Use a Card processing terminal to Expand Your Business Model
If your business is predominantly focused on small ticket items it can be hard to see the benefits of adding a card processing terminal. Once the transaction fee and percentage have been deducted, the remainder may or may not reach the minimum threshold needed to show a profit on the sale. When a business consistently operates at a loss, no matter how strong their cash flow, the result is inevitable, closure. Businesses must maintain a small profit margin on each sale to stay in business. A credit card terminal may seem counter intuitive for this purpose, given the additional costs, but the benefits far out weight the negatives.
Yes, businesses that primarily sell small ticket items have valid concerns about a offering electronic payments; however, without a terminal, customers may limit their purchases to fewer items. The best way to ensure that your card processing terminal actually improves sales is by instituting a minimum amount to charge. If your average sale is less than five dollars, but your minimum credit card transaction is ten dollars, it may encourage customers to increase their purchase amounts. While the profit margin on each individual item will be affected, the improved sales quantity will make up for the difference.
Installing a card processing terminal also gives you the option to start selling higher ticket items. Not necessarily expensive products, but higher than is the norm for your business. If you sell items that are priced at a dollar, including some five dollar items can make a big difference to your bottom line. With a card processing terminal that allows instant electronic payment processing, you can offer a wider variety of products. When you are only accepting cash it is more difficult to convince customers to purchase more expensive items. The addition of electronic payments gives them greater flexibility in payment options, which encourages them to make larger purchases.
There are two basic ways that a card processing terminal can improve your bottom line, by increasing the quantity of sales and increasing the amount of each sale. While the cost of the processing cuts into the profit margin of each sale, the increase in quantity and quality of sales will ultimately improve your numbers. Offering electronic payment options also opens up the world of online sales. While in store is a great way to market directly to customers, the Internet offers a much wider variety of customers. You can market to the entire world with a few clicks of the mouse. In store, your customer base is limited by geography.
Even if you predominantly sell low ticket items, there are ways to incorporate credit card sales into your business successfully. The addition of a card processing terminal may have some up front costs and continuing maintenance costs, but at least it translates directly into sales. There are even processing agreements that only charge you if a sale is made. If you never use the credit card processing terminal, there will be no fees assessed. Given that, consider adding electronic payments today.
