Do I Really Need to Accept Credit Cards?
Do I really need to accept credit cards?
YES, in today’s market I do not know too many successful businesses that do not accept credit cards. There have been numerous studies showing if a merchant accepts credit cards as a form of payment that the merchant can increase sales dramatically. Depending on the type of business, increases in sales can be anywhere from 15% to 100%.
Internet businesses have the largest increase because customers want to pay immediately and not have to call or wait for the merchant to contact them.
Some obvious reasons to accept credit cards are merchants will move more expensive merchandise, have an increase in impulse buying, and give your business credibility. Giving customers the ability to pay with a credit card allows impulse buying that will allow a merchant to move merchandise that a customer’s may not have funds available in their checking account. If you want to give your business every chance to be a great success, you must take credit cards. Here are some more good reasons to take credit cards:
COMPETITIVE WEAPON – Customers will buy from a merchant that offers payment by a credit card and will often look to see if a merchant accepts credit cards before shopping.
COMPETE WITH THE BIG GUYS – Accepting credit cards levels the playing field with larger retailers.
PEACE OF MIND – Customers feel secure in using their credit card. If the service or product is faulty, the use of credit card allows customers to dispute a charge that protects them.
CONVENIENCE – Making it easy for your customer to pay you is probably the biggest reason to accept credit cards.
CUSTOMER LOYALTY – Customers will often shop at merchants where they feel comfortable or have shopped before. One important thing to remember is to make sure to add credit card logos to any marketing you do. Many potential customers looking for a service or product will look at a merchant’s advertisement to identify and find the right merchant. If the customer has little cash often the deciding factor in determining which merchant to choose depends if the merchant accept credit cards. This allows the customer to finance the sale and make payments to their credit card company.
How do I get the money from a credit card sale?
Another good question and here is how it works. When you, the merchant, want to accept a credit card for payment, the following process occurs (this is a brief summary):
You submit a Transaction to your processor using your electronic terminal or Online Processing Software. Either option works almost the same way. The terminal or Online Processing Software communicates with the Visa/MasterCard Authorization to ensure that the Credit Card is valid and that the transaction amount does not exceed the cardholder’s credit limit. The authorization puts a “hold” for the transaction amount on the cardholder’s credit limit. That way, the funds are available to you when you complete the transaction. To complete the transaction you will simply close your batch at the end of the day with your terminal. By doing this, you are promising the merchant account provider, sponsoring bank, and issuing bank that you are prepared to deliver the goods and services expected by the cardholder.
With Online Software, you usually do not need to close your batch as transactions are processed Real Time. From the time you close your batch, funds are directly deposited into your bank account. This process usually takes 48-72 Hours.
Michael Knudderson is an expert in merchant services and specializes in online check processing.
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