The Advantages and Disadvantages of Accepting Credit Cards for Your Small Business
If your small business does not yet accept debit or credit cards, you could be losing out on a great deal of revenue. Expanding the ability for your customers to purchase products can provide many tangible benefits. Yet, many small businesses are afraid to step into the credit/debit card processing arena. Many feel intimidated and overwhelmed when signing up for a merchant account. They don’t understand the fees and assume it’s a much larger hassle than it’s worth. Here we break down the advantages and disadvantages of accepting credit cards for your small business.
Below, we break down several advantages and disadvantages of accepting credit cards and signing up for a merchant account. We also provide different solutions to the perceived disadvantages businesses may feel when signing up for a merchant account.
Benefits of Accepting Credit Cards for Small Business | Why It’s Worth It
Over 511 million Americans use credit cards, with the average person owning at least 4 different credit cards.
According to Statistica, an estimated 1.66 billion worldwide shoppers will increase to 2.14 billion at the end of 2021.
Credit cards make online shopping very convenient. If you run a cash-only business, you would be leaving plenty of money on the table because customers prefer primarily utilizing their credit card options.
The benefits of accepting credit cards for a small business are definitely worth it, even though it comes with a fair number of drawbacks.
Let us examine both sides of the coin by looking first at the advantages of accepting credit cards for your business.
The Hidden Benefits of Accepting Credit Cards for a Business
Credit/Debit cards are popular with many small businesses due to increased profits. It has been proven, through a number of studies, that customers tend to spend more when using a credit/debit card for purchases.
Cash on hand means customers purchase on a physical level. As soon as the cash is gone the spending is finished. Credit/debit card purchases allow customers to buy on an emotional level. A customers will typically make a larger purchase without feeling the limitations of cash. They recognize that they can pay purchases off a little bit at a time, thus making it more likely they will purchase more of what they want.
When identifying the benefits of accepting credit cards, many small businesses have found that a great deal of customers only make purchases with debit/credit cards. They rarely carry cash or checks around. Accepting credit/debit cards allows you to cater to those customer’s needs and broadens the customer base coming through your doors.
Accepting credit and debit cards can also increase profits as it allows you to conveniently accept payments from customers all over the world. A cash only model would be a slow and completely dangerous process from a client who lives on the other side of the world. There is absolutely no protection against fraud when accepting cash in a foreign currency.
Higher Sales Amounts
Another benefit of accepting credit/debit cards is that many businesses see an increase in sales due to impulse buys. For example, a customer may walk into the store for milk and realize that they need to get additional groceries such as eggs, cereal, toast etc. They might walk past the greeting card section and realize they need to purchase a card for a friend’s birthday. Cash on hand will always limit what a customer can buy, whereas debit and credit cards do not.
Convenient for Customers
Convenience and options are extremely important for your customers. While brainstorming about the Advantages and Disadvantages of Accepting Credit Cards, make sure to take this into consideration. Credit/debit cards are the most prevalent way to make purchases in this day and age. Not being able to process debit or credit cards can become a huge inconvenience for your customers. Most customers will tell you they feel safer carrying a credit/debit card thanks to the many different fraud protection services that credit/debit card offers. It is extremely rare for customers to carry around large amounts of cash to make large purchases.
Improves Your Businesses Cash Flow
Accepting credit/debit cards can help improve cash flow. Waiting for checks from prospective clients can take weeks. First the check must be written, then sent, then processed. However, being able to take a credit/debit card for your businesses products and services means that you have access to funds within 1-2 business days.
Disadvantages of Credit Cards for a Business
While accepting credit/debit cards can be an overwhelmingly good thing for your business, there are a few disadvantages. However, we feel that while contemplating the Advantages and disadvantages of credit cards for a business can easily be overcome with confidence.
Many small businesses feel that fees can cut into a huge amount of profit and therefore don’t want to accept credit cards. Most merchant account providers charge a minimal basic monthly fee. Additionally, there is a transaction fee and a percentage of sale fee that is paid to the processing company for every transaction. That is why it is important to find the right merchant account company that will take the time to get to know your industry and your business. We recommend that you work closely with your merchant account provider to look at your business history and projected sales volume. This will help them in offering you the best pricing structure based on your specific business needs.
If you are thinking of shutting down your merchant account due to all the fees you have to pay each month, we encourage you to send a statement to SecureGlobalPay. We provide customized merchant processing statement analysis services that allow us to carefully review your statement to see where you can save money. We have saved thousands of dollars per month for some of our larger clients.
Our experience in the industry means that we have heard just about every chargeback horror story out there. Every time a customer decides they don’t want your product they can dispute the charges and credit card companies will most often refund the customer. That means that you have to pay back the credit card company the money they refunded to the customer.
While there are customers out there who are not satisfied regardless of the customer service you provide, they are not as prevalent as many businesses believe. Additionally, with our experience across many different industries, we can offer suggestions to help you prevent a great deal of possible chargeback situations.
Preventing Fraudulent Activities
The possibility of fraudulent activities has prevented many small businesses from accepting credit/debit cards. However, SecureGlobalPay offers many different fraud detection and prevention measures that can be used to deter fraudulent activities including:
Require the Security Code (CCV, CCV2)
Not Storing Credit Card Information on Your Website
Use the Address Verification Service
Restrict the number of declined transactions
Review Multiple Orders Shipped to the Same address with Different Cards
What to do If I Suspect Fraud?
If a fraudulent transaction occurs, we encourage you to immediately contact the following persons for assistance:
Your bank or payment processor
Your Local Police Department
Working together, these departments can help direct you towards resolving the fraudulent charges.
We work hard to make sure that we service your merchant account in a way that will help you receive the full benefit of accepting debit/credit cards for your business.
More Benefits of Accepting Credit Cards for Your Business | Best Foot Forward
When comparing the advantages and disadvantages of accepting credit cards, many businesses assume that setbacks outweigh the benefits. However, this is far from the truth.
Today, credit card processing is a competitive industry because customers use it as their preferred payment method.
The benefits of accepting credit cards for your business trump the disadvantages. The reason is that there is an array of providers that offer different packages in sync with small and medium-sized enterprises on shoe-string budgets.
These providers offer low credit card processing rates that mushroom-sized businesses can afford.
Advantages and Disadvantages of Credit Cards | Last Words
Despite the advantages and disadvantages of credit cards, businesses should firmly consider integrating them into their operations.
Accepting credit cards increases revenue and cancels out the risk of getting bounced checks and wasting resources tracking down defaulters.
Are you thinking of closing down your merchant account because of the fees you pay every month?
We use a customized and tightly-knitted analysis system to find the best ways to save your money.
Presently, we are using these strategies to cut down thousands of dollars in expenses for our clients every month.