Retailers face various challenges with accepting credit cards. Accepting credit cards is generally seen as positive for a business’s growth, but it can pose an assortment of issues for business owners.
In many ethnic communities, cash is a preferred payment method over credit cards. Therefore, cash payments will always be an ideal fallback for those who don’t have access to credit or are too young to qualify for their own credit cards. But payment with cash can be limiting in how much a customer will spend per visit. Some stores offer an ATM machine on premises for convenience, but the customers who don’t qualify for a credit card may also not have funds to withdraw.
With many credit card companies, each time a customer swipes, they get mileage, cash-back and other rewards. The store owner typically pays the processing fees with each transaction. In a store with high processing volume, it can be very costly for retailers to process credit cards.
Another concern about accepting credit cards is the increased risk of fraud and credit card theft. Credit card companies offer customers fraud protection and have been making great strides in developing chip and other verification technology for credit card use. Store owners are not as protected from fraudulent card payments, and may be held liable. For a small business owner, this can hit hard and paralyze their business. Credit card fraud impacts online retailers in a significant way. Retailers will pay around $130 billion in digital CNP (card-not-present) fraud between 2018 and 2023. Exercising extra precautions, many cashiers ask for an accompanying ID before accepting credit cards, and online payment systems are constantly adding extra layers of security and verification.
However, the proven benefits of accepting credit cards far outweigh the challenges. Accepting credit cards and displaying credit card logos near your point of sale system at the checkout counter increases your business’s legitimacy. Customers trust their credit card brands, and that trust inherently transfers to you, the merchant, who accepts this payment form. A reputable credit card processing company helps protect you and your customers from data breach and identity theft. Accepting credit cards can boost your sales and keep your business on an even playing field with competitors. When you open up payment methods beyond traditional cash to include credit and debit cards, your potential customer base and their purchasing power broadens. Your competitors are likely accepting credit cards for customers’ convenience. To stay profitable and competitive, you need to offer the same.
Credit cards encourage impulse buying and improve your cash flow. Shoppers like being able to check out quickly and easily without having to write a check or make an extra trip to the ATM (which limits their purchasing to only their available funds). An MIT study indicated that customers tend to spend an average of 83% more when they’re paying with credit cards. This includes a high rate of impulse purchases. Credit card transactions are processed and verified electronically, and settled quickly. Proceeds are typically deposited the next business day, or sometimes even same day, into your bank account. You won’t have to handle as much cash, reducing theft and security concerns in your store. You won’t have to worry about bounced checks or wait for checks to clear. This also means no more sending out invoices and waiting for customers to pay. If you are an e-commerce merchant, accepting secure payment by credit card is imperative. The majority of transactions on the internet are paid for with credit cards or online systems such as Paypal, which link to credit cards.
Convenience and safety are top priorities. Most banks offer debit and/or credit cards to account holders, with fraud protection guaranteed. Cardholders can enjoy access to credit for spending without fear of theft. Storing and toting around cash carries an increased risk of theft. Shoppers are often in a rush. Paying with a credit card is convenient and quick, with not having to pull cash out and start counting it for payment. Many credit cards offer points, mileage, cash-back and other rewards as incentives for the cardholder to use credit cards.
Compared with the tangible benefits to your bottom line, accepting credit cards is relatively inexpensive for businesses. Credit card processing is a highly competitive industry with many different offerings. Most merchant services providers assess retailers an affordable, percentage-based processing fee, plus a flat-rate amount per transaction. Some offer a surcharge or cash discount program with one low monthly flat fee (and no separate transaction fees) to help store owners recoup these fees. It’s important to use an honest, transparent processing company to avoid hidden and surprise charges. Many companies purport to offer a great deal but unfairly and unethically catch unsuspecting customers with fees and surcharges.
It is easy to start accepting credit cards. Filling out an application costs nothing and can take just a few minutes, with approval within a day or two. The application process can take less than 24 hours, and some companies provide free equipment with no long-term commitment or early termination fee. Fast approval and quick setup can have your business running more smoothly within just a few business days. Most companies offer no-obligation quotes with rate plans that are profitable for your business and flexible, based upon sales volume. They may ask you to provide a current statement so they can show you how they can save you money over your current rates. A unique industry concept that is becoming popular is a cash discount and/or surcharge program, with which store owners can recoup processing fees by passing along fees to customers who pay by credit card while offering a reduced price for customers paying with cash. A little bit of research goes a long way in finding the perfect credit card processing solution for your business.