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accepting credit cards

The Pros And Cons Of Accepting Credit Cards

It is becoming more common for businesses to accept credit cards. That is why if a business does not accept credit cards, their competitor may have an advantage over them. However, there are advantages that come along with accepting credit cards. Here is a list of the numerous pros and cons:

Pros

More business

You may be able to get more business if your company accepts cards. It is safer to carry around a credit card instead of cash. People will probably spend more money if they use a credit card. This can potentially help your business generate more revenue. Keep in mind that you are limiting a large percentage of your potential demographic if your business is not using a credit card processing machine.

Convenience

Merchant accounts not only make things more convenient for the customers, but they also make things more convenient for the business. People like the convenience that comes along with being able to swipe their card instead of carrying around a lot of cash. There are different types of software that can be used to tie in directly with your merchant accounts. This makes things like accounting and inventory management a lot more convenient.

Cons

Expensive

It can be expensive to accept credit card payments. You will have to pay for monthly statements, merchant services, interchange fees and other credit card processing fees. These fees may be too much for a business that is on a tight budget.

Subject To Chargeback

Every credit card transaction is subject to a chargeback. If the customer is not happy with your product or service, then he or she may dispute the charge. A person can dispute the transaction for up to six months after it occurred. The business will have to prove that the purchase was legitimate. Additionally, if a business has received a lot of chargebacks, then it may no longer be able to accept cards.

Liable For Fraud

If some type of fraud occurs in your system, then your business may be held responsible. A bank may also require that the business pay for the fraudulent transactions. A business may be destroyed as the result of a fraudulent transaction.

Weighing the Benefits of Accepting Credit Cards

Many business owners often start out with the impression that they will do well for themselves if they only take cash or check for payment. In truth, however, they are doing their business a disservice. If you weigh the benefits of accepting credit cards, you will see just how much it will profit your business.

Validation of Your Business

When you place a sign on your business door or your website that you accept credit cards, it will immediately validate your business in the public eye. Many people often consider a business that will not take credit cards as a business that will not be around for long. In many cases, they are correct.

Get a Boost in Your Sales

The greatest advantage of merchant accounts is you will see an almost immediate increase in sales. A person with cash in hand is only going to spend the amount they have on hand. However, by taking credit cards as payment in your store, you are going to get a lot more impulse buys. Your customers will not be limited by the amount of cash they have in their pockets.

Merchant Accounts are Inexpensive in Comparison to Not Having One

Credit card processing is competitive and, with a little research, you will be able to find a company that will suit both your needs and your budget. Many will have such low rates that small businesses of any type can afford them. In fact, most small businesses find that their merchant accounts are something they should have invested in much sooner.

Merchant Accounts Allow a Level Playing Field with Your Competition

From the moment you choose a credit card processing provider, you have leveled the playing field with all of your competition. The fact is that very few individuals actually carry cash with them. Instead, they pay for their purchases with credit and debit cards. As long as you are offering quality products and services, you can be guaranteed that you will be able to compete with companies in your line of work.

By allowing your clients and customers to pay with a credit card, you are setting your business up for success. The actual set up of a credit card merchant account is quite simple and within a short time, you can start seeing a major difference in your sales. The key is to find a provider that is familiar with the type of business and provides quality service.

Your Responsibilities When Accepting Credit Cards

When a business accepts a credit card payment, it is bound to a set of rules that are detailed in operating guides of all merchant accounts. Adhering to the policies associated with credit card processing protects customers, employees, and businesses from malicious activity. Following the contractual responsibilities of merchant accounts keeps data secure, prevents incidents of fraud, and avoids chargebacks. Failure to sustain accountability in these regards results in fines, convictions, and potential merchant account closure.

PCI Compliance

The payment card industry data security standard (PCIDSS) is the standard of protection agreed upon by the major credit card brands. Meeting the PCIDSS’s twelve basic policies is required of all merchants that store, process, or transmit cardholder data. Without safeguards, credit card processing is vulnerable to intrusions that expose customer data. It is important that businesses of all sizes achieve and maintain the minimum PCI minimum standards in order to avoid data breaches and the associated penalties.

Vigilance Against Fraud

Credit card fraud comes in several different forms, and businesses have a mandate to adhere to procedures that help identify and impede attempts to use wrongly use credit card data. In-store transactions, in which the credit card and its owner are both physically present are easier to monitor, but special attention must be paid to online transactions and telephone orders. Acquiring banks and credit associations will penalize or close merchant accounts if they incur too many financial losses from fraud.

