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Pros and Cons of Using Credit Cards in Business

When it comes to accepting payments for your business, there are a number of methods that you may or may not choose to accept from your customer base. It is possible that you will choose to become a cash-only business, accepting solely bills and coins as tender. Other businesses choose to accept cards only, though this is undeniably a bit rarer than the cash only option of running a business.

Businesses in contemporary times often opt to accept the newer technology methods of payment, such as Google Pay or Apple Pay. These applications link one’s debit cards, credit cards, and/or bank accounts to a payment application accessible via the smartphone. One of the most common forms of payment today is the credit card payment. It is a more debatable form of payment in terms of credibility, so to speak, as it is the only form of payment based upon monies that are not actually yet within the customer’s possession. There are pros and cons to accepting credit cards.

Pro: Major Credit Card Companies Are Reliable

While credit card purchases do not utilize real monies, they are undeniably reliable for the vendor. The major credit card companies are simply too invested in their business to fail to provide the credit that is promised by the customer. These are reputable businesses that have seen continued success since their initial advent. These businesses’ growth can be witnessed in their steadily increasing value on the stock market. Visa stock, for example, has experienced a 56% gain since the month of March 2020.

Pro: Customers Are Likely to Spend More

It is an undeniable fact that customers who spend their monies on credit cards as opposed to debit cards or cash are liable to spend more than if they did not have access to this line of credit. It is tempting to spend money that is not actually there—that is until you have to pay off the credit card bill the next month. Either way, this issue is of no concern to the merchant, as he gets paid either way. It is important for the merchant to fully appreciate how valuable credit cards can be to his livelihood, as they enable the otherwise frugal consumer to temporarily lavish in luxury through exorbitant spending.

Con: Processing Fees

It is possible that the processing fees for the credit card payment can outweigh the benefits offered to the vendor, depending upon the size of the purchases being enacted. It is a fact that many consumers do not know that for each and every credit card transaction, there is also an associated fee. This fee must be paid on the part of the merchant, while it is also sometimes chargeable to the customer.

There are credit card companies that charge both the merchant and the customer two separate fees just for using their services. Credit card companies do this quite simply because they can; the customer needs to spend and the merchant needs to profit. The credit card company is allowing both parties to do so and therefore accrues profits because of this. These processing fees can range anywhere from a few cents to a few dollars, even exceeding $3 in certain situations. This is a practice that should be avoided when possible, though more often than not it is inevitable.

Con: Cost of Equipment

Another drawback of processing credit card payments is that the merchant has to acquire the equipment necessary in order to process these payments. Prior to being able to accept credit card payments, this particular vendor will need to establish enough of a working relationship with the credit card company to purchase from them a credit card processing machine. It is possible that the business may charge an extra fee for being shipped this piece of equipment.

It is also possible that the customer might even have to pay for shipping and handling on the credit card processing machine. Should there be updates to the software on the machine that is required routinely, the merchant may have to pay out of pocket in order to update these technology requirements. All in all, the credit card processing endeavor is costly to the small business owner in a number of ways.


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