In a world which is quickly moving away from physical cash, there are compelling reasons for small businesses to accept credit card payments.
With only 54% of all point-of-sale transactions (by value) carried out using cash last year, it’s clear you will be missing out on a significant chunk of the market. If your business does not currently accept credit card payments, it might be time to consider this option.
What are credit card payments?
A credit card is an account that gives private consumers and businesses access to an agreed amount of credit to pay for goods and services online, in shops and over the phone.
What is needed to accept credit card payments?
Accepting credit card payments for small business requires point-of-sale equipment like a credit card terminal or a mobile card reader for the tablet or smartphone you use to process credit cards. To accept credit card payments online, no equipment is needed but a gateway fee will be applied. You will also need a communications connection. If you’re using a fixed device, that can be as simple as a phone or internet line.
While there are some costs involved in terms of service fees, the benefits of giving customers a modern and efficient payment alternative will help to keep your business ahead of the game.
1. Encourage impulsive transactions
Shoppers like to be able to make purchases quickly without having to dash to the nearest cash machine. If you don’t accept credit card payments then many prospective customers will go elsewhere. Customers also tend to spend more when paying on credit card, especially on impulse purchases, resulting in increased sales and revenue.
2. Easier analysis
The data captured from a credit card processor can help businesses identify specific types of customer spending behaviours. This can lead to the customisation of specific accounts and the creation of promotional campaigns that target these behaviours. Data insights cam also identify new trends, allowing you to target new customer groups.
3. Increase customer satisfaction
Many credit cards enable users to earn rewards for their credit card payments. This boosts customer satisfaction and makes the customer feel better about spending. Rewards available include:
- Points-based rewards – Consumers can accumulate points for every pound they spend which can be redeemed against items they’d otherwise spend money on.
- Relationship rewards – Some credit cards have reward programs which give consumers discounts when they shop at particular stores.
- Cashback – Some providers also give consumers cash in return credit card payments.
These rewards encourage credit card payments and consumers have a more positive experience.
4. Improved processes, reduced risk
If a business takes credit card payments, majority of your bookkeeping is done for you automatically. A business can simply use the records that have been generated, saving time counting cash and completing bookkeeping. The reduction in cash handling also reduces the risk of in-business theft.
Credit card payments can also give small businesses a cash-flow boost. Rather than issuing invoices and waiting for payments to clear in the bank, credit card payments arrive in your account within a couple of days of the purchase date, freeing up the cash you need to grow.
5. New finance opportunities
Bank loans can be hard to come by for small businesses. By accepting credit card payments, your business opens itself up to a merchant cash advance.
A merchant cash advance (MCA) is, a pre-purchase of your future credit card sales. The finance provider will advance you money in return for ‘owning’ a proportion your future income. The advance will be repaid when the lender has recouped the initial cash advance from those sales. Unlike a bank loan, a merchant cash advance does not have an interest rate or a set repayment period. Instead, a percentage of credit card sales is taken until the initial advance and the agreed fee has been repaid.
Start accepting credit card payments today
If you’re ready to start collecting credit card payments then we can get you set up quickly and provide a secure online payment gateway that already processes payments for thousands of businesses every day.