Card Merchants Enjoy More Sales and Better Cash Flow
Retailers have been accepting the necessity of offering credit card as a payment method for over fifty years. Even so, there are still small retailers that have not yet become card merchants. Card merchants are able to accept credit card payments, which can increase their potential sales considerably. High ticket items are often paid for with credit in today’s society. Many people don’t have the cash money to make large purchases all at once, and offering extended lay a way is difficult for a small retailer. Taking up space in the location as a retailer stores goods that are only partially paid for can be expensive. In retail every square inch of space is valuable. Any time a retailer has to store an item they face the possible loss of not having another item in stock that might result in a sale. The balance of offering lay a way versus maximizing space is difficult to find.
Card merchants don’t have to offer extended lay a way services because a credit card works similarly to lay a way, offering the customer the option to pay for a purchase slowly over the course of several months. Revolving credit allows consumers greater purchasing power than they have based on their regular pay check. With revolving credit they can buy today and pay later. The automatic grace period on revolving credit allows them an extended payment period without lay a way. Card merchants can offer that option to customers without the difficulty of storage.
Offering direct credit to customers is also something that small retailers are not usually in a position to do. While larger corporations can extend credit they are in a better position to collect on lapsed accounts. Small retailers don’t have the needed capacity to pursue collections when a customer fails to make agreed upon payments. They also can’t afford to eat the loss the way larger retailers can. Small businesses often operate on very slim margins. By extending direct credit options they can put their entire business at risk. Offering credit card payment options is a nice compromise that protects the small business owner’s interests.
Card merchants are able to offer more flexible payments to customers, as well. Sometimes, a customer won’t have enough available credit on a single card and will need to place a purchase on several cards, or make a payment using a variety of payment methods. Offering customers the ability to pay as much in cash as they like and only putting the balance on a credit card, enables businesses to increase the number of sales they are likely to make. The more flexibility a customer has with payment methods, the more likely they are to purchase larger ticket items. It is only when they are limited to cash payments that they have to budget and juggle larger items. When they can purchase on credit consumers are more likely to make impulse purchases, which improves a businesses odds of making a sale. Becoming a card merchant can offer businesses expansion options not available to those that only accept cash.