Avoid Chargebacks

Some chargeback situations are unavoidable, but strong business practices will decrease the likelihood of customer dissatisfaction and the resulting complications. Chargebacks cost businesses not only the money from the sale, but fees on their merchant accounts. Like other major violations, too many chargebacks may damage a business’s reputation and make merchant service providers less willing to work with them.

Maintain a Positive Relationship with Merchant Service Providers

Credit card processing is considered a privilege to credit associations and acquiring banks. If a business is consistently unable to meet their standards, the penalties are significant, from fines to the privilege being completely revoked. It is crucial that business owners monitor their statements every month and stay familiar with the policies guiding their merchant accounts.

How Can My Business Start Accepting Credit Cards?

Purchasing items with cash is a thing of the past for many people. A lot of people prefer to use their credit and debit cards to make purchases. Billions of people shop comfortably from their home and paying with cash is not an option in most instances. Here are three things you need to keep in mind in order to start accepting credit cards in your business.

Merchant Account vs. Third-Party

You don’t want your business left behind in ancient times due to the fact your business does not accept credit cards. Make sure you judge your needs according to your business and not your competition. The difference between a merchant account and a third-party account is simple. A merchant account is a business account that enables a business to accept credit card payments with various fees, such as transaction fees. A third-party credit card merchant allows a business to use their merchant account for a fee, but the transaction fees may be lower or higher depending upon the provider you choose. You need to decide which method of accepting credit card payments will best suit your business.

Purchase Necessary Equipment

You may have a merchant account, but without the proper equipment, accepting credit cards is useless. You need to ensure your business has every piece of equipment that is required to accept credit cards without a hassle. In order to accept credit cards, you may need web-programming services and credit card machines to accept credit cards. If you plan on using credit card machines, they have to be professionally installed and set up. There are many different companies that are available to help you with credit card payments. Make sure you choose the correct provider for your company to ensure each transaction is as smooth as possible.

Training and Support

Training and support are essential when it comes to accepting credit cards. Every employee needs to know how the equipment operates and how to utilize its functions. There will be at least one individual who prefers to pay for their item with a credit card. One thing you do not want to do is have a customer wait a long period of time and create a long line. As far as support is concerned, you need to keep all support numbers in a convenient, safe place in case of a mishap. Errors with machinery occur frequently and you should make sure you are prepared for any errors and malfunctions. The better prepared you are, the better chance your business has of recovering from a machine malfunction. Normal wear and tear is expected with machines that are used on a daily basis. You need to have at least two plans and solutions to ensure your company can function in the event of an emergency.

The Benefits of Accepting Credit Cards

Those who want to begin to grow their businesses need to be receptive to the preferences of their customers. In many cases, customers no longer carry around a lot of cash, and many younger people don’t even know how to write a check. Most people prefer to pay with plastic, making credit card processing important for businesses who want to stay relevant.

Merchant accounts offering payment processing have many different options for those who are considering accepting credit cards. Some will offer different fees for debit cards, and they all vary with what types of cards they will take. The types of cards that businesses choose to accept will determine what the cost to accept them will be. In many cases, these payment processers can get businesses their money in one day. That is very helpful for those who need to have their money right away.

One of the best reasons to begin to look into credit card processing is that businesses can then take their merchandise and services to the web. It is easy to find a merchant account service that will process payments not only in person, but also online. They will provide the system needed to process these cards online, and allow businesses to expand to the country or the world.

Those who only accept cash are missing out on customers who rely more heavily on using a credit card. Even those who have something like a cart may find that they are able to accept cards using an app on their phones. In some cases, they will be able to get a device to swipe the cards through, and then will be able to process the payment using their cell phone signal. This can seriously open up the number of people who they are able to sell to, and allow them to be more flexible for their customers.

Look into the services that are available, and find one tailored to the needs of each business. Depending on what each business needs, it is easy to build a package that will include something for everybody. Start reaching out to customers where they are and begin accepting credit cards today.

When to Start Accepting Credit and Debit Cards

When is it a good idea for your company to start accepting debit or credit cards? Depending on what kind of company that you are running, it may be a good idea to start accepting these types of payments as soon as the company starts. Fortunately, it may not be hard to find credit card processing options when your company first starts doing business.

