I wanted to make it clear first that I am not here to suggest you should or should not except credit cards. But to show you the pluses and the minuses of both and let you make the choice, especially because a small business has to make choices that will affect your bottom line.
The decision to except or not except credit cards for your product is one of those decisions. Since businesses are different, it would be better for some and not for others.
The Pros: The first advantage of taking credit is that it is continent. More people are using credit cards for purchases online and offline then they ever have. Even debit usage is becoming more predominate, although the old payment of checks and cash are becoming less popular.
So for the convenience factor alone can increase your bottom line. If you have an online business, sales over the internet are expected to grow and are estimated to reach $230 billion dollars in transactions by 2010. And online sales will account for close to 10% percent of the United States sales by 2008.
Another plus for accepting credit cards is the better credibility. To be able to get a merchants account is not the easiest thing to do. So if you are able to obtain a merchant account then the customers may see you as more reliable.
The Cons:One of the biggest cons of accepting credit cards is the fees that you will occur. These fees can range greatly. If you are accepting credit cards face to face it will be anywhere from $30 to $2000 just for equipment.
You will have transaction fees from anywhere from $.5 to $.50 cents per transaction. If someone used a charge back on you, that can be from anywhere from $30 to $60 every time. You are even charged for your monthly statements. Now I know someone is saying $.5 to $.50 per transaction does not sound like very much, but they can very quickly eat into your bottom line.
Let me quickly explain charge backs. A charge back is when you either have a fraud purchase, an error that happened with the bank or just misunderstanding with the customer. The funds will be taken from your account, back to the card before you can even know about it.
The credit card company will hold you fully responsible for the charge back even if you did everything you could to get proper information. Another negative factor for accepting credit cards is the amount of fraud that you will come across. You will still be held responsible for the fraud every time for using a credit card.
The last con I will be speaking of is the time you have to learn how to use this technology properly. It is important that you learn how to use credit card processes services because any mistakes at all and you will loose money. Now that you see the pro and cons it is up to you to decide if it is right for your business.
