The Merchant Fee is a Necessary Cost of Doing Business
A merchant fee is simply a cost of doing business in the modern economy. It can be considered along the same lines as a utility bill or taxes. It is required to maximize sales opportunities. While no retailer enjoys paying the merchant fee, the increase in sales realized through offering credit card payment options is more than enough to cover the increase in costs. In fact, many people won’t shop in places where cash or check is the only payment option, particularly since many merchants no longer accept checks.
Checks have been the subject of much discussion over the last several decades. The number of bounced checks has increased, and any business that accepts checks has faced dealing with collections on a rubber check at least once. In many instances, collection is possible, but the amount of time and manpower it takes make it less than worthwhile. It is usually easier to either not accept checks at all, or to only accept checks that pass through an electronic payment system. There are many ways to electronically approve a check prior to acceptance. Of course, those services also charge a merchant fee. All electronic payment processing comes with some form of fee. The benefit is that payment is assured on purchases made in this manner.
A check that has been electronically approved is guaranteed to cash, or the processing company will make good on the check and then pursue collections. The small business is protected. The small merchant fee charged on these automatic payments is worth the security and peace of mind they grant. A business may be robbed and lose the day’s cash take, but a hold up can’t touch the credit card transactions. Before credit card processing a business that lost a day’s take could be in serious trouble, but now many businesses do more than half of their sales using an electronic payment method. This enables a business to operate secure in the knowledge that even a disaster, like fire or flood, won’t harm their electronic dollars. A fire can consume physical bills, but electronic funds are safe and secure. This kind of security is worth the few percent that is charged as a merchant fee on credit card processing.
Businesses may want to be cautious about which types of electronic processing they accept, but in most cases the fee is negligible. Charge cards usually have the highest fees, and businesses that operate on very tight margins might want to avoid accepting them, but all other electronic processing is highly valuable to a business and represents both security on the sales transacted and an increase in potential sales. Customers that don’t have to pay in cash at that moment are more likely to make larger purchases and take advantage of sales offerings. When a customer enters a store looking for a specific item, they are much less likely to deviate for their assigned purchases if they can’t pay in credit, simply because they may not be carrying enough cash to make additional purchases. The merchant fee associated with credit card processing more than pays for itself.
