I have heard many people complain that some small businesses and service providers do not accept credit card payments. It may be difficult to understand why a business would not elect to allow payment by credit card when it is such a convenience to the consumer (and likewise, often times, annoyance when not available as an option).
I DO accept credit card payments but quite honestly it is expensive; there are associated fees and I can understand why some small businesses decide against this payment “convenience”. This morning I received George Whalin's Retail Management E-Letter on this very subject. I thought it would be helpful to share the basic points with consumers too, so that when you are met with the dreaded, “Oh, I’m sorry, we don’t accept credit cards”, you have a better understanding of the possible reasons why.
Among the many issues facing merchants today is the ever-increasing costs of taking, handling, and dealing with credit and debit cards. Retailers, on average, pay out anywhere from 2% to 3% of sale fees – in addition to monthly and transaction fees. This may seem small yet those fees generated more than $62 billion to retailer costs in 2009 as reported by The Nielsen Report. Even Paypal assigns rates equal to about 2.9% + $0.30 per transaction. For a small business, that adds up to a substantial amount.
Many times retailers are charged per “swipe”. For example, if a salesperson/retailer scans a card through the card reader and it doesn't go through so they scan it again (possibly several more times). This can result in additional fees from the bank or card processor, varying among credit card processors.
Over the last two years, there have been significant increases in credit and debit card processing fees and costs. On July 1st, 2010 this will change again when two things will occur:
- Processing fees will see across-the-board increases
- 25 % of the equipment used to process these payments will become inoperable (which means retailers will need to purchase new equipment)
(Source: George Whalin's Retail Management E-Letter )
As stated previously, my business, Storibook Designs does accept payment by credit card. It is a service that I've always felt I couldn't possibly go without offering. As fees continue to increase though, I sometimes feel that business owners are between a rock and a hard place. The cost of providing this service is something that I watch carefully and come next week, when the new changes go in to effect, you can be sure that I will be looking at the charges with closer inspection to see how it affects the bottom line.How about you, as a consumer/shopper, do you find it annoying if a business does not accept credit card payments? Will you shop elsewhere if credit card payments are not allowed?
If you are a business owner, do you or do you not accept credit card payments?
I’d love to hear your feedback - consumers and fellow business owners alike!
Thank you ~ Sarah
Posts
Sarah,
ReplyDeleteI do accept credit cards although most of my retail customers still pay by check. The few sales that I have had with credit cards have been HUGE, so I think the fees are simply a cost of doing business. I would rather 96.25% of $500 than 0% of $1000 because I did not accept credit cards:)
Thanks for sharing your thoughts Laurie. You make a good point too that I did not make clear in the post > transaction fees are also based on average of transactions. This is one of the reasons some businesses require a minimum amount. Retailers get "punished" for small sales with increased transaction fees.
ReplyDeleteThanks Laurie!
When I had a retail store I did accept credit cards but now I don't. I hardly ever have anyone ask....
ReplyDeletevery interesting! now i know why there's a min amount on some asian grocery store that i go to.
ReplyDeleteI do accept credit cards. I also factor these fees into the price of the invoice. I rarely run a transaction for less than $1500. though. I believe that it is a convenience for the client, and sometimes a way to disguise the real cost of custom!!! Some Husbands just don't understand. :)
ReplyDeleteI accept credit cards, but seldom get asked. I do it as a service to those who want to use their cards, but I prefer checks, and if asked, I tell the customer I would prefer their check.
ReplyDeletemary@designsbymary.net
I continue to accept credit cards but I've noticed a big change in the last 4 months or so. I have about 40% less of cc transaction; clients are tending to pull out the checkbooks instead.
ReplyDeleteMy business has never accepted credit cards because of the associated fees. However, one of the things that I do with each client prior to starting a project is to review this policy along with other terms and conditions. I have found this approach very helpful because it opens a dialogue very quickly about THEIR MONEY. This has also been a time-saver for both me and the client. They know very quickly if the project meets their expectations. We all know that there are many clients that have no idea what custom costs.
ReplyDeleteThat is an excellent way of addressing the issue Karen; thank you for sharing!
ReplyDeleteWould I not 'shop' there? Yeah, it's annoying not to have debit/credit cards accepted, but if it's just small purchases, no big deal. I accept paypal. I don't consider myself to be like a retail store (yet?), since my work is custom - and I wouldn't expect many custom contractors to accept credit cards (roofers, carpenters, electricians etc).
ReplyDeleteThanks for your honest viewpoint Michelle. Good point too re: roofers, carpenters, electricians etc; it is true that most work by payment with check only.
ReplyDeleteI don't accept credit cards. I don't think I've ever even had a client ask! I agree that many people don't even think about the costs to the retailer.
ReplyDeleteI understand why small businesses chose not to accept credit cards, yet it disappoints me. It's so much easier for me to use a credit card, plus that I way I can track where every penny goes. When I have cash, it tends to disappear and it's not as easy to manage my spending.
ReplyDeleteI do still accept credit cards Marie because I feel the same way for my own purchases. I feel that we (businesses) are between a rock and a hard place but I right now the convenience for my customers is still outweighing that.
ReplyDeleteSarah, We too except credit cards, partly because we have many out of town clients. It's easier for them to use a credit card instead of having them send a check. Also most of the people that use credit cards, get perks and they like to use the cards for that reason.
ReplyDelete