Allowing Credit and Debit Card Transactions at Your Small Business
Whether you choose to operate your beading business from the comfort of your own home or a rental spot, you will need to decide on the payment methods customers will be able to use to buy your goods. Credit and debit cards are commonly used for transactions at retail locations across the country, but there are both pros and cons to allowing consumers to use this method, according to the U.S. Small Business Association (SBA).
Some entrepreneurs immediately see debit and credit card payment options as a must, but the SBA says there are a number of drawbacks to allowing these methods as well. First, a business can put itself at risk for fraud, along with its client base. Although there are a number of security measures in place, identity theft is easy to commit via credit card.
Many Consumers rely on credit.
||Some entrepreneurs choose to operate cash-only businesses, but credit cards are the most popular method of payment. This fact makes it advantageous for companies to accept them, regardless of the size of their client base. Credit and debit cards are also seen as convenient and easy, making them more desirable than visiting the bank to withdraw cash.
Another advantage to accepting credit cards as a small business is a consumer's likelihood of impulse shopping with plastic in hand. Customers who choose to make purchases on a whim contribute to the overall bottom line. A business can increase its chances of making a steady profit by allowing consumers to conduct transactions with credit cards.
Small businesses that accept credit and debit card transactions may also be forced to pay merchant fees. This money goes to the bank to allow consumers to use their cards to make purchases. Although merchant fees are small, they can quickly add up over time. Entrepreneurs should take these costs into consideration prior to allowing customers to use plastic.
Remember that setting up credit and debit card machines costs money as well. You will need to factor the equipment into your budget in order to manage your finances accordingly.
When it comes to bookkeeping, allowing credit and debit card transactions can be more trouble than it's worth. It will be more difficult to keep track of your finances if you are allowing a number of different types of transactions to run through your business. Entrepreneurs who are intent on hosting multiple types of payment at their company are encouraged to consider hiring a financial manager to keep track of their costs and revenue.
The SBA says that the bottom line comes down to the fact that you will need to spend additional money in order to reap the benefits of allowing plastic. It may also give you more to do in terms of staying on top of your finances.
Although it can be difficult to grasp the concept of spending extra money, many entrepreneurs have learned to view allowing credit and debit card transactions as a necessary expense. More consumers are beginning to assume that these types of payment will be offered anywhere. Failing to provide this option may deter certain customers from doing business with you.
Before jumping the gun and choosing to provide this opportunity to your client base, run down the pros and cons to operating a cash-only business as well. First, requiring consumers to pay cash can make sure that your small business immediately receives funds. Credit and debit card transactions often have a waiting period before the money makes it into your account.
Because cash is a simple payment method, it requires less book keeping. This can be especially beneficial to amateur entrepreneurs who have yet to generate enough revenue to hire a bookkeeper.
There is also a limited risk of fraud by avoiding credit and debit card transactions, according to the SBA. As a business, you will already have to put in an effort to make sure that you do not accept fraudulent forms of payment, such as counterfeit money. Rejecting credit and debit cards can reduce the stress on you to keep up with potential fraud.
By keeping your business cash-only, you can also avoid all of the merchant fees tied in with plastic transactions. This can cut back on your overall expenses over time.
Being a cash-only company may deter customers without money on-hand from making transactions, but this is a risk that entrepreneurs have to be willing to take in order to avoid additional spending. Whether you choose to accept credit cards or avoid them altogether, you will be confident in your decision by weighing the pros and cons. Understanding how certain payment methods can affect your business can help you avoid financial mistakes in the future.
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