Once your business reaches a certain size, accepting credit cards almost becomes a must. It benefits both your customers and your business for a variety of reasons, some of which may not be immediately obvious.
As a small business, you understand the importance of keeping up with current trends and staying ahead of the competition. One simple way to do this is to start accepting credit card payments from customers. Not only does it make it easier for people to purchase your products or services but you could also greatly benefit simply by offering this card payment method. Read on for more information about how accepting credit card payments can help your business.
Here are some of the reasons why your business would want to accept credit cards.
Benefits of Accepting Credit Cards
There are many benefits to accepting credit cards for your business, including the following:
1. More Sales Opportunities
Accepting credit cards gives your customers more options to pay for purchases and also increases the likelihood that they will make a larger purchase. It's been shown that customers are more comfortable making larger purchases using their credit card, likely due to broad cardholder protections and a credit card's physical detachment from cash. Accepting credit cards also allows your business to set up an online store where customers from around the world can shop 24/7, giving your business significantly more opportunities to make sales.
2. Speed Up Your Transactions
Even compared to taking a cash payment and doling out change and receipts, credit card transactions are very fast, and they're only getting faster as new payment tools and technologies emerge. Authorizing a credit card takes only a few seconds, giving you more time to manage the rest of your business and help more customers. If your business accepts tap and NFC (Near Field Communication) payments, then the entire transaction can be reduced to a few seconds. This means faster checkouts and shorter lines for your customers, and more sales in less time for your business.
3. Trade Green for Going Green
As people seek out environmentally friendly practices for all aspects of their lives, accepting credit cards is one way businesses can reduce their environmental footprint. Going paperless helps businesses reduce their reliance on cash and paper for things like receipts, inventory lists, booking sheets, invoices, and spreadsheets. Since credit card transactions are essentially just data, it's possible to easily feed that data through an ever-growing number of business software applications and tools that allow you to send paperless receipts and invoices through e-mail, do all your accounting from the cloud, and manage your inventory and customer data all from your computer or phone.
4. Improve Your Cash Flow
Accepting credit cards affords you the ability to receive your deposits as quickly as a few hours or a few business days. Sure, "cash in hand" is cash in hand, but compared to checks which can take up to 30 days to clear, and invoices which can take up to 90 days to be paid, accepting credit cards gets money into your business's bank account faster.
Plus, Credit Card Payments are cost-effective. Accepting credit payment cards comes with fees— it's true. A major component of accepting credit card payments is managing credit card processing fees. However, offering credit card payment options is beneficial to both customers and merchants, with the flip side of this benefit to merchants being that they are charged a processing fee for every transaction.
When choosing a payment processor, ask about their credit card fees. The rate per transaction a merchant will be charged is set by the payment processor and depends on the pricing model (see interchange vs. flat rate pricing.)
Hesitant to start accepting credit card payments because you’re worried about credit card processing fees? Recent studies show that cash comes at a greater cost than you might think.
Jessica Kats. eCommerce and retail expert at Soxy explains the misconceptions around the real cost cash to businesses.
"People think businesses would prefer cash over credit cards since cards have a processing fee. But that's not the case at all. Working with cash is much more expensive for businesses."
We spend about $7 on every $100 just for handling cash. Credit cards only have a 3% processing fee. The cost of working with cash is much higher than this.
She continues, "You need a person to count drawers, account for the money, pack it, and send it to the bank. All of this costs a lot of money and is undoubtedly becoming more expensive with time."
It makes sense. When you account for transaction and reconciliation errors and time (counting bands of cash can be flustering and time-consuming versus a quick Chip and PIN), theft, and counterfeit and security costs it can start to add up.
If you are still accepting written checks, especially for B2B transactions, you might find it enlightening to know that the cost of accepting a check ranges from a steep $4 per check when considering factors such as administrative time and resources.
Credit card payments may not be the cheapest option compared to payment methods such as ACH bank transfers, but there are reasons a business may opt for one over the other.
5. Increased security for both you and your customers
Debunking credit card myths that have kept some businesses in the dark is easier than ever with technological advancements such as EMV technology and the ability to perform Address Verification Service checks for online purchases.
Tools like recurring billing, tokenization, and credit card vaults mean you can feel safer than ever charging your regulars and storing their card details (all while easily maintaining PCI compliance.)
Accepting credit cards is more secure than ever before (especially since Swipe is being phased out.) Especially when compared to checks which have the highest rate of fraud ( 66% according to this report by AFP.)
6. Expand your market while staying competitive
Visa and Mastercard are international brands. By accepting these card types, you have access to customers in over 170 countries who are able to pay for your products or services with just a few clicks. Accepting credit cards also helps you keep up with your competition by meeting customer expectations for payment options - if you don't offer the payment type that they're expecting, then there's a greater chance they will go to another business that does. People are carrying less cash than ever before, and it's unlikely your business can afford to ignore this trend.
7. More sales and customer retention
Credit cards give your customers flexibility to make those larger purchases sooner. Plus, more payment options may mean more sales. Since customers can collect rewards and access cash-back options, they are even more likely to purchase goods or services at places where they can pay via credit card, thus helping you to keep your customers coming back.
Paying via credit card has become so normalized most customers have come to expect this payment option. It is as intuitive to them as ordering takeout from their smartphone or paying their bills online.
As a small business owner, it’s essential to stay ahead of the curve and provide customers with various payment options. By accepting credit card payments, you can ensure your business remains competitive and continues to increase profits. With so many easy ways to start accepting credit cards, you can easily access the benefits to both you and your customers such as increased convenience and streamlined checkout processes. With the current technology making digital transactions more secure than ever before, there is no reason why any small business should not accept this form of payment in today's increasingly cashless society.
Don’t worry, getting started is easy— With the right payment solution, it’s easier than ever to set up your shop so you can start billing customers quickly and offering them flexible payment methods at the counter.