Why Don’t More Small Businesses Accept Credit Cards
Credit and debit cards are nearly as common as cash. Nearly everyone in the USA has at least one in their wallet, including business owners. But data from Intuit INTU +0.22% shows that 55 percent of the nation’s 27 million small businesses do not accept credit cards.
According to a recent infographic from Community Merchants USA, an educational nonprofit project of the electronic payments industry, 66 percent of all point-of-sales (POS) transactions are done with plastic – credit, debit, or gift cards. That is a lot of sales for millions of businesses to miss out on. Only 27 percent of purchases are made with cash. In fact, they estimate that cash sales will drop to only 23% by 2017.
Technology is making it easier for any business to accept and manage credit card transactions. Gone are the days of complicated machinery via dedicated dialup lines. Paypal, Square, Intuit’s GoPayment, WePay, and a host of others are making it simple and relatively affordable to accept cards.
So why do many merchants refuse to accept cards? The common reason is the fees, but with $127 billion being added to the economy between 2008 and 2012 through card usage, most merchants are starting to pay attention to accepting credit cards.
I was in Staples SPLS +0.51%, the office supply store, and walked by a kiosk that had both a PayPal credit card reader and a Square credit card reader for sale in the store. I don’t remember it being so accessible and so easy to add point of sales equipment to your business. Granted, this is not high-end point of sales equipment but a simple credit card reader, nonetheless it is easier and easier for any merchant to add technology to their business.
In another survey conducted by WePay, which offers an online payment mechanism to accept credit cards (not dramatically different from Paypal), found that 58 percent of small businesses are regularly asked by their customers to accept credit cards. So that tells me that many are still missing out on potential revenue by accepting credit cards. Sure, there are fees, but you can account for it in your pricing.
The argument I hear from most merchants is that it is too expensive to accept credit cards. But I have been in stores, and you probably have as well, that have a sign on the counter that says X amount will be added to all credit card transactions. Or, that there is a minimum purchase requirement. I’m not sure if that a legitimate way to process the transaction, but I see it often enough. Customers seem to understand that the cost of processing plastic is greater than cash and most seem willing to accept this cost from smaller merchants.
The benefits of accepting credit and debit cards far outweigh the cost. The various studies show that when people are given more payment options (beyond cash); they are more likely to make impulse purchases, join loyalty programs, and spend more per purchase – and that can only help your business to grow.