Running a small business in the US is amazing. The freedom, the profits, being your own boss are several reasons more people are choosing this route. Yet, Americans have so many challenges in running their own business from the government to customers, that the headaches can be insurmountable. Some would hope that accepting credit cards for your business would not be a problem but an benefit for you, but it can prove to be a gigantic hassle
Here are several reasons for and against the accepting credit cards for your business.
The advantages of accepting credit cards in your business.
Increase your customer base: Your chance of bringing in more customers increases as you expand how you are going to let your customers pay for their purchases. Statistically, only 23% of all customers use cash to make point-of-sale purchases.
Bigger total purchases: Several studies of consumer behavior have proven that they are likely to spend more dollars when they use a credit card vs cash. Cash is real, tangible, and psychologically harder to part with. A credit card is just plastic and does not let you see the spending damage until you receive your bill at the end of the month.
Ease of use: Easy to use for both the customer and the business owner. It is easier to carry one single card than a large amount of cash. And for the business owner taking credit cards streamlines your accounting, inventory and other metrics of your business so sales are easier to track.
Using cards is safer: Who wants to carry a large sum of cash in their wallet or pocket and have something happen where it gets lost or stolen. It is not insured, and 99% of the time you will not get it back. Credit cards are guaranteed by the issuer against loss or theft. They can be canceled and re-issued with-in days with no financial loss to you.
The negatives of accepting credit cards for your business
There is an expense: Of any drawback to accepting credit card payments, paying your merchant expenses can be their biggest detriment. Monthly statements, Interchange and other processing fees add up. You may also have to pay fees for monthly charge minimums. There are also charges from PCI compliance that will be passed on to you.
Chargebacks: Consumers are protected with their credit card purchases and have the legal right to dispute charges made to their account. You may get hit with chargebacks if a consumer is unhappy with a purchase or dissatisfied with your product. This can happen without warning and your account could be frozen.
Fraud: You may be held liable by your bank and issuer for different types of fraud that may occur on their system. If fraudsters make multiple charges with fake or stolen credit cards then you could be out more than just the product that was “stolen” from your business
The bank may look to you for reimbursement if too many fraudulent charges happen at your business. Also, your account could be terminated by your processor. If this happens, it will be very hard for you to get another processing account. You will be blacklisted, so in a case like this, your business can suffer greatly.
The choice is yours….
Should you or should you not? If you are doing lots of transactions and lots of business, credit card acceptance is an easy choice. If you are a merchant with lower volume and smaller dollar purchases, then you must weigh the options carefully and decide if the costs of taking credit cards outweighs benefits.