Once upon a time, it was quite difficult to get your business set up with credit card processing. However, merchant providers have lowered their requirements over the years. Today, it’s easier than ever to move your company to plastic.
With a bit of research and planning ahead, you can find a merchant service provider that will meet your needs, charge reasonable rates, and work within your market niche. Here are five reasons your business needs to move to credit cards, and how you can optimize your business by diversifying the ways you handle transactions.
1) Mitigate Risk and Increase Convenience
If you don’t accept credit cards, some customers may expect you to accept other forms of payments like paper checks (which can be difficult to process unless you have a great solution for check cashing). Additionally, cash transactions can be riskier than many people realize.
A 2013 study from Tufts University dived into the less transparent costs associated with conducting business in cash, and came up with three primary areas that could lead to lost money. The first was the risk of theft, counterfeit, and change-making errors. The second issue was the cost of cash security and logistics to bank physical currency. And the third area was the actual time it takes to handle a transaction using paper money and coinage, compared to the faster processing speed of credit card payments.
The study found on a sale of $12, the cost of handling that transaction with cash averaged to 2.25%. Such a result is surprising, considering the fact that there is no upfront processing fee associated with cash. When all is said and done, credit card processing fees are pretty similar – not to mention safer for you and your employees.
2) Boost Sales
As a business owner, it’s common sense that you’d want people to spend as much money as possible when dropping by your physical store or website. However, if you only accept cash or check, you limit yourself to the money held in a customer’s checking account rather than their credit limit. Plus, cash-in-hand carries the concept of scarcity, so they may be more reluctant to spend it.
Financial website Nerd Wallet curated research on spending habits of consumers using cash versus credit cards, and the findings were music to the ears of business owners. People spend 12-18% more money when they’re swiping cards in contrast to spending physical money. At McDonald’s, the average transaction increases by nearly 60% when the diner is paying with plastic.
Studies show that credit cards lead to impulse buying, as well as less consideration for the cost of a product or service. Nerd Wallet’s insight was done with the intention to benefit consumers – however, it’s easy to flip the script as a business owner and notice how accepting credit cards opens the doors to increased spending on every transaction.
3) Conduct Business Anywhere
Just as being in a brick and mortar storefront creates physical limits on where you conduct business, not accepting credit cards restricts how you conduct business. Once you begin processing transactions via card, you’re finally able to move beyond the physical boundaries of your retail establishment.
For most people, this means doing business online. Accepting credit cards facilitates e-commerce and opens your business up to a whole new world of customers, who are now able to enjoy your products and services.
But it goes further than that – by accepting card, you can get your brand out there in new ways, and push your product at pop-up stores, music festivals, and community events – even streamlining the checkout process via mobile credit card payments. Promote your brand and drive revenue beyond what you previously thought possible with the the ability to accept credit.
4) Simplify Bookkeeping and Tracking
Humans are imperfect, and with imperfection comes mistakes. Human error can be incredibly expensive too, and has the potential to cost individual companies millions of dollars and the U.S. economy billions annually. The improper handling of cash is one problem area for many businesses – but with credit cards, room for error is minimized substantially.
Not only do credit card payments allow computers to handle the bulk of number crunching (thank goodness), but they also simplify your tracking and accounting efforts. Credit card transactions are much simpler to reconcile, and you avoid the headache of dealing with bounced checks and wads of cash that needs depositing.
5) Cut Costs
You might be hesitant to accept credit cards because you’re worried about the associated cost, but think of it this way – every sale you miss out on because you don’t accept a customer’s card is 100% lost revenue. Some business niches have managed to stick to a cash-centric model, but those that do are missing out on potential profit.
The cost of processing is in reality quite modest. For card-in-hand transactions, the average percentage is 1.95-2% of the total sale, with a company like Square charging a 2.75% flat rate (which is actually a bit higher than usual). For online transactions or those over the phone, the rate increases a bit due to risks involved for the processing company.
Get Started Now
It’s never been easier to get set up with credit card processing, so what are you waiting for? Make more money, increase your customer base, and expand your brand.
To find out more about the benefits and costs of setting up credit card acceptance services for your business, start a conversation with Paymotile. Our expertise is matching businesses to their ideal merchant service provider, and we’re ready to help you immediately.
