If you are a small business owner, you may realize that there are many customers who prefer to pay by credit card. As a matter of fact, so many Americans have become dependent on credit cards, that if you don’t offer this option, you may find yourself losing business. The more payment options you offer your customers, the better. You may find yourself asking, “why not offer them?” Let’s take a moment and look at the pros and cons of credit card acceptance.
If you are an online business, and you decide to allow your customers the option of using credit cards, you may also want to allow the use of Pay Pal. Pay Pal is an online credit service which works like a credit or debit card, it is reasonably low cost, and fairly easy for customers to use. They may be directed to Pay Pal’s website, where they can complete an online registration and be approved in minutes. Pay Pal use guarantees that the money will be in your customer’s account prior to the sale. There are major credit card processors for major credit cards online also. These services are offered by companies who, like Pay Pal, charge a fee to process the credit card, and then deposit the funds to your account. These services usually charge a sign up fee, and a fee for each transaction. These fees can range from between .29 to .45 per purchase. Other companies charge an amount based on the amount of the purchase. In either case, the merchant will pay a fee for accepting credit cards. Another point to remember is that proper tax must always be charged on a credit card purchase. Sometimes merchants will offer a discounted price to customers who pay with cash. This waiver of the tax amount, which is usually the equivalent of a sale price, will reflect the charge cost, in some cases.
One of reasons a small business may not want to use credit cards is the additional bookkeeping it entails. The records must be kept meticulously, since a credit sale technically is not counted as a cash sale. A credit sale may reflect the actual purchase, but the funds may sometimes be held up for a week or more, depending on the company you choose to do your processing with. A common business mistake is to count the sale when it is purchased, and then count it again when the funds arrive, possibly leaving yourself open to double-stocking your inventory. If you intend to use credit cards, your business model must be decided on by all employees, and your inventory system may need to be revamped. Another reason may be the additional cost reflected in the overall credit card usage. If you find yourself doing mostly credit card sales, you may want to reexamine your pricing policy so that it reflects the cost of processing the payments. If you use an in-store credit card processor, it may be subject to outages, depending on the system you have installed. Many businesses use a machine which runs over a phone line. If you do not have a separate line installed, picking up the phone may void your credit card transmission, making an awkward situation for the customer, who now has another minute or two to mull over their purchase.
The positive aspect of using credit cards should be obvious. Impulse purchases are most often bought using credit cards. Online shoppers like the convenience of shopping day or night without leaving their house, and your site’s acceptance of credit cards makes those purchases even easier. If you have a product in stock, but don’t accept plastic, a quick search on Google will direct your potential customers a site which will accept them. If you are a real-time merchant, a customer may not mind paying for a more costly item, as long as they can pay it off. Many merchants offer their own credit cards, based on the customer already being established with one or two major credit cards. This is a great way to entice returning customers, also.
Whatever you decide, customer service is the most important thing you can offer your customer. Easy payment plans and expanded options will go a long way, but the final sale is made by appearance. Keep it friendly, offer ease of use, and volume of sales may go along way toward covering your operating costs.
