5 major advantages for businesses that take credit cards
Sept. 18, 2015 at midnight
In a society where everyone seems to have a smartphone or tablet, it is difficult to believe that many businesses still do not accept credit or debit cards for payment. A survey of 1,000 small businesses in the U.S. found 55 percent don’t take cards, even though customers say they seek out businesses that accept them.
Customers prefer using cards for many reasons, including wanting to avoid carrying cash, a desire to earn reward points, security and protection offered by card issuers and more. For businesses, setting up a system to handle card payments is as simple as contacting a merchant services provider.
“Merchant account services act as middlemen between the business and the customer's credit card company or bank. Merchant account services process payments and make sure the money is appropriately withdrawn from a credit card account and placed into the business's merchant account,” explains Sara Angeles in an article for Business News Daily.
Some of the many advantages for businesses that accept credit card payments include:
Credit card acceptance increases revenue
Cash is no longer king. Across the globe, people like the convenience and security of paying with a credit or debit card. In fact, 66 percent of point-of-sale transactions use credit, debit or gift cards, according to data from Community Merchants USA, an educational nonprofit organization of the electronic payments industry.
Credit cards are essential for online sales
Internet selling is a growing segment of the marketplace. Online sales in the U.S. totaled $307 billion in 2014, according to the Centre for Retail Research. In 2015, that number is expected to climb nearly 14 percent to $349 billion. By 2016, the total should reach almost $400 billion. Much of that activity comes from small businesses that only operate online or that use the internet to extend their sales reach.
Each year, more than 100 million people in the U.S. buy something online, reports ibisworld.com. The Internet makes it possible for a small business in a remote location to offer its products to potential customers throughout the nation and even across the world, but almost all of those transactions require a credit or debit card.
Credit cards reduce transaction risks
Check fraud remains a major problem for U.S. businesses, totaling more than $14 billion annually, says a Citibank report. In 2014, 77 percent of businesses were victims of check fraud, according to a survey for the Association for Financial Professionals. In contrast, only 34 percent experienced credit card fraud and 92 percent said they believe new smart credit cards will significantly reduce fraud at the point of sale.
Merchant services accelerate cash flow
Credit card transactions process quickly, with proceeds generally available in a bank account within two days or less. That eliminates the time it normally takes checks to clear. It also reduces or eliminates billing and the time spent waiting to receive payment checks from customers.
It is easy and cost efficient
Credit card processing has become a highly competitive industry. As a result, costs for merchant services are lower than they have ever been. Today merchant services providers typically offer a range of options, from technology that allows businesses to swipe cards on a smartphone to traditional processing stations to online platforms. Most can be set up at a business in less than a day.
Small business revenue in the U.S. could increase by more than $100 billion annually, according to a small business survey. With a tight economy, it seems likely that more small businesses will seek the competitive advantage that comes from accepting card payments.