Originally Published: October 20, 2007 8:52 p.m.
Question: Should my small business accept credit and debit cards?
Answer (By Bill Sonsin, SCORE counselor):
Major reasons that many small businesses, not just retailers, accept payment by credit and debit cards include:
The average consumer spends 20 percent to 30 percent more per visit when paying with plastic than with cash or checks, a figure that has not changed since the early 1970s.
Credit and debit cards make it easier for out-of-town visitors to buy merchandise and services while traveling, an important consideration in areas such as ours that are heavily dependent on tourism.
Accepting plastic can make it easier for customers to buy from you if you are selling on the Internet.
With cards, you, the merchant, have little to no risk as long as you follow the card issuer's rules.
Many consumers prefer to pay using credit or debit cards because of the convenience, reward programs, record-keeping, fraud prevention and protection programs offered by card issuers. In 2004, for the first time, consumers used plastic cards more than they used cash or checks. This trend has continued each year since and shows no signs of changing.
While all major card issuers charge fees for accepting their cards, usually per transaction plus a percentage of the sale, these fees can generally be less than the operating costs of offering your own credit along with losses from unpaid store credit and bad checks. In general, the larger your sales, the lower the fees, and the profits from higher sales can help the cards pay for themselves.
You can sign up to have your business accept cards and obtain needed equipment and supplies directly at the card issuers' own websites. Most of the time, you can also sign up with your own bank to accept bank cards. And there are a number of third-party service bureaus who offer card processing services to merchants. Since fees vary widely, check the available alternatives and then pick the one that works best for you. Also, some card issuers will lower their rates if you let them know that you have a lower rate quote from another issuer and/or can maintain a certain level of sales charged to their card.
Finally, most issuers offer monthly reports to help you manage your business.
Remember that not every customer carries every type of card, so be sure to accept more than one - ideally all four.
SCORE will present "Marketing Your Idea" on Oct. 25 from 6 to 8 p.m. at the Prescott Adult Center, located at 1280 Rosser St., in Prescott. Please pre-register at our website at www.scorenaz.org, call the Prescott SCORE office at 778-7438, or e-mail us at email@example.com. All SCORE counseling services and workshops are offered to small businesses and non-profits at no charge.