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[P113]Pay By Credit Cards

by Debbie Dragon, Deb

It's a given that running an online business means that you need to accept credit cards. If you don't then you are losing as much as 70% of your sales to competitors who do accept credit cards according to an article published by Forbes Magazine. But it's not just online businesses that suffer lost sales by not accepting credit cards. That same 70% figure, and higher in some cases, is applicable for off-line businesses as well.

Most People Do Not Carry Much Cash

Thanks to direct payroll deposit and debit cards, 50% of Americans carry ?a few singles and may a five or ten? and 40% carry ?around $5 or less including coins? according to an opinion poll conducted by one company recently.

This means that even if you are selling low-priced items you will be chasing away as much as 90% of your potential customers if your product or service costs more than they are carrying with them at the moment and you don't accept credit and debit cards.

Even Starbucks, which has an average sales transaction amount of $4, does the bulk of their business with credit card and debit card transactions.

Statistics indicate that the average American carries at least four credit cards and nearly all Americans carry a debit card. You're missing a lot of purchase opportunities if those cards aren't welcome at your business.

Most Consumers Prefer Paying By Credit Card

Not only do consumers avoid the inconvenience of carry cash, which includes the threat of loss or theft, but they also enjoy the security of knowing that their bank is willing to back them up should they end up in a dispute with your business over the quality of your products or services.

Then There Are The Rewards Programs

A lot of credit card programs offer cash-back or other incentives for every dollar that a consumer charges to their card. People who are enrolled in rewards programs will go out of their way to pay by credit card and avoid using cash at all costs. If your business doesn't want to help them earn their rewards, they'll simply find another business that does.

Credit Cards Are More Convenient For Big-Ticket Purchases

Customers who are spending hundreds or even thousands of dollars on a product simply expect to be able to pay by credit card. This is especially true for those customers who cannot afford to pay for their purchase all at once and who are planning to pay the balance off over a period of time.

Some Customers Are Forced To Use Credit Cards

Employees who are making purchases on the behalf of their employers, or employees who travel on company business, are often issued company credit cards which they are expected to use for all purchases. Accounting for cash expenditures, and the subsequent process of reimbursing the employee for their out-of-pocket expenses, is a nightmare for businesses. If you don't accept credit cards, these employees are shopping elsewhere.

You're Losing Out On B2B Purchases

Many companies that are making purchases of products or services for their own internal use or for resale prefer to pay with a credit card for accounting reasons. Not accepting credit cards means that you are losing out on the opportunity to serve repeat customers who are being forced to take their business elsewhere.

Hopefully you've found one or more good reasons to start accepting debit and credit cards at your business. And if the reason you're not accepting them is because you think you can't afford to, think again. The truth is: You can't afford not to!

To accept credit card payments you need to set up a ?Merchant Account.? This is a credit card processing account that you establish, that makes it possible for you (your photography business) to accept all major credit cards for payment. This account is not the same as your checking account or savings account, but it allows you to accept credit card payments from your customers, and for the money to get deposited into your existing bank account.

TWO TYPES

There are two types of accounts a merchant can use. Unless you are a brick-and-mortar studio or stock photo agency, you probably won't be interested in the first type, which is the over-the-counter type of account, where the credit card is physically swiped through a machine at the time of purchase.

The account that likely would fit you best is the Mail-Order/Telephone Order merchant account. Your client, photobuyer or print order customer, enters their credit card information onto a form on a website, or by email, or by phone. You then process the merchant account transaction, which goes to a verification provider. Once the card is verified and approved (done electronically), your client's payment is deposited into your bank account.

Can you afford to accept credit card payments? Some banks may charge you an annual fee in addition to a ?per transaction fee? -- but there are many other providers that charge only a small percentage of the sale amount at each transaction, when you process a credit card (you pay an average of 2-3% per transaction to such a merchant account provider). These merchant account providers are ideal for small business owners and online businesses that may need to process only a handful of sales each week.

There are several credit card processing providers to choose from, each offering different features and fees. Figuring which one of these would work best for you, to process your customer's credit card payments, can be a daunting task.

A local bank, because they are not familiar with the stock photo industry, may deny your business application for a merchant account because they don't want to take the risk. Most small businesses end up going through third party providers who are willing to take the risk, and actually get the merchant account on your behalf; then apply their own rate structure to your transactions.

To move ahead with your merchant account, you'll need a shopping cart program of some kind, which must work with the system you use to process credit cards online. Unfortunately, if you go with a third party shopping cart rather than a custom written one, it may not work with all credit card processing gateways. Be sure that whatever shopping cart program you use on your website, works with the merchant account you ultimately end up using to process customer payments.

What's the charge to get involved? You pay fees to the third party merchant account provider (or the bank if you are able to secure your own account directly with a bank that provides it) in exchange for the ability to accept credit card payments. The fees and rates you pay will vary depending on many factors, including how long you've been in business, the type of business you operate, your credit score, how much of your sales are processed by phone versus online, and the amount of credit card sales you process each month.

As mentioned, some providers charge an annual fee in addition to a fee per transaction, while other providers charge only a percentage of each transaction processed. Typical rates for small businesses accepting phone and mail order payments are $0.10 to $0.30 per transaction, plus 2 to 3% of the transaction amount. If the merchant account provider you are considering wants to charge more than this percentage, be sure to check out a few others to see if you can get a lower rate. Sometimes, your credit rating will result in your having to pay higher fees -- but it's worth shopping around a little to see if you can get a lower percentage rate per transaction.

When you're shopping companies, looking for the best merchant account provider, make sure to compare all of the fees to see how much you're going to end up spending per each sale. You should also take into consideration what the application fee is (if any), how much you pay annually, how much you must spend on equipment needed to set up your account (in case you need a swiping machine), and whether or not you must maintain a monthly minimum of sales volume.

YOUR LOCAL BANK

If you sign up for a merchant account with your local bank, you'll be able to make direct deposits into your business account at the bank. If you outsource, study the terms for cancellation and under what conditions the provider can cancel your account, as well. Compare how each merchant account provider allows you to withdraw your money -- can you do it whenever you want or do you have to do it at specific times of the month or year? How long will it take to receive your funds once you've requested a withdrawal or transfer of the money? How does the provider handle charge-backs? Read all of the forms and contracts associated with the merchant account before you sign anything.

The process for applying for a merchant account varies depending on the company. For example, some providers ask you to provide a photo of your driver's license, and even of your home office or studio to verify you are in the location you say that you are. Some companies will want to send a representative to photograph your place of business. Occasionally, you'll be asked to provide a DBA (?Doing Business As?) or business license, your tax returns, and profit and loss statements.

In our own case, here at PhotoSource International, about five years ago we did our homework and contacted a half a dozen providers. We determined that Total Merchant Services would be best for us. They have been consistent and quick, and I can highly recommend them. If you're interested in checking them out:

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Both Debbie Dragon & Smith Chen are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Debbie Dragon has sinced written about articles on various topics from Finances, Credit Cards and Kitchen Home Improvement. This article has been provided by Creditor Web. Creditor Web has the articles and other credit card processing resources to help you choose t. Debbie Dragon's top article generates over 165000 views. Bookmark Debbie Dragon to your Favourites.

Smith Chen has sinced written about articles on various topics from Depression, Interior Design and Finances. Smith Chen is an author and internet marketing consultant. Find more about Directory Article and review page. Smith Chen's top article generates over 135000 views. Bookmark Smith Chen to your Favourites.