How Taking Credit Cards Can Help Small Business Owners
Many businesses are hesitant to accept credit cards due to fees, the perceived hassle of setting up a merchant account and the fear of customer chargebacks. In some cases, accepting credit cards may not be practical for your business, but before dismissing the need for a merchant account, you may want to consider some of the benefits associated with being able to slap the sticker with the major credit card icons on your door.
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Get Paid Faster
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When you process a customer's credit card and it is approved, you know the funds are on the way to your bank account in two or three business days. Although you pay a transaction fee or discount rate, which can be 1 to 4 percent of the sale transaction, there is no waiting for a check to arrive in the mail. If you charge customers on a recurring basis, you can automatically have their credit card processed each billing period without the need to mail an invoice or wait for payment. Accepting credit cards also speeds up collections -- if you get paid right away via a credit card, it eliminates the risk of an account going past due. Accepting credit cards can also help you collect old, outstanding balances. Cash-strapped customers may be able to pay off some of their old balances with plastic.
Increase Sales
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It does not matter if you are a business that sells retail to consumers or a firm that caters to business clients. Several studies have shown that accepting credit cards can increase your company's revenue. Since most consumers do not carry a great deal of cash in their wallets, when you are set up to accept credit and debit cards, your buyers' purchasing ability is dependent on their available credit line or entire bank balance vs. the amount of cash they may have in their wallets. For instance, a customer that was only planning to buy one item may buy two or three thanks to the added convenience and increased purchasing power associated with paying with a credit card. Customers are also more comfortable using credit cards to purchase higher-priced items because they can finance the amount if necessary.
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Appear More Legitimate
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Although you may not accept credit cards, your competition probably does. Both consumers and business clients are increasingly expecting the places they shop or do business to accept credit and debit cards. When you accept credit cards, it adds a level of legitimacy to your business. Customers may feel safer seeing the Visa, MasterCard, American Express and Discover logos on your web site or storefront door. For instance, a consumer will know he can dispute the transaction with you if he is not satisfied. Obviously, this can pose some problems for merchants accepting cards, but that added level of comfort for the buyer can help you establish a relationship and better earn the trust of your customer. In addition, most merchant accounts will require your business to be Payment Card Industry compliant to a certain degree -- meaning that you take appropriate measures to protect the integrity of your customers' credit card data.
Merchant Client Benefits
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It costs money for businesses to accept credit cards. In addition to the small percentage charged on the total sales amount, there are other monthly, administrative and transaction fees that may apply. If your credit card sales volume is high, the fees can be sizable. Merchant account providers that help your company get set up to accept credit cards understand this cost and how valuable it is to them to earn your credit card processing business. In addition to trying to offer competitive fees, many merchant accounts will offer additional benefits to their credit card processing customers. Some benefits include online reporting and accounting tools to aid with bank reconciliation of your credit card transactions; marketing support for your business; discounts at certain other merchants; and the ability to borrow funds against your transaction volume if you need access to cash.
Conduct Business Online
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If you don't accept credit cards, you will find it nearly impossible to sell products and handle other business processes via the Internet. Not only may you be missing out on an entirely new set of customers, you may be missing opportunities on how you can improve your business efficiency using e-commerce. If your company sells products, accepting credit cards is a key component to having a functional and viable shopping cart website. With an e-commerce enabled website, you can then market and sell your products via the Web rather than just in your neighborhood. If you provide services to your clients, you may be able to use your website to collect payments online or through email rather than customers calling you to provide you a credit card number. Using e-commerce can lead to new customers, increased sales, greater business efficiency and improved credibility with your customers.
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References
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