Credit Card Processing Options for Startups

Credit cards are a widely used payment option of customers who buy goods both online and offline. If you don’t want to use a merchant account right away, using a payment gateway that doesn’t require you to use a merchant account alongside of it could be your best bet. Many new payment gateways allow you to use their API to create different payment options for your customers.

Offering Different Payment Options for Customers Is Never a Bad Idea

Offering your customers the ability to pay for their orders with a debit card instead of cash or credit is never a bad idea. In fact, it may make it more likely that customers will purchase your products instead of purchasing products from the competition. The best part is that you don’t need to offer a large variety of credit or debit card companies that your company will accept.

Is There a Definite Time to Start Accepting Debit or Credit Cards?

There isn’t a time by which you have to start accepting credit cards. The decision should be made by considering customer feedback and determining how much money is being lost because customers are shopping elsewhere due to lack of payment options. When you feel as if there is more to be gained by accepting credit or debit cards as opposed to not accepting them, that is when your company should start accepting them.

A company that offers multiple payment options to its customers may find that customers have a better shopping experience and feel as if they are getting better customer service. When customers feel as if they are getting good service, they are willing to pay more for a product because they feel valued by the company that is selling them a good or service.

Various Fees Involved with Accepting Credit and Debit Cards

As a merchant there are many benefits in accepting credit cards and debit cards; however, your business will have to pay fees for virtually everything. For instance, you will pay fees for setup, application, processing, administration, and customer service.

Keep in mind there are many vendors, and no two vendors charge the same fees. One vendor may advertise low prices on setup, but they will charge more on processing. Another vendor may waive setup fees totally but they will charge for all service fees. Therefore, it is essential to choose the vendor that will best meet the needs of your specific business.

It is important to ask the right questions when choosing a vendor. You must know all of the fees associated with accepting credit and debit cards. First, the bulk of your fees will be transaction processing fees. Your fee rate per customer transaction will ultimately be based on your personal and business risk. The rate will be based on how many customers use credit or debit versus cash. The amount of the sale will weigh heavily when these rates are determined. Monthly sale rates of credit and debit cards will play a key role in determining this cost also. Getting the best rate will depend on you determining the rates and qualifications regarding each sale.

Vendors will usually quote you the qualified rate first. This is the rate that is based on a percentage of the sale whenever you accept a credit or debit card. You must use an approved processing solution to qualify for this rate. In fact, this is the lowest rate that you will be quoted.

A mid-qualified rate is when you accept and process a transaction that simply does not qualify for the lowest rate. One example is when you must manually key a transaction into the terminal instead of swiping the card, or if a customer uses a rewards or business card.

A non-qualified rate is the percentage you will pay when you accept a credit card that does not fit the criteria for either a qualified rate or a mid-qualified rate. Again, manually typing in the credit card information can trigger this rate, or address verification is not performed. In addition, if you don’t process the transaction within the 48 hours that is required, you may incur this rate.

Calculating How Much More You Will Make by Accepting Credit Cards

Companies that have credit card processing capabilities have an opportunity to make more than companies that do not have credit card processing capabilities. However, how do you figure out exactly how much more your business stands to make?

How Many People In the Area Use Credit Cards?

The first thing that your company needs to do is figure out how many people would use credit cards if they could. One way to figure this out is to find out the percentage of customers at local businesses use credit cards. The second way to figure this out is to ask your customers if they would use credit cards if offered the opportunity.

How Much Business Does the Company Do Online?

When customers shop online, they are likely to use their credit cards to pay for their purchases. Therefore, you need to find out how many customers would shop online instead of visiting your store. Then, you need to figure out how many customers would use a credit card as opposed to a PayPal account or with an eCheck.

Which Credit Cards Will Be Accepted?

It is critical that your business accepts credit cards that are widely used. A company that doesn’t accept credit cards that customers want to use will find that there may not be much of an added benefit to accepting credit cards. You should also consider whether or not a store branded credit card will be offered to customers. This could entice your customers to use a credit card when they otherwise might not.

How Much Do Merchant Accounts Cost?

The last piece of information you need is how much merchant accounts cost. Merchant account providers generally charge a signup fee and may charge other fees as well. On top of any administrative fees that you may face, your business will have to pay a processing fee each time a credit card is used to make a payment.

There is a lot of research that needs to be done before you can determine with any certainty how much money your company can bring in by offering credit cards. It is important to know how many people use credit cards now, would like to use credit cards in the future and which cards people are most likely to use. Otherwise, you could be offering customers a service that they don’t want or need.

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