What Small Businesses Need to Know About Accepting Credit Card Payments
As a small business, there are several things to keep track of: your customers, your goals, your payments, and more. Because of that, it’s important to stay on top of all the data that comes your way so that you can efficiently manage your workflow and make the most of your time. Nowadays, accepting credit card payments for your products or services is a virtual requirement. In fact, some businesses have stopped taking cash transactions entirely. In simple words, accepting credit cards will lead to increased sales and happier customers.
If you want to be competitive in the current marketplace, you have no choice but to start accepting credit card payments. Unfortunately, many small businesses aren’t as prepared as they ought to be in order to manage this function.
Why should a small business accept credit cards?
There are several benefits for small business credit card processing, including the following.
- Credit cards are easier to use than other payment types:
You can accept credit card payments online by setting up an online payment gateway system. Customers don’t have to carry cash or checks, which are vulnerable to loss or theft, and merchants don’t have to go through the hassle of manually depositing those types of funds into their account.
- Improved cash flow:
In aninvoice process, normally you send an invoice, wait a few days or weeks for the client to send a check, then have to wait a few more days for the check to clear.Accepting credit cards cuts down the several week wait for an invoice to be sent out and a payment to be received. Customers pay immediately with their credit cards, getting your business its payments faster and improving cash flow.
- It helps boost sales:
Consumers tend to spend more when paying with a credit card, make purchases more frequently, and make more impulse purchases than those using cash. More customers, more repeat customers, and customers spending more money mean more sales for your growing business.
- Makes you competitive:
Chances are more that your competitors are already accepting credit cards. Never give your customers a reason to purchase from them instead of you.
- Credit card acceptance helps legitimize your business:
When you accept payment from the world’s leading financial brands like Visa, Mastercard, and American Express, you show your customers that you are serious about your business.
- Streamlines online business:
If you plan to take your retail business online, the only efficient way to run your eCommerce store is to accept credit cards. Also, accepting credit cards reduces the amount of cash needed on hand— cash that has to be counted, stored, and transported.
Potential Credit Card Transaction Risks:
There are always pros and cons in everything even credit card. With any payment method, there are some potential disadvantages and risks involved; for example:
- Major Credit Card Processing Fees to Watch out For:
Unfortunately, accepting credit card payments always comes with a price.Interchange Rate, The major credit card companiescharge a fee for using their products. This fee is known as the interchange rate.Markup Fee, Your payment processor handles interchange rate fees for you, but they’ll charge an additional fee, or markup, on top of the standard interchange rate.
- Risk of fraud:
There’s always a potential chance for fraud. This can be really costly, and it usually involvesa lot of back-and-forth with multiple parties.
The horrible chargeback is one of the painful realities of credit card processing. These are usually disputed transactions that customers initiate when they aren’t satisfied with a purchase.
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