Accepting credit cards cost money. But do you know how much value credit card payments add to your business?
Customers are increasingly switching from cash to card. In many respects, physical currency is dead in many markets as nearly 60% of American shoppers prefer to reap the benefits of a credit card.
It’s no surprise that consumers prefer plastic. The growth of rewards cards and credit management schemes allow consumers to make their purchasing power work twice as hard for their goals.
Despite the trends in credit card use, not all businesses are on board. A GoPayment survey found that 55% of all U.S. small businesses have yet to jump on the bandwagon. Not accepting credit cards limits consumers’ purchasing power while also shrinking your market.
The most significant barrier to credit card acceptance for most businesses is the processing fees of 2-3% per transaction. What if you earned so much more than what credit card companies take?
10 Reasons to Start Accepting Credit Cards
It costs money to accept credit cards. There’s no way around it. But did you know that the value credit card purchases add to your business makes up for the fees you pay?
Here’s how:
1. Make Purchases Convenient
Whether we like or not, customers reach for their credit and debit cards more often than hitting the ATM.
Having a card in hand means they can make whatever purchase they want and not limit themselves to what’s physically in their pocket. When you accept credit cards, you say “come on in” rather than “go get cash.”
It may sound simple, but science backs up this claim. Research shows that part of what causes customers to spend more with their credit card lies in their ability to do so.
2. Increase the Average Sale
Credit cards increase sales in several ways. First, they prevent you from missing out on sales because a customer doesn’t have the correct payment method.
Customers with credit cards also spend more on big-ticket items and impulse buys that pad your bottom line.
Finally, customers might choose you over another business because of a promotion offered by their credit card. Regular small business promotions or cash-back offers impact decision making, but you need to be there to welcome those customers.
3. Less Risk for Customers
Credit cards are less risky for customers than checks or even debit cards. High fraud protection standards mean that a cardholder is only a phone call away from questioning a transaction and getting their money back.
4. Less Risk for You
Cash may be king, but it’s risky. You have to count, sort, transport and put it into bank accounts. Large amounts of money make stores a target for thieves.
Outside thieves aren’t a small business’s only concern. You also need to worry about:
- Increasing sophistication of fake bills
- Quality control issues with giving change
- Insider cash-skimming
A credit card transaction means the money leaves the customer’s account and heads straight for yours. There’s minimal worry of interference.
5. Credit Card Technology Has Never Been Better
Security remains an issue for both cardholders and merchants. While fraud sends some business owners running scared, it’s important to remember that credit card fraud is much more difficult to pull off today than it was ten years ago.
New EMV technology keeps transactions secure. What’s EMV?
EMV refers to the chips now found on credit and debit cards. Developed by Europay, Mastercard, and Visa, it is now the global standard for security.
Not convinced? Introducing chip-and-pin cards in the UK cut credit-related fraud by 72%.
6. Improve Your Cash Flow
Running a cash-only business or waiting for checks to clear means spending time waiting.
Accepting credit cards opens up payment opportunities that flow between accounts faster. It is also safer than cash or check.
7. Legitimize Your Business
Taking credit cards has never been easier. No longer are we tied down to traveling salespeople offering credit card machines. The advent of mobile and wireless payment systems makes the whole process painless even for the smallest businesses.
If you don’t accept cards, you risk alienating customers who may wonder about the legitimacy of your business. Younger customers, in particular, who are more used to cashless payment alternatives may be skeptical of a company that doesn’t embrace what has become standard technology.
8. Out-Smart Your Competition
Is it typical for businesses in your niche to reject credit cards?
What once served as an excuse to shun Visa and Mastercard is now an opportunity. If you accept credit cards, you’ll attract customers other businesses leave behind. Allowing more payment systems provides more ways to pay and encourages customers to spend.
They’ll remember who accepted their rewards card and who didn’t.
9. Credit Cards Cost Less Today
The 2-3% merchant fee taken off the top of every credit card transaction tends to send small businesses running. Add in the all the hidden fees, and it’s no wonder the adoption of credit cards is so small among small businesses.
While there’s no denying that it was expensive in the past, competition has improved both prices and services today. Processors are cheaper and more transparent than before as long as you take the time to learn more about your options.
Don’t forget: you may pay a small fee, but you’ll earn more. Dun and Bradstreet found that people spend between 12 and 18% more when they pay with credit card. What’s a 2-3% fee for an 18% boost in sales? The answer is profit.
10. Jump Into E-Commerce
Do you run a brick-and-mortar business in the retail or service sector? Increase your on-time payments or sales by using e-commerce services.
E-commerce demands credit card use, so getting set-up now will streamline your expansion in the future.
How Will Credit Cards Improve Your Business?
Torn between accepting credit cards and sticking with the status quo? Run a cost-benefit analysis to see how and where your business might benefit from card-based transactions.
Are you considering the possibilities offered by credit cards? Share your concerns in the comments below and check out our other business finance articles.