A Credit Card Merchant Account Makes High-Ticket Sales Easier
Shopping at stores that don’t offer credit card processing is a hassle for consumers. No one enjoys getting up to a register, being all rung up and then realizing they can’t pay. It is embarrassing, and in some cases, will cost a store that sale and any future sales the customer would have made. Becoming a credit card merchant can avoid that type of embarrassment for customers, save them time and increase store profits.
A credit card merchant is more likely than a strictly cash based merchant to get high-ticket sales, since many consumers are not prepared to bring thousands of dollars in cash to a store. The potential for theft and loss is so much higher on cash that many people no longer carry large amounts. Debit and check cards allow consumers to spend only the money they have in the bank, without the fees charged for withdrawal, the possibility of loss or theft and the convenience of not having to visit the bank regularly. The modern day retail environment is moving more toward convenience and time savings. People in modern society are busy, with many commitments to meet. Wasting time in stores that aren’t a credit card merchant is not something most consumers are prepared to do.
When a business chooses not to be a credit card merchant they lose out on a potential client base. Consumers that simply don’t carry cash will avoid those stores. High-ticket items are often beyond the reach of customers unless they are able to pay using a revolving credit account. It is ultimately much cheaper to become a credit card merchant than to offer credit directly to customers. The process for approving store credit can be expensive and defaulted are a risk that small businesses can’t afford. While car dealerships are in a position to offer financing directly or through banks given the value of the object, most retailers are not. Items that lose so much value merely from having the box opened are not good candidates for financing options.
Small-business owners lack the negotiating strength of big corporations. Because they buy a product in extremely limited quantities, unless they are part of a consortium, small businesses often wind up paying significantly more per item than a large corporation. Stores like Walmart, for example, buy in millions of units. No small business can match that purchasing power. Small businesses can’t dictate pricing the way Walmart can, so profit margins on individual sales are much tighter. By offering credit card processing those margins get even smaller. However, it is better selling with a smaller margin on a greater quantity of sales than it is to have fewer sales on a larger margin. Quantity sales are the foundation that many businesses use to keep their doors open. By purchasing and moving large quantities of a single product, stores are able to generate higher profit margins. Sales, specials and other marketing techniques are designed to push the chosen product and generate quantity sales. Even though the margin on each sale is lower due to special pricing, the eventual profit is larger.
