Despite this, many small businesses remain on the fence about accepting card payments.
Are you one of these businesses? Perhaps the process of accepting cards appears daunting—too confusing, too time-consuming, and too costly. Perhaps you get a headache just thinking about it. But it may not be as costly or as difficult as you might think. And the benefits of accepting cards far outweigh the costs.
In this article, we’ll take a look at several reasons you should accept cards and what it could cost you to get started.
Reason 1: You’ll likely increase sales
Have you ever walked into a business only to walk back out without making a purchase because it didn’t accept credit cards and you didn’t have enough cash with you? We have, and you can bet that we’re not the only ones.
How many customers are you losing because you don’t accept cards?
According to recent studies, total non-cash payments increased at an annual rate of 5.3 percent, between 2012 and 2015. Not surprising, debit and credit payments increased while check payments decreased during this time. At the same time, only 12 percent of consumers prefer using cash to make purchases.
In short, if you aren’t yet accepting card payments, then you are likely missing out on revenue.
Reason 2: Your customers might spend more
People tend to buy more when using credit cards than when paying with cash. In fact, a recent study found that customers spend 12 to 18 percent more when paying with cards instead of cash.
When buying with cash, we see exactly how much we’re spending. And, we see how much less cash we have in our wallet. This isn’t the case with credit cards: we don’t physically see how much we are spending, so it is much easier to make impulse purchases. Your customers may make larger purchases when you start accepting card payments.
Reason 3: Your business becomes more credible
People buy from businesses they trust—especially when it comes to accepting payments. If you display the logos of major credit cards like VISA, Mastercard or Discover (brands that people already know and trust), you’ll likely create a sense of greater trust for your customers. Displaying these logos shows customers that you’re a legitimate business, whereas a “cash-only” sign might cause customers to feel uneasy.
Reason 4: Improved cash flow
Most credit card transactions are deposited into your bank account quickly—typically within 24 to 72 hours, depending on your payment processor. Alternately, checks can take longer to clear and even longer to be deposited into your account.
Accepting cards also cuts down on the hassle and time it takes to process and prepare large amounts of cash and checks for deposit. And, as an added bonus, you will greatly reduce the risk of dealing with bounced checks, which is time-consuming and costly.
Reason 5: You don’t have to spend as much as you think.
Many business don’t accept cards because of the perception that it is a confusing process with hidden and costly fees that they don’t think they can afford. However, accepting cards is easier and cheaper than you might think.
Of course there are costs that you will have to navigate when you accept card payments, but there is no need for these to be confusing or prohibitive. Let’s look briefly at a few:
- Hardware — To complete card payment transactions, you will have to transmit your customer’s credit card information to a processor to obtain approval and payment for a transaction. Most commonly this is done with a card reader or terminal where customers swipe, dip or tap their card or mobile phone. Obtaining processing hardware for your business doesn’t have to be overly expensive. Depending on the functionality and features you want—in the very least, you’ll want a model that supports magstripe and EMV chip cards—you can get a card reader for as little as $50 to $60. Though some models with features like NFC, PIN pad readers, or wireless (4G or LTE) communication can run up to $500 or more.
- Software — A Point-of-sale (POS) system allows you complete transactions and streamline key business operations like inventory, reporting, customer management and employee scheduling. POS software is typically subscription-based with monthly fees, which can range anywhere from $69 per month to $299 per month, depending on specific features and add-ons.
- Processing fee and contracts — This is perhaps the biggest hurdle for businesses moving from a cash-only system to one that accepts card payments. Typically, you can expect processing fees to average between 2 percent and 3 percent of each transaction.
There are essentially two types of processing fees: Interchange Fee and Processor Markup Fee. Interchange fees are set by card companies like VISA and Mastercard and are not negotiable, whereas markup fees are additional (and negotiable) fees charged by processing companies.
Accepting credit cards could be a game changer for your business. At Sonder Payments we believe your business should be able to participate and thrive in today’s economy. So, we’ve built easy tools that empower and enrich your business.
We’ll help you shift to a card payments system, and it will be less expensive than you might think. Need a credit card terminal? We offer EMV chip enabled terminals, which you can purchase or lease for affordable rates. And we offer the industry’s most transparent pricing that offers consistency and peace of mind.
Are you ready to come down off that fence and begin accepting credit cards at your business? It’s a decision you won’t regret. Contact a Sonder Payments representative by emailing firstname.lastname@example.org or by calling (314) 722-6424 and learn how you can make the responsible and affordable transition.