If your business does not currently accept credit card payments then it might be time to consider whether your reluctance to accept credit is holding you back. Although there are some costs involved in terms of service fees, in a world which is quickly moving away from physical cash, the benefits of giving customers a modern and efficient payment alternative will help to keep your business ahead of the game.
For small business owners, the biggest deterrent to moving away from a cash-only system is the processing fees. However, with only 54 percent 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 by continuing to take the cash-only route.
What are credit card payments?
A credit card is an account that gives private consumers and businesses access to an agreed amount of credit that can be used to pay for goods and services online, in shops and over the phone.
If you want to accept credit card payments from customers then if you run a regular storefront, you will need point-of-sale equipment like a credit card terminal. If you operate a kiosk or food truck then a mobile card reader for the tablet or smartphone you use to process credit cards will usually suffice. An online business doesn’t necessarily need any equipment and will instead pay a gateway fee.
But what are the benefits of accepting credit card payments for your business?
Top five reasons to accept credit card payments
- Encourage instant and impulsive transactions
Shoppers like to be able to make purchases quickly and easily without having to dash to the nearest cash machine, which is not only inconvenient but also limits their spending to their available funds. If you don’t accept credit card payments then many prospective customers will simply go elsewhere. There are also studies which suggest that customers tend to spend more when paying on credit card, particularly in regard to impulse purchases. The result is an increase in sales and revenue.
- Easier to analyse customer spending and trends
The data available from a credit card processor can help businesses identify specific types of spending behaviour by their customers. This can lead to the customisation of specific accounts and the creation of marketing and promotional campaigns that target particular behaviours. These can also be used in a way and at a time when they are most likely to generate a purchase. You can also use the data insights to identify new trends and patterns that allow you to target new customer groups.
- Increase customer satisfaction and service levels
Many credit cards give users rewards which can boost customer satisfaction and make them feel better about spending. The type of rewards available includes:
- 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 for purchases made on their credit cards.
These rewards encourage consumers and businesses to spend on their credit cards and make them look at their shopping experience with your business in a more positive light.
- Easier bookkeeping, improved cash-flow and reduced risk of in-business theft
If the majority of payments to your business are made by credit card then much of your bookkeeping is done for you automatically. Rather than handling and counting lots of cash during the day and doing time-consuming bookkeeping in the evening, you can simply use the records that have been generated for you. The reduction in cash handling also reduces the risk of in-business theft.
Credit card payments can also give small businesses a much needed cash-flow boost. Rather than issuing invoices and waiting for payments to clear in the bank, credit card payments will be cleared and in your account within a couple of days of the purchase date to free up the cash you need to grow.
- Open up new finance opportunities
Bank loans can be hard to come by for small businesses, particularly given the mainstream lenders’ current reluctance to lend. By accepting credit card payments, your business opens itself up to a merchant cash advance, which is another source of business finance.
A merchant cash advance (MCA) is, in effect, 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. Get in touch to discuss your requirements or apply online.