Most shoppers these days expect to be able to buy items without having any cash or checks on them. Accepting credit and debit cards helps a business raise sales, attract more customers and get its money faster.
History
Credit cards and debit cards developed as a way for people to pay for items without having to carry any cash around with them. Purchasing on credit dates back to the 1800s, when "credit tokens" allowed shoppers to buy items faster. Until revolving bank credit cards were announced, credit cards were expected to be paid off every month. Today, customers are only required to make a minimum payment.
Significance
Credit cards and debit cards have radically altered how people shop. People shopping with credit cards tend to buy things they want on impulse, and they also buy a greater quantity of items. Debit cards also make shopping easier. While you have to have the money in your bank account, it's still more convenient to swipe a card than to count out cash.
Function
A credit card runs on credit, and a debit card runs on cash. What this means is that a credit card allows you to spend up to a certain amount of money without having any money in the bank. Then you pay the money you spent back at a later date. A debit card allows you to take money out of your bank account by swiping the card. This means you have to have the money you want to spend in your bank account, or the debit card won't work.
Potential
Businesses can increase sales and receive faster payments by accepting credit and debit cards. Customers will shop more and are more likely to buy a product or service, because it's easier for them to pay with a card. Not only is it convenient, but it gives them a way to track their purchases. They can also shop online with a credit or debit card, which lets you reach more customers. Finally, your business will get paid faster. With a credit or debit card, you receive the money almost instantly.
Ability
For your store or online business to accept credit and debit cards, you need to have special equipment hooked up. Many companies offer installation and will help you set up a machine for customers to swipe their cards. These machines range from a few hundred dollars to a thousand dollars depending on the machine, and the number you have installed. A percentage of the profit from the credit and debit card sales goes to the company that sold you your equipment. This runs around 1.29 percent of the sales, depending on the company you bought from. Each swipe instantly charges the shopper for the purchase and credits your account with the money. The machine will also print off receipts of the transaction for both you and the customer to keep for your records.
Alternative
An alternative is to use Paypal.com. Paypal allows you to accept credit cards online without having to set up a swipe machine. This also allows credit-card owners to pay you without revealing their credit-card numbers to you. This is important because it makes the transaction safer, since customers don''t have to worry about having their credit-card numbers stolen. Standard Paypal service charges a small transaction fee (about 1.9 percent to 2.9 percent of the transaction, plus a $0.30 charge). For a premium membership, the fee jumps to about 2.2 percent to 2.9 percent plus the $0.30 fee, and a $30 monthly fee. With a premium account, customers buy directly from your website instead of being taken to the Paypal website to finish a transaction. It also allows orders to be made through phone, fax and mail.
