Why Your Business Should Upgrade from ‘Cash Only’
- May 7, 2014
Businesses that refuse to accept non-cash payments may be missing out on a significant number of sales every month. The costs of upgrading to accepting credit cards and mobile payments may seem daunting, but the long term benefits should most definitely be examined before a final decision is made.
A Reason To Stay "Cash Only"?
Why hasn't your business made the switch to accepting credit cards? There may not be a clear answer as it’s not uncommon for small businesses not to accept credit cards simply because the need to do so has never seemed to arise.
However, you may think you have a good reason for avoiding payments other than cash up until now. Accepting credit cards isn’t free. A recent article in Business News Daily details the various fees that a businesses are charged to accept credit cards, from per transaction percentages to flat fees. Of course, there’s the cost of the equipment as well.
And, businesses that accept credit cards also have the additional responsibility of protecting the data, keeping their customers’ personal information private - and secure.
Upgrading To Accepting Credit Cards
While the above information may offer businesses a compelling reason to stick with cash, there's another side to the story. The benefits of accepting other forms of payment tend to significantly outweigh any disadvantages.
Consider Entrepreneur's stance on the issue. The number of people who carry cash when they're shopping has reduced significantly in recent years. Huffington Post reports that a whopping 66 percent of all sales that are made in person are paid for with a credit card. Most people rely on their credit cards, and even people who carry cash on a regular basis would have the opportunity to make a larger purchase when a business accepts credit card payments.
Businesses need to realize that a large percentage of potential customers will be alienated if they choose not to accept payments other than cash. Volume sales often offer more opportunity than any other method of turning a profit, and two-thirds of shoppers are paying with credit cards.
Another benefit of accepting credit cards is reducing the need to worry about bad checks. The Houston Chronicle details that many merchants who only accept cash will take checks as a substitute for cash, but allowing customers to pay with a check without having any type of equipment to verify the check can be detrimental for a business if the check bounces.
If the costs of accepting payment methods other than cash is a concern for a business, there is a way to ensure that these costs are not prohibitive. Small businesses can set a credit card limit that allows the company to make money on a sale instead of losing out when a small sale turns a profit that is smaller than the transaction fee. The Houston Chronicle warns that the minimum sale amount has to be carefully chosen to avoid turning customers away. For example, companies with small bills could risk losing out on business when they set a $15 minimum when bills tend to be $10 or under.
How Accepting Credit Cards Impacts the Bottom Line
What kind of boost in profits can your business expect to see if you choose to upgrade from "cash only" to accepting credit cards? Businesses who choose to accept credit cards see a boost in revenue of up to 23 percent. Consider what a large difference this would make in your monthly sales revenue. If you currently bring in $5,000 per month, accepting credit cards has the potential to boost your sales to $6,150.
With two-thirds of all in-person sales in the U.S. being paid for with credit cards, even the smallest businesses need to start accepting the form of payment to increase revenue. Initial costs and monthly fees may seem daunting, but an overall increase in business can mean a bigger bottom line despite these expenses.