Benefits of Accepting Credit Cards

Credit cards are increasingly becoming Americans' payment method of choice. According to the 2008 Study of Consumer Payment Preferences, conducted by BAI Research and Hitachi Consulting, 41 percent of shoppers say they have cut down on their use of cash over the past two years. And 97 percent of these respondents said they are opting for credit, debit and gift cards instead.

If your firm is not yet accepting credit cards and logging the transactions with your business finance software, there are plenty of reasons why you should consider it. For one thing, credit card purchases are the bread and butter of most online businesses - so it is a great way to increase web-based sales.

Even if you run a bricks-and-mortar shop, your sales are very likely to rise if you start accepting plastic. Various studies have suggested accepting credit cards typically increases a business' sales by at least 30 percent, with some research claiming sales can double.

Here are some additional benefits:

Credit cards encourage buying

Paying by credit card makes buying an item or a service very easy. Customers will appreciate being able to complete transactions quickly and without fuss. And the simpler it is for someone to make a purchase, the more likely they will be to do so.

The ease of credit cards can also facilitate impulse purchases. Studies have shown that people tend to spend more - and make more frequent purchases - when they are using plastic rather than cash.

Consumers like the flexibility of credit cards

It's all about choice and flexibility. Whether or not they ultimately decide to pay by credit card, customers appreciate having the option.

Some people use credit to manage their personal cash flow, spreading payments out over the course of several months. Others regularly use a particular card because it offers them some form of reward, such as air miles, gas points or cash back. These customers will be more likely to do business with you if you accept credit cards.

An added bonus is that by adding a payment option, you do not risk alienating any existing customers. Essentially, you can retain those who like to pay with both cash and credit, while opening the door to those who only use plastic.

People tend to spend more with credit cards

As was previously mentioned, people using credit cards often spend more than those using cash. Credit cards also facilitate the purchase of big-ticket items that people want to pay for slowly over time. This can be a big incentive to spend - and more money to be recorded with your business financial software.

Credit card payments can increase cash flow

When someone pays by credit card, the funds usually flow directly into your firm's bank account from your merchant account provider within two to five days. Compare this to the often months-long process of billing a customer and waiting for payment. The cash flow benefits of the credit card payment process can be captured with your business finance software.

Credit cards payments can make your life simpler

Similarly, when credit card payments are deposited directly into your account, it removes the need for you to go to the bank, create and print invoices, and deal with bounced checks. When you begin accepting credit cards, you may notice that your level of bad debt diminishes.

You can reach a wider audience

One benefit of selling products on the internet is being able to market to people living across the country - and across the world. In fact, credit card transactions make the process of selling an item to a customer in Scotland as easy as selling to someone who lives down the street. Automatic currency conversion makes international purchases easy for both the seller and buyer.

Credit cards encourage trust

People tend to trust companies that accept credit cards. Some customers may associate the acceptance of a structured payment system as a sign of legitimacy or believe it identifies an established business.

Your competitors are probably doing it

Chances are most of your competitors already offer customers the option of paying by credit card. If people are given the choice of buying a product or service from two vying businesses - and one accepts credit cards - this factor could be enough to sway them. Not accepting credit cards could put you at a competitive disadvantage.