subject: Why Take Credit Cards? [print this page] With the controversy these days over interchange fees (the fees merchants pay to accept and process credit cards), is it wise for a merchant to take credit and debit cards? Or would their business be better off without them?
One thing for sure - if all card processing does is add new expenses to a business - why bother to take them? Who wants another bill to pay? Hmmm... Perhaps there's more to the story than meets the eye at first glance...
Customer Experience
A first class, top run organization, stresses the importance of making sure their customer has the best possible in-store experience. This has always been a 'rule of thumb' for doing business - even before the economy slowed down.
Part of what makes shopping a good experience comes from feeling that the stores you like to patronize, and especially the ones you give your repeat business to, are doing all they can to meet your wants, needs, and desires. Would you agree?
Two primary desires which influence our buying decisions are how easy and how convenient the experience will be. Accepting credit and debit cards as forms of payment is a simple way for a business owner to give their customers that experience.
Give Customers What They Want
Think about it... when you're in the process of making a decision, don't you decide based (at least in part) on how convenient it will be? Don't you want your purchases to be as quick and as easy to make as possible?
Who wants to go out of their way to the bank for cash, or write a check, or pay an ATM fee... when the vast majority of businesses will accept a small piece of plastic? That plastic contains a card that can instantly access a customers credit line or bank account, and it's easy to carry it with them.
A business owner who doesn't allow a customer to use whatever form of payment he or she wants WILL lose business - whether they realize it or not.
Here are just a couple of reasons why:
There will always be people who would've spent more than they did, had it been easy and convenient for them to do so. Here's why:
Let's say someone goes into your store planning to make a purchase. And let's say that while in the store they see a couple of other items they want, but they don't have enough cash on hand to pay for it. The card in their wallet - (the one you'll have to pay a percentage of your sale on to process electronically) gives your customer instant access to money they don't have in their pocket. Does this ever happen? Positively, absolutely YES!!! So, what happens if you don't accept credit cards because you don't want to pay processing fees? Will you lose sales because of it? Again - positively, absolutely YES!!!
Another way a merchant loses money is when the customer is told, "I'm sorry we don't take" (either "any" cards, or "that" card). The customer will oblige - this time, and pay the way the business owner requires. But what will go through his or her mind the next time they go shopping, and are deciding where they'd prefer going? Do you think there will be people who'll remember their experience from last time, and go somewhere that's more convenient for them? The answer is "yes"! And when that happens then once again the store loses money -- the money they would've made had their prospective customer not had to go somewhere else because it was easier for them to shop there.
Some Interesting Benefits of Accepting Cards
When you let people pay the easiest ways possible here's what happens:
You increase your customer base - some potential customers either can't or won't buy from you if you won't accept credit or debit cards (e.g., a person with only $10 cash in their wallet, who needs more than $10 to make a purchase)
You increase your average ticket size - consumers spend more with plastic than with cash (the average ticket at the point-of-sale [POS] with cash is $28, vs. the average credit card transaction of $87, or, an increase of $59. Compare a $59 higher ticket to the mere 2% or so processing fee to make the sale possible)
You increase customer loyalty - the easier you make it for people to pay for things the way they want to, or the way they're able to..., and the more pleasurable you make their "in-store-experience" (quick and easy = pleasurable), the more they'll keep coming back to reward you with repeat business
So You Make the Call!
So, based on what we've just considered, - are you better or worse off by taking credit cards?
It depends on how you look at it. If you feel that credit and debit cards are taking money out of your pocket by requiring you to pay fees every time you take one, you may not want to take them
Or, are the cards actually moneymakers, that provide your business with more revenue and more benefits than you would otherwise have?
If they give your customers the pleasurable experience they want (ease and convenience), while increasing your profits at the same time... are they really the "necessary evil" they're being made out to be?
