There are various challenges retailers face with accepting credit cards. Acceptance of credit cards is generally purported to be positive for a business’ growth, but can pose an assortment of issues for business owners.
Reconciling credit card payments with cash register (POS) information can be harrowing, unless you have a checkout system that integrates both sales and credit card payments. A point of sale system that operates seamlessly with merchant services is necessary in order to batch summaries and accounting, and can be critical for preparing tax filings and other related compliance requirements.
In some ethnic communities, cash is a preferred payment method over credit cards, particularly for those who don’t qualify for cards; minors, and those have difficulty obtaining a comfortable line of credit. Therefore, as long as “cash is green”, payment by cash will always be an ideal fallback for those who don’t have access to credit or are too young to qualify for their own credit cards. But payment with cash can be limiting in how much a customer will spend per visit. Some stores offer an ATM machine on premises for convenience, however, the customers who don’t qualify for a credit card may also not have funds in the bank with the ability to withdraw cash using a debit card.
As is standard with almost all credit card companies, each time they swipe, tap, or dip their card, customers get mileage, cash-back and other rewards and/or points towards redemption. The store owner typically pays the processing fees with each transaction, ranging from 2-4% plus a flat fee per swipe. In a store with high processing volume, it can be very costly for retailers to process credit cards. As a solution, some credit card companies offer a surcharge program and/or cash discount program within which the customers are assessed a surcharge to offset the credit card charges, and simultaneously offered a reduced price if they pay with cash.
A fourth poignant concern about accepting credit cards is the increased risk of fraud and credit card theft. Credit card companies offer customers assurances that they are ‘fraud-protected’, and have been making great strides in developing chip and other verification technology for credit card use. Store owners are not as protected from fraudulent card payments, and may be held liable. For a small business owner, this can hit hard and paralyze their business. Credit card fraud impacts online retailers in a significant way. According to studies, retailers will may around $130 billion in digital CNP (Card-Not-Present) fraud between 2018 and 2023*. Exercising extra precautions, many cashiers ask for an accompanying ID before accepting credit cards, and online payment systems are constantly adding extra layers of security and verification.
However, the proven benefits of accepting credit cards far outweigh the challenges:
1.) By accepting credit cards and displaying credit card logos near your POS at the checkout counter, your business has increased legitimacy in reminding customers that they can pay with credit. Customers trust their credit card brands, and that trust inherently transfers to you – the merchant – who accepts this payment form. A reputable credit card processing company helps protect you and your customers from data breach and identity theft. Accepting credit cards can boost your sales and keep your business on an even playing field with competitors. When you open up payment methods beyond traditional cash, to include credit and debit cards, your potential customer base and their purchasing power broadens. Your competitors are likely accepting credit cards for customers’ convenience, and to stay profitable and competitive, you need to offer the same.
2.) Credit cards encourage impulse buying and improve your cash flow. Shoppers like being able to check out quickly and easily without having to write a check or do an extra trip to the ATM (which limits their purchasing to only their available funds). Studies have indicated that customers tend to spend more when they’re paying with credit cards** – up to 83% more! This includes a high rate of impulse purchases. Credit card transactions are processed and verified electronically, and settled quickly. Proceeds are typically deposited next business day – or sometimes even same day – into your bank account. You won’t have to handle as much cash, reducing theft and security concerns in your store. You won’t have to worry about bounced checks or be waiting for checks to clear. This also means no more sending out invoices and waiting for customers to pay. If you are an e-commerce merchant, accepting secure payment by credit card is imperative. The majority of transactions on the internet are paid for with credit cards or online systems such as Paypal, which link to credit cards.
3.) Convenience and safety are top priorities. Most banks offer debit and/or credit cards to account holders, with fraud protection guaranteed. Cardholders can enjoy access to credit for spending without fear of theft. Storing and toting around cash carries increased risk of theft. Shoppers are often in a rush. Paying with a credit card is convenient and quick, with not having to pull cash out and start counting it for payment. Many credit cards offer points, mileage, cash-back and other rewards as incentives for the cardholder to use credit cards.
4.) Compared with the tangible benefits to your bottom line, acceptance of credit cards is a relatively inexpensive business expense. Credit card processing is a highly-competitive industry with many different offerings. Most merchant services providers assess retailers an affordable percentage-based processing fee, plus a flat rate amount per transaction. Some offer a surcharge or cash discount program with one low monthly flat fee (and no separate transaction fees) to help store owners recoup these fees. Acceptance of credit cards offers an excellent return on investment, and the fees charged by credit card processing companies are worth the net gains. However, it’s extremely important to use an honest processing company with transparency, to avoid hidden and surprise charges.
“Everyone knows someone with a brother who says they can offer you the best deal in credit card processing. But the industry is infamous for ripping off customers with hidden fees and locking customers in with long term contracts and early termination penalties,” said Elie Y. Katz, founder and CEO of National Retail Solutions.”NRS PAY is backed by its mission to help independent retailers survive and thrive; and this means providing an honest service for our customers, with transparency and without unpleasant surprises – zero hidden fees, no long term commitment, no early termination fees.”
5.) It is easy to start accepting credit cards. Filling out an application costs nothing and can take literally just a few minutes, with approval within a day or two. At NRS PAY, for example, the application process can take less than 24 hours, plus they’ll ship you free equipment with no long term commitment or early termination fee. Fast approval and quick setup can have your business running more smoothly within just a few business days. Most companies offer no-obligation quotes, with rate plans that are profitable for your business, and flexible, based upon sales volume. They may ask you to provide a current statement so that they can show you how they can save you money over your current rates. NRS PAY offers a unique FeeBuster plan, in which store owners can recoup processing fees by passing along fees to customers who pay by credit card, with no monthly fee at all if the store processes over $18K per month. For more information, check out nrsplus.com/feebuster. Whichever structure you choose, it’s important to go with a dependable company that will encourage you to ask questions and be available for you when an issue arises, even on weekends.