5 reasons why you should accept credit cards
Electronic transactions are growing. In 2009, it's projected that 66.9 billion transactions will be made via debit and credit cards. But according to a recent Angie's List survey of more than 800 service providers, 41 percent currently do not accept either.
- Of the companies who do accept credit cards, 29 percent said it's a cost of doing business. They also said that offering that option allows them to help more customers and improves their cash flow.
- Of the businesses who do not accept credit cards, the biggest reason against it was cost. Partnering with a reputable merchant processor can help you manage those processing fees however. Interchange is the banking transaction that takes place when a customer uses a credit card to make a purchase at your business. The related fee is determined by the nature of your business and the processing procedures you follow. Visa and MasterCard determine these rates by assessing the level of risk and expenses associated with funding and processing a transaction. For instance, the interchange fee for a face-to-face transaction is generally less than mail-order transactions because you are present and can compare signatures and swipe the card. Hence, the level of risk is lower. Twice a year, Visa and MasterCard examine changes in the card payment industry and implement whatever changes they feel are necessary. It's important to be aware of their direction so you can make any changes that you feel are necessary for your business.
- Improve cash flow. 16 percent of service providers said they get one to two returned checks each month. Depending on the size of those transactions, that can be a major blow to your cash flow.
- Increase payment flexibility. Studies show that adding additional payment options increases the likelihood that customers will complete a transaction. Angie's List Merchant Services offers businesses exclusive low rates on credit card processing.
- When shopping for a merchant service partner, be sure to ask these questions:
- What is the contract term?
- What is the monthly minimum?
- What are the monthly fees? Is there an annual fee?
- What is the cancellation fee?
- Is the rate being offered applicable to all card types?
- If not, what is the rate on rewards cards? (those linked to things like Frequent Flier programs, restaurant gift certificates, etc)
- Is there a separate rate for debit cards?
- May I keep my current bank accounts / bank relationship?
- What is the settlement timeframe? (When funds get deposited into their bank accounts)
- What types of equipment do you offer?
- What types of processing methods do you offer?