In a plastic world, you're hurting yourself if you accept only cash and checks.
By: Rosalind Resnick | 9/22/2008
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Q: Should I accept
credit cards in my business?
A:
Absolutely--unless you enjoy losing business to the competition.
Let’s face it: We live in an age of plastic. And unless you’re prepared to
accept Visa, MasterCard, American Express and most flavors of bank debit cards,
you face an uphill battle persuading all but your most loyal customers to pay
with checks or cash.
Margaret Prusan presents four reasons an entrepreneur might want to
reconsider a decision not to accept credit cards. She's the CEO of Illumin, a
firm in Maplewood, N.J., that provides consulting, workshops, networking and
resources to women-owned professional and service businesses.
- Perception. Accepting only checks creates the impression that you’re a
mom-and-pop shop, not a cutting-edge company.
- Commitment. Letting customers pay with a credit card creates a way for
them to commit immediately to your product or service. This is especially
important when selling online, where prospects can click over to a
competitor’s site in a matter of seconds.
- Ease of Use. It’s much easier for customers to reach for their credit
card than it is for them to write a check, find a stamp and drive to a
mailbox. That’s doubly true of a shopper who has already supplied his credit
card information to an online payment service such as PayPal.
- Recurring Fees. If you provide a service that requires customers to pay
on a monthly basis for fees, dues or subscriptions, accepting credit cards
lets you set up recurring billing and charge customers automatically.
Of course, accepting credit cards has its drawbacks, too. The initial setup
can be complicated, and credit card companies typically deduct a small fee for
each transaction (from 1.5 percent to 3 percent) in addition to statement fees,
internet gateway fees (if you accept cards online) and other fees charged by the
credit card processor.
Merchants with too many chargebacks (cardholders demanding a refund of the
money they paid for the products or services they purchased) may lose their
ability to accept credit cards.
"But even with the fees and headaches, the advantages of accepting credit
cards outweigh the disadvantages," Prusan says.
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