you can lower processing fees and keep more of what you earn without changing how you do business.
Here are seven practical ways to get started:
Interchange-plus is the best pricing model for most businesses. It separates card network costs from processor markup fees, so you always know exactly where your money is going and save more long-term.
No fee payment processing options let you compliantly pass your merchant processing costs along to your customers. When choosing a payment provider, ask if they support cash discounting, dual pricing, or surcharging so you can keep more of what you earn.
Payment processors have more wiggle room in their pricing than you might think. Ask about how you can lower your per-transaction fee or monthly service charges — especially if sales are steady.
Leasing card terminals might sound convenient, but the long-term cost can be up to five times higher than buying hardware outright. Payment equipment usually pays itself off after just a few months.
High-risk businesses (like CBD, firearms, gaming, and travel) often have to pay higher interchange rates to cover the increased risks of fraud, chargebacks, and legal restrictions.
On the other hand, business-to-business (B2B) and business-to-government (B2G) companies may be eligible to apply for Level 2 or Level 3 processing, which offers lower processing fees in exchange for more detailed transaction data.
Understanding what type of business you operate can often help you navigate and even reduce credit card fees.
Being PCI-compliant protects your customers’ data and prevents costly non-compliance fees.
Take the time to fully understand your monthly statements and keep a close eye out for vague charges labeled “regulatory fees,” “service add-ons,” or “batch fees.” These might be unnecessary or inflated. If something looks off or is unclear, ask your provider to explain or justify the charges.
Small changes can lead to major savings, especially as your business grows. At Flute, we’re here to help you get the best deal and keep more of what you earn on every transaction. To learn more, reach out to a member of our team.
You only have a few minutes before your meeting, but it’s your turn to pick up coffee. You drop into a local cafe, place your order, and reach for your wallet — only to realize you left it at home. There’s no time to double back, so you pull out your phone, hold it near the terminal, and in seconds, the payment is done. You grab your drinks and are out the door with time to spare.
As a customer, that kind of payment experience feels effortless. As the coffee shop owner who made it possible, you didn’t just make a sale; you earned a regular.
Consumer expectations are shifting. People are reaching for their phones instead of their wallets, tapping cards instead of swiping them, and choosing businesses that make checkout feel invisible.
Younger shoppers, especially those who’ve grown up with digital payments as the norm, won’t think twice about going elsewhere if a business can’t accommodate how they want to pay. And that’s backed by data: 70% of consumers say the availability of their preferred payment method is very or extremely influential in deciding where to shop.
If you’re a business owner who’s been wondering whether contactless payments are worth the effort, or even what they actually are, this guide is for you. We’ll cover how to accept contactless payments, what consumers expect, the real benefits for your business and your customers, and what they actually cost.
Contactless payments are any transactions completed without swiping a card, inserting a chip, or exchanging cash. Instead, they rely on wireless technology, most commonly near-field communication (NFC), to pass payment data between a device and a reader.
In practice, that looks like a customer tapping a phone or smartwatch near a payment terminal to pay through Apple Pay, Google Pay, or Samsung Pay.
It also includes contactless-enabled credit and debit cards. Most cards issued in the past few years include this feature by default, indicated by the small wave icon on the card’s face. It also includes QR code payments, where a customer scans a code on a screen or printed display to complete a transaction through a mobile app.
Contactless payments are more convenient than traditional methods: the customer taps, scans, or hovers their device, and they’re done. It also allows businesses to accept payments from a much wider range of devices and payment methods than traditional card readers.
Here’s a quick breakdown of the most common types of contactless payments:
The shift toward contactless payments isn’t a trend on the horizon; it’s already the mainstream. Mastercard reported that 70% of all in-person transactions on its network were contactless in the third quarter of 2024, and that number is growing. That means contactless payments have moved from early-adopter territory into everyday use.
Younger shoppers are driving much of this shift; for many of them, using a digital wallet for business and personal transactions is already second nature. Worldpay’s 2026 Global Payments Report found that digital wallets are the most-used online payment method for 39% of 18-to-24-year-olds and 41% of 25-to-34-year-olds. The same report projects that by 2030, $4.1 trillion in U.S. spending will flow through digital wallets, a 64% increase from 2025.
This matters across all industries, not just retail.
Consider a home services contractor who just finished a week-long renovation project. Their customer wants to settle up on the spot, but they don’t have any digital payment options available, so they mail an invoice instead. That invoice takes a week to arrive, only for the customer to then misplace it. Instead of receiving their money on the spot, cash flow stalls, and the contractor has to spend weeks chasing down their payment. It’s not only a bad experience for the customer, but it’s bad for the business, too.
