Nearly every adult in the United States has a credit or debit card and the majority of them use their card often for purchases. In fact, many Americans are choosing to use their credit or debit cards rather than cash or writing checks. If you operate a small business and are considering not accepting credit cards as payment, there are a number of things to consider. It’s true that accepting credit cards means you open the door for credit card fraud and transaction fees can often be very high, but you may also stand to lose business with other negative implications of not accepting credit cards. With 309 million people using a Visa credit card, 211 million people with a MasterCard and 54 million people with an American Express card, you can bet a good deal of purchases are made using credit cards as opposed to cash or check.
Take note of these four implications of not accepting credit cards in your small business.
1) Lost sales – By not accepting credit card payments, your business may suffer sales, especially with large purchases. Most consumers don’t carry large amounts of cash with them or are willing to write a check for a large purchase, which means they won’t be purchasing for companies that don’t accept credit cards. Sales in general will be lower when you decide not to accept credit or debit cards as consumers tend to always have a card with them, but won’t often carry cash or checks.
2) Delays in customer payments – Most credit card processing machines verify the funds immediately and process the sales much more quickly than personal checks. Of course if the consumer gives you cash, the money is processed immediately, but when they are writing a check, it could take days or weeks to clear.
3) Increases in client/customer non-payment – Along with the long waiting time for checks to clear, you also run a higher risk of non-payment by customers or clients. If the check bounces because it was not processed immediately like credit card payments are, you may lose out on a payment, or wait a long time before finally getting payment. If you offer services to clients, they may not pay immediately when they can’t pay with their credit card
4) Customers limited by immediate purchasing power – Credit cards are responsible for the majority of last-minute purchasing decisions. If a customer decides on a whim to purchase from your store or purchase services from your business, they won’t be able to do so if you don’t accept credit cards. Since the consumer did not think ahead to carry cash or checks, they won’t be as willing to pay for it unless they can use their credit card. Consumers are also more willing to pay for something when they can do so immediately with their credit card.
With this list of negative implications of not accepting credit cards in your small business, you may decide to take the risk and accept this popular form of payment. If you’re still concerned with the risks, you can protect your business from credit card fraud and other risks with adequate insurance, as well as protecting your business from other risks at the same time.