Are You Accepting Credit Cards for your Business?
Businesses of all kinds are under an immense amount of pressure to accept credit cards from their customers, but this in itself raises a question? Can they handle the inevitable costs associated with accepting cards?
Today it’s extremely rare to come across a shop or business that doesn’t accept credit card transactions. Those which do, appear out of touch and behind the times. Moreover, they can infuriate customers and risk losing business. For example, close to where I work there is a newsagent which only accepts cash. It is extremely close and convenient, but there are plenty of times when I won’t be carrying cash and, as such, will have to go somewhere else. Every time that happens they lose out on that single transaction as well as many others; the more times I have to go to a different outlet, the more comfortable I will be shopping elsewhere.
A recent report by Bankrate.com found that around 80% of people in the USA carry less than $50 in cash while a substantial 9% routinely do not carry cash with them at all. That’s almost one in ten customers who will be out of reach if you don’t have a facility for accepting alternative methods of payment.
There is a problem, though; by accepting payments you run into a range of transaction fees. Given that you’ll already be paying tax and other monies on the sums you receive this represents a significant drain of capital from your business. So what are your options?
- Do Nothing
You’re a small business set up to deal with small transactions. Accepting credit cards is too complicated and represents a cost to your business. This makes things simpler from your point of view, and you’ll keep all the money you receive from your customers. On the downside you’ll lose custom from those who are not carrying cash.
- Pass the Costs Down
If you’ve ever paid your bills by credit card there’s a good chance you might have run into the term convenience fees. This is, in effect, your utility provider passing the cost of transaction fees onto you. Equally, some businesses place a small surcharge on goods purchased with a credit card. For example, they may say that any goods purchased for less than $10 will be subject to a fee. This is because they have decided the size of the transaction is insufficient to justify the cut taken by the credit card agencies.
- Shop Around
Like many aspects of business, we’re paying more because we don’t shop around. Different providers implement different mark-up charges on their fees. This is the amount of profit they intend to make on your transaction. These fees vary depending on the organisation, so if you exercise a little selectivity in your choice you can get a better deal.
The decision will depend on a simple calculation: is the price you pay in processing fees less than the business you lose through not accepting credit cards? If so it’s worth expanding your payment options. Even so, the process is can be confusing.
That’s why we created MyPaymentsSavvy – a place where a range of payment options are made more convenient, safer, and more affordable for businesses of all sizes. Take a look around our site to learn more about your payment processing options and how we can help you.