Why Your Business Should Accept Credit Cards
By Harish Keshwani at 11 April, 2008, 3:37 pm
Business, especially ones that operate online, should understand the importance of being able to accept and process credit cards. Many buying decisions are made on impulse and if you are not able to provide a way to capitalize on those impulses, you could be losing a lot of important business. You need to be ready to complete a transaction as soon as a customer is ready to buy.Businesses on the web have many more options these days than they did in the past. For those businesses who sell items on sites like eBay or perhaps through their own website can still rely on snail mail for checks and money orders, which would need to be received prior to sending out the goods. This may not always be the option of choice for consumers of the “I want it now” philosophy so they may choose to shop elsewhere. Additionally, people who want to make an impulse purchase will not always have the money to pay for it right at that moment. Again, business is lost.
The check and money order route also affects the business owner too. Waiting for checks to clear and money to show up in your bank account affects your cash flow. Plus, if the check you receive doesn’t clear the bank, you may be held liable for expensive fees and other charges for the bounced check.
Establishing a way for your business to accept online checks and credit cards may be a step in the right direction and increase your business profits in a shorter period of time. While it may be expensive to be fully operational, the new business you may gain will be worth it. There are several ways to set up your business to accept credit cards. Here we will discuss two of the options.
- Bank Merchant Accounts - Websites such as Propay and Click2Pay allow you set yourself up with an account and will process credit card transactions on your behalf for a fee dependent upon the size of the transaction. Money made is transferred into an account and can be transferred to a checking account. Typically, there is an annual fee, which ranges from reasonable to expensive, depending on the type of account you establish. Bank merchant accounts also require other factors for opening an account including your business credit score.
- Third Party Processors - Websites such as PayPal is considered a third party processor. You can set up a free account and do not have to pay annual fees. Processing fees will depend on the amount of money involved in the transaction. There may be more limitations involved with these types of accounts than with the bank merchant accounts.
Both types of credit card processing sites will allow your business to be more flexible and offer payment options consumers need. A simple internet search will help you locate credit card processing companies and you should comparison shops for the best rates and features for your company before committing to the first company you find.
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Tisha Kulak is a writer for Creditorweb.com, where she writes about <a href=”http://www.creditorweb.com/”>credit card offers</a>, business credit cards and small business finances.
I think you failed to touch on one very important aspect of accepting credit. There have been several studies done that conclude people spend more when paying with credit than they do with check or cash. I’ve seen statistics that range from 5-20% increase in the sale amount on purchases made with credit vs cash. Many small business owners feel that Visa shouldn’t get 3% of the sale, but when you realize that giving visa 3% is actually netting you an increase of 2-17% the decision is simple. Accept credit!