Contactless options solve this problem, allowing the contractor to process the transaction immediately rather than waiting weeks (or months) for their customer to pay a paper invoice.
The data makes it clear what’s at stake. A 2024 Applause Digital Payments Survey found that 76% of consumers are likely to abandon a transaction if they can’t pay the way they want. And research from PPRO found that 42% of U.S. consumers said they’d walk away from a purchase if their preferred payment method wasn’t accepted.
These aren’t customers who reconsidered and came back. In most cases, they went somewhere else.
For growing businesses, there are three places you’ll see the greatest benefits: checkout completion rates, the ability to serve shoppers without adding more time, and more customers.
Fewer abandoned sales: Payment friction is notorious for quietly draining your revenue. When customers can’t pay the way they want, they often don’t say anything; they just don’t complete the transaction. Removing that barrier is one of the best ways to improve your conversion rate without changing anything else about your business.
Faster service: A tap takes seconds. Compare that to inserting a chip and waiting for approval, counting out change, or flipping through a wallet for the right card. For businesses with consistent foot traffic, like cafés or retail stores, that speed adds up fast. Straightforward transactions mean more throughput, shorter lines, and a better experience for everyone.
A broader customer base: Gen Z and Millennial shoppers have strong preferences when it comes to paying for goods and services. Offering the payment options they already use will help you reach more people and build lasting loyalty.
On the other side of the counter, the benefits to your customers are just as tangible. They’re the kind that build goodwill and bring people back.
Speed and convenience: This is what customers feel most immediately. Worldpay’s 2026 Global Payments Report notes that consumers are drawn to digital wallets because they’re fast, safe, and easy to use. A smooth, fast transaction is a small thing that leaves a lasting impression.
Better security: Contactless payments are more secure than magnetic stripe swipes, which surprises a lot of people. NFC transactions use tokenization, so instead of transmitting a customer’s real card number, the terminal receives a one-time token that applies only to that specific transaction. There’s no static data to intercept and no card number to copy, so your customers are protected at every step.
Payment flexibility: Not every customer carries the same thing. One shopper might have their phone, another might have a contactless card, and another might only have a smartwatch. When your business accepts a range of contactless options, customers can pay with whatever they have on hand. That kind of flexibility is easy to offer and hard for customers to forget.
Security is often the first question business owners raise, both about protecting their operations and their customers. It’s a fair question, but fortunately, contactless payments are among the most secure payment types available.
NFC payments use end-to-end encryption and tokenization to secure each transaction. That means when a customer taps their phone or card, the terminal receives a unique encrypted token in place of their actual card information. Because tokens don’t represent specific card numbers, even if that data were somehow intercepted, it would be useless to fraudsters.
Let’s compare that to magnetic stripe cards. The data embedded in a magnetic stripe is static, so it’s the same on every single swipe. That makes it possible for fraudsters to copy data using special equipment, which is why mag stripe card fraud has historically been so common.
NFC-based payments don’t carry that vulnerability.
The biggest fraud risk for most businesses today isn’t contactless transactions; it’s outdated hardware that doesn’t support modern encryption standards. Upgrading to contactless-enabled devices will not only make it easier to meet customer expectations but also help keep your business safe.
Contactless payments, including NFC-enabled cards and digital wallets like Apple Pay and Google Pay, have the same interchange rates as standard chip card transactions, so your rates depend on your payment processor and the type of card being used, not on how the customer pays.
The main upfront consideration is hardware. If your current device doesn’t support NFC, you may need to upgrade. That said, most modern point of sale systems include NFC capabilities as a standard feature, so most businesses just need to enable the functionality rather than buy new equipment.
For businesses looking to reduce costs even more, zero-cost processing programs allow you to accept all payment types without dealing with processing fees. When set up correctly, these programs compliantly shift the cost to customers who choose to pay by card, keeping your margins intact regardless of how they pay. With the right provider, that can mean offering more flexibility while spending less on processing.
The way people pay is constantly changing. Consumers (especially younger ones) are making decisions about where to spend their money based in part on whether a business offers the payment experience they’re used to. That’s a real consideration, and one that growing businesses can’t afford to ignore.
When you make it easy to pay, you make it easier for customers to choose your business over someone else’s.
Flute makes contactless payments simple. With transparent pricing, NFC-ready hardware, and built-in zero-cost processing options, our platform is designed for growing businesses that want powerful payment tools without a high price tag or complicated setup.
Getting started is easier than you think. Talk to our team, and we’ll find the right setup for your business.