Should Your Business Accept Credit Cards?

Credit cards are so prevalent in the marketplace in today's world, that in order to be competitive most businesses accept them. There are costs involved in accepting credit cards, however, that need to be weighed against the potential for gain and increased business. Here are some pros and cons of accepting credit cards for your business.

It is important to understand that consumers today prefer plastic to cash or checks. This is true of people using either credit or debit cards. They take less time to use and are much more convenient. Credit card companies offer great rewards for customers that make it worth their while to use their credit cards instead of cash, even if they plan to pay the card off. It also gives consumers a measure of buying protection when they use their credit cards. In addition, people assume that all businesses take credit cards, and companies who do not cater to credit card toting clients will lose business, sometimes without even realizing it.

One obvious reason to accept credit cards is the increased revenue it can generate. So many people carry credit cards that they are now the preferred method of payment for most people. In some cases, a consumer may decide not to make a purchase if a business does not accept credit cards. Many consumers do not carry cash on them, which would make a business forfeit a sale if they do not accept credit cards. Impulse buys are frequently purchased by credit card, and consumers are also more likely to spend larger amounts of money if they are paying by credit card. So, as you can see, the potential for increased revenue is great.

There is, however, a cost involved in accepting credit cards. This is the primary reason many small businesses opt not to accept them. In some cases (those involving the sale of very inexpensive items), the cost of the transaction can be greater than the profit generated for the merchant by the small sale. You can, however, find reasonable rates if you shop around before committing to a particular company. Expect to pay per transaction fees (a fee usually between 1.6% to 2.5% of the sale amount plus another 25 cents or so). There are also fees for monthly statements, online payments, equipment, and more. Make sure you investigate all the hidden charges before you sign up.

There is also the risk of fraud liability associated with accepting credit cards. There is generally more protection for consumers than merchants when credit card fraud occurs. In some cases the merchant will be left responsible for the fraudulent purchase, which can further eat into a business' profits. Keep in mind though that this risk is not necessarily greater than the risk associated with accepting personal checks.

There are many things to keep in mind when you are weighing the pros and cons of accepting credit cards. The advantages and disadvantages should be considered carefully before you make your decision. In general however, it is a wise business move, since today's consumers expect the ease and convenience of being able to pay you with credit or debit cards as opposed to cash or check.

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Michael Rupkalvis runs The Transaction Group website. The web site provides information about credit card processing and provides merchants with cheap internet merchant account discount rates, along with excellent customer service.

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