Accepting credit cards

Consumers are using their credit cards more than ever, paying for everything from their daily coffee and groceries to big ticket items like large screen televisions and automobiles. If you run a business without accepting credit cards, you could be turning a way a large number of potential customers.

Accepting credit cards helps you expand your customer base by providing a convenient method for customers to pay for products and services. Rather than having to fish through their wallets for cash or taking the time to write checks, customers can present their credit card, sign the slip, and quickly complete the transaction.

In addition to the convenience factor, accepting credit cards can also lead to increased sales. Customers are more likely to spend more with credit cards because they're flexible - users can draw from credit balances or available checking account funds rather than carrying around large amounts of cash.

So why isn't everyone accepting credit cards?
There are a few reasons businesses may be hesitant to accept credit cards:

• Fraud - Some businesses fear they'll be left holding the bill if a credit card owner reports the card lost or stolen or disputes certain charges.
• Initial expense - In order to start accepting credit cards, businesses either have to buy a credit card terminal or special software (for mail order and Internet transactions) which can cost several hundred dollars.
• Ongoing fees - Businesses must pay a credit card provider a percentage of all sales processed, a fee for each transaction, and possible monthly minimums.

While all of these are valid concerns, they shouldn't prevent you from accepting credit cards. First, credit card companies work closely with merchants to alert you if a card is lost or stolen, so you don't process fraudulent transactions. Also, you can reduce the chances of chargebacks if you take precautions like asking to see photo ID or checking the signatures on the back of the card.

The physical credit card terminals are relatively inexpensive. You can get basic terminals for $150 to $250 and wireless terminals for about $1,000. Some providers will even lease you a terminal allowing you to get a higher-quality terminal while spreading your costs out over time. With a credit card terminal, you can also easily integrate programs like gift card systems which can build customer loyalty and attract new business.

Finally, the costs of accepting credit cards are minimal when you consider how much increased business you can take in. A customer that spends $50 in your store with cash may spend $100 with credit cards. With percentage fees averaging 1.75% and the per transaction cost running about 30 cents, you're still clearing far more than you would without credit cards.

Getting started
If you're ready to accept credit cards, you'll need a merchant account which allows you to process credit cards with a bank or provider. Submit a free request for merchant account quotes and get matched up to as many as six different vendors who will walk you through your options and detail your costs.

Of course, you don't necessarily need a merchant account to start accepting credit cards. Third party merchants can accept payments on your behalf, but it usually costs more and takes longer. Plus, it doesn't look as professional as having your own merchant account.

To learn more about merchant accounts and how they can impact your business, read our Merchant Accounts Buyer's Guide.