Are you a small business owner who doesn’t take credit cards? You’re not alone – according to Intuit, 55 percent of American small businesses don’t accept credit or debit cards as payment. But if you’re one of them, you’re leaving a lot of cash on the table, so to speak.
That’s because only 23 percent of point-of-sale (POS) transactions involve cash. Most customers want the option to pay with credit or debit cards – 66 percent of POS transactions involve a card. Card usage added $127 billion to the economy between 2008 and 2012. If you want your share of that money pie, you need to start accepting cards sooner rather than later.
Your Business Needs Card Payments
Many small business owners still shy away from accepting card payments. They’re afraid of paying the fees associated with credit card processing, or they’re overwhelmed by the merchant account choices available, or they’re worried about credit and debit card fraud. But if you want your business to continue to thrive, and even to grow, you need to give your customers the option to pay with credit cards.
Have you ever had to turn away a customer that didn’t carry cash? That will get more commonplace, as more and more people just stop using cash. But, even taking customers that do carry cash into account, your business will still be better off if you start taking cards. For one thing, you’ll raise your appeal to the 77 percent of consumers who prefer card transactions. But that’s not the only reason.
People tend to spend more when they pay with plastic than they do when they pay with cold, hard cash. Cash has a physical presence in your wallet; it’s a tangible item and when you spend it, you have less of it afterward. The very physical nature of cash makes people subconsciously inclined to spend less if they have to fork over cash for their purchases. With a card, it’s easy to for customers to forget just how much they’re spending, because the card itself doesn’t change; they don’t see the impact until they get the statement, by which time they’re no longer standing at your register. So, when you start accepting cards, customers will start spending more money.
Card Payments Are More Convenient for Everyone
Customers like to pay with cards because it’s more convenient than cash. There’s no need to go to the bank or go out of your way to find an ATM, and possibly pay a high ATM fee, only to be limited in your spending by the amount of cash in your wallet. Customers feel safer carrying and using cards, too, because they’re not responsible for unauthorized charges.
But accepting card payments is more convenient for you, the business owner, as well. Your merchant account will give you access to online portals and software that will make your accounting tasks easier by helping to keep track of purchases automatically, manage your inventory, and track other metrics that might be useful. You could even open an online storefront and start accepting payments online.
How to Choose a Merchant Services Provider
There are so many merchant services providers out there right now that you could be forgiven for putting off accepting card payments out of a simple sense of overwhelm when faced with all the merchant account choices available to you. Choose a provider based on your business size, your projected future growth, and your cash flow.
Most merchant accounts come with fees, but these can vary depending on the processor, the volume of transactions, and your total revenue. Shop around to see what rates you can expect based on your transaction volume and annual revenue. Stand-alone card processing companies typically offer better rates than banks. Look into hold times; some processors hold payments for some period between the time they’re processed and the time they’re deposited in your bank account, while others make them available to you immediately. Consider, also, whether you will want to offer online sales, or phone sales, in addition to POS sales in-store.
Drawbacks to Watch Out For
Fees are the biggest drawback to accepting card payments, and the reason why many merchants don’t accept them. You’ll have to pay for processing fees, merchant services, equipment, and monthly charge minimums, as well as PCI compliance. If a customer is dissatisfied with your product or services, you may get a chargeback debited from your account with little or no warning. If you accept a fraudulent card, you could lose the product, be on the hook for reimbursement, and even lose your processing account. You’ll have to take measures to protect your business.
If your small business isn’t accepting credit cards yet, you could be missing out on massive revenues. Don’t be late to the party – start accepting credit cards today, and watch your business take off.
