Being hesitant to deal with processing companies and the additional fees that come with accepting credit and debit card payments is totally understandable. However, the reality is that by only accepting cash and check payments, you might be alienating yourself from many potential customers.
Despite the growing popularity of online shopping and an overall increase in the use of debit and credit cards, there are still some businesses that are on the fence about accepting debit and credit cards. If I described you, don’t worry. I get it. Being hesitant to deal with processing companies and the additional fees that come with accepting credit and debit card payments is totally understandable. However, the reality is that by only accepting cash and check payments, you might be alienating yourself from many potential customers. Here are just a few reasons why accepting credit and debit cards might improve your business:
There’s no denying it; purchasing something with a card is just plain easier for most customers. Instead of carrying a wad of bills in their wallet, customers enjoy being able to make the majority of their purchases by simply swiping or inserting a card into a computer.The use of credit and debit cards has continued to increase year over year. When given a choice, 44% of people would choose a debit card and 33% would choose a credit card, while only 12% view cash as their preferred method of payment. This is in no small part due to the rise in popularity of online banking as well as the allure of rewards that come with many credit card purchases.Think of it from the customer side. If you’re trying to keep a budget, which would you prefer: a system that automatically logs every transaction you complete, or having to take meticulous notes of each of your purchases? When it comes to keeping track of spending habits, nothing is more convenient than being able to simply log in to a bank account and see every transaction in one place. The alternative is tedious and fallible, so it makes sense that customers would prefer to use a card wherever possible.
Customers aren’t the only people who benefit from having access to digital records; they can be a lifesaver for small business owners as well. Strictly accepting cash or check payments means that you’ll have to manually enter the payments that you receive, making it easier for human error to overcomplicate your accounting process. Cash can be hard to keep track of, especially if your business is mobile or you have multiple employees. All too quickly, cash and checks can be misplaced or lost, which can be a nightmare come tax season.By accepting electronic payments, you ensure that all the money your business brings in is immediately recorded and transferred to the right account, making it easier for you to know exactly how much money you’ve made and how much of said money is at your disposal.
Most businesses that put off accepting credit and debit cards do so because they don’t want to make less of a profit due to processing fees. This concern is entirely valid. After all, credit card processing is the second highest operating expense US business owners face, second only to labor. Avoiding that cost entirely is not an awful strategy.However, making this decision based exclusively on upfront cost is shortsighted. While you’ll save money on processing costs, there’s a good likelihood that operating on a cash-only business will force many potential customers to do business elsewhere. A 2017 study found that 50% of Americans are carrying cash less than half the time, meaning that your potential customer base is much smaller when cards are not an option.Not only will you acquire more customers by accepting cards, but studies have shown that customers tend to spend more money when using a card, so your existing customers will provide more revenue as well.
At first glance, the process of starting to accept credit and debit cards as a form of payment—and subsequently having to deal with payment processors—can seem confusing and expensive, and in many ways, it can be. However, doing your due diligence and learning about the industry basics can go a long way in making sure that you choose the right processor for your business.In order to start accepting credit and debit cards, there are a few primary steps you’ll need to take:
Hardware is one of the largest barriers that businesses face in accepting cards. Terminals can get pricey, but remember that these are a one-time purchase and, in the long run, their costs will be well worth it. You can get a great terminal for as little as $60, but if you want to get a more high-end model, you could see prices as high as $500. For more information on credit card terminals, make sure to read our article about how you can select the best credit card reader for your business.
Unlike hardware, your point-of-sale system will likely be a monthly expenditure. You can typically find a good POS for somewhere between $50-$100 per month. When making your choice, be sure to select a POS system that fits well with your industry—not all software is created equal. You can learn more about selecting a POS system for your business by clicking here.
In addition to the purchase of hardware and software, accepting credit and debit cards means dealing with processing fees and contracts. The amount of money that you’ll spend on processing fees will vary depending on the types of cards and that your customers use. This is due to interchange rates, which are typically higher for credit cards and lower for debit cards. Ideally, the processor that you go with will use an interchange-plus pricing model so that you can easily see how much of your money is going into the processor’s pocket. You can read more about selecting the best processor for your business here.Although the idea of refusing to accept credit card payments may be tempting to some business owners, it’s important to realize that by doing so you may be preventing your business from reaching its potential. Yes, dealing with payment processors and the large corporations that often run them can be frustrating, but by accepting credit and debit cards you are giving your business the room it needs to be successful.
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