Accepting Credit Cards can improve your sales
Choosing not to accept credit cards is not longer an option in today’s marketplace. Breaking into online sales can mean the difference between survival and failure for a lot of small business owners. The fact is that credit card purchasing has become a major factor in many consumers purchasing habits. The first thing to remember when discussing whether or not to accept credit cards, is that for many consumers there is not difference between paying with a debit, credit or charge card. From their perspective the needed equipment and payment process at the register is the same. As a merchant, you know that there are different pricing structures for each of these types of transactions.
Charge cards can cost a merchant up to 6% of the total sale amount in addition to a transaction fee. When some small businesses are operating on a profit margin of less than 20% this can be a ruinous percentage. The cost of doing business is already high; losing 6% off the top of every sale is not something many small business owners are willing to do. For that reason, many business owners choose to only process debit and credit cards. Of course, even there the fee structure can vary highly.
Some quick tips for businesses that want to accept credit cards, but are afraid of the high fees: only take debit or Mastercard and Visa; only take transactions that swipe, never punch in a number; try to stay away from rewards credit cards. The last one is, of course, the most difficult. When customers see that you accept credit cards, they do not enjoy being told which ones they can use. Customers are familiar with being told American Express and Discover are not supported, but being asked not to use a visa card simply because it offers the cardholder a rewards program feels highly prejudicial to the customers. Unfortunately, processing rewards cards automatically bumps the fees up to at least the mid-qualified tier which usually means a percentage fee of at least 2%. With some credit processing companies it can be as high as 4%. Processing rewards cards is chancy for the merchant and looking at the statement at the end of the month and realizing that at least 30% of all transactions were processed at the mid-qualified level or higher is not a pleasant realization. Customers often don’t realize the intricacies of the pricing structure that is in place on credit card processing. Sometimes a simple explanation is enough, and sometimes you just have to suck it up and take the hit.
By refusing to process any transaction from a credit card that doesn’t swipe, you will avoid some unnecessary fee upgrades. Fees are also increased if a credit card number has to be entered manually. Don’t simply choose not to accept credit cards, the potential profits more than out weigh the processing fees. Consider all the sales that you could lose entirely if consumers can’t pay via credit card or all the sales you have already lost.
