In today’s digital world, it’s hard to believe that the majority of U.S. small businesses still do not accept credit cards. Think about it, when was the last time you wrote out a check to your local grocery store? Or paid for a nice dinner with a wad of greenbacks?
Despite the rapid decline in cash payments, 55 percent of the nation’s 27 million small businesses do not accept credit cards, potentially missing out on $100 billion in annual sales. Cash may still be the most commonly accepted form of payment for small business owners, but the benefits of accepting credit card transactions outweigh the cons. If you’re thinking about starting a business or expanding your current payment options, here are 5 good reasons to choose plastic over paper.
Credit Cards Broaden Your Customer Base
Cash alternative technologies like Apple Pay are proof that money is becoming increasingly digital. In fact, 50 percent of Americans say they carry no less than $20 cash in their wallet, and 10 percent say they don’t carry cash at all. If you’re a ‘cash-only’ merchant, you’re unknowingly limiting your potential customer base. This is especially true amongst millennials, who prefer using plastic for purchases even when the amount is less than $5.
Improved Cash Flow
Not only can accepting credit cards expand your customer base, but it can also help time-pressed merchants streamline finances. Credit card payments are processed directly into merchant accounts, reducing the time and expense of sorting and transporting funds to the bank. Since funds are deposited directly to your merchant account, it also speeds up payment cycles, which leads to improved cash flow.
Enhanced Customer Service
There is no better way to lose a customer than by increasing friction at the point of sale. Accepting credit cards is not only convenient for customers, but it also improves transaction speed.
Some studies also suggest a strong correlation between payment options and customer loyalty. Customers who pay with credit cards are not only more likely to shop at your establishment in the future. They spend more. Which leads us to the third benefit, increase average ticket size.
Increased Average Ticket Size
Customers typically spend about 18 percent more when paying with credit cards. Experimental research shows that by removing cash from the equation, you encourage people to spend more. In fact, people are often willing to pay more for the same product when using credit than when using cash.
Minimized Security Risks
Keeping large sums of cash on hand is a security risk for small business owners. The less cash you have on your premises, the less attractive you’ll be to criminals and corrupt employees.
If you’re thinking about starting a business or expanding your current payment options, accepting credit cards is an excellent way to increase sales, improve cash flow and minimizes some of the risks associated with running a small business. If you’re still unsure if accepting credit cards will benefit your business, speak to a payments provider to determine how much credit cards will cost you annually, in comparison to the potential profits you could be losing by denying customers that option.