Tuesday, April 11, 2017

Cash is King (Not)! Small Business Owners – Accept Credit Cards or Wither

When it comes to transacting with customers cash is becoming less and less popular every day. It has come to a point when many people don’t even carry any cash in their wallet, if they carry a wallet at all! According to Gallup poll only 24% of US population is using cash for all or most of their purchases. This is down from 36% only five years ago. If this trend continues it will not be surprising if the federal government starts phasing out some of the cash all together! Few months ago India took a controversial step of banning large currency and instead encouraged the use of credit card and mobile payments for all transactions.

Small business owners who do not facilitate the use of credit card as a method of payment stand to lose customers. While it is true that it costs more for small businesses to accept credit card when accounting for the transaction fees they have to pay to credit card processing companies when you consider the negative impact of not accepting credit cards in the form of lost business it would be ill-advised not to pay this transaction fee. Just consider it as a cost of doing business. The alternative can be even worse!

While the increasing use of credit cards may give headache to some small business owners it provides an opportunity to others. Small business owners who are mobile, think plumbers, carpet cleaners, etc. who do not have the luxury of installing credit card terminals now have an opportunity to accept credit cards with the use of mobile credit card terminals. Technological advances in the past few months have enabled almost anyone to make use of credit card processing facility.

Companies such as SumUp have introduced advanced credit card terminals that enable anyone to accept credit card anywhere, anytime. These newer readers allow you to accept credit cards with magnetic stripe, EMV chip or even contactless (NFC) method. It used to be that large businesses had the advantage of using these advanced technologies, while small business owners could not afford it due to prohibitive cost. The latest generation credit card reader now give the same opportunity to small business owners as the large stores.

If you do decide to take the plunge and accept credit cards, which I highly recommend, there are few factors you want to keep in mind when choosing what credit card processing companies to go with:
  • Technology – Choose credit card reader that can handle all the advanced forms of credit cards, including magnetic stripe, EMV chip and as contactless (NFC). The newer version of credit cards are incorporating these technologies and customers will favor those businesses that accept these modes of payment.
  • Credit Card Processing Fee – Many companies charge an arm and a leg to small businesses to process the credit cards. You don’t want to be in the situation where you end up paying large portion of customer payment in the form of credit card processing fee. Choose the company that charges flat, low per transaction fee without any hidden charges.
  • Integration – Make sure the credit card reader can integrate with other computer systems such as billing and accounting. You should be able to send the bill to customer automatically when they pay using credit card. This avoids extra steps and makes the whole transaction seamless.
  • Payout – Many credit card processing companies take forever to pay you the money they collect on your behalf from the customer. Why should you have to wait for the money that is yours after all? Choose the processing company that makes fast payouts and doesn’t make you wait for months.

The technological advances of recent years have enabled small business owners level the playing field with their large competitors. Credit card processing is one such area where small businesses have no excuse to lose to their competitors. Make sure you jump on the bandwagon now or risk losing your customers!

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