Should Your Business Accept Credit Cards
Hello All,
I recently got into a minor debate with the lady at my local fruit store. My purchase was under $10 which meant that I had to pay by debit or cash. Unfortunately, I only had my credit card on me, so I told her that, since I was an excellent customer, she should make an exception. Her (completely reasonable) response was that all of these purchases add up and the cost of accepting credit cards for minor purchases would significantly impact her bottom line. This left me wondering whether this was the right decision for her business.
Like so many business decisions, whether or not you should accept credit cards requires an assessment of the costs versus the benefits. The costs are easily measurable. On average, the total cost of accepting credit cards is between 1.5% and 3.5%. This means that on $1,000 of sales, you are paying between $15 and $35. Additionally, you might also be paying for equipment. This can certainly add up, depending on your sales volume.
While these costs can be significant, the benefits of accepting credit cards often outweigh them. Most importantly, it reduces friction in the sales process. If someone is on the fence about making a purchase, being able to pay by credit card may be the deciding factor. It can also broaden your customer base by accommodating those who prefer or rely on credit card payments, especially for larger purchases or when cash isn't an option.
In my story above, I had to go elsewhere since I was not able to pay by cash or debit. Worse, I had a negative interaction, which might impact my willingness to go there in the future. That's not to say I don't empathize with small business for having to incur these fees, but so much of the customer experience results in responses that are emotional rather rational.
Additionally, credit cards enable faster transactions, improving customer satisfaction and streamlining your checkout process. Allowing credit cards can make your business appear more professional. And finally, credit cards offer a sense of security to the customer, knowing they have recourse if something goes wrong.
This doesn't mean that all businesses should offer credit cards as a payment option. Those of you that provide high ticket price services, such as web developers, IT consultants, contractors or if you have an established clientele that is comfortable paying via bank transfer or check. Or you might use a hybrid model, where you offer credit cards as a payment option to new customers or on lower value purchases.
Ultimately, deciding whether to accept credit cards, requires evaluating whether it is likely to improve your sales and customer satisfaction, which is I believe to be the case more often than not.
I would love to hear your thoughts. Simply hit reply to this email.
From the Blog
10 Ways Businesses Can Accept Payments: While conventional methods of payment like cash and cheque still exist, there are also a variety of other options like debit cards, internet transfers and mobile payments that have greatly facilitated payment infrastructure and made financial management significantly more flexible.
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