Do you accept credit cards? Do you receive a large percentage of revenue from processing credit cards? I am sure most small business owners would say yes to the first question. The second answer would depend on the type of business you run, but most owners will say that a large portion of their revenue comes from credit cards. It is always good to be up to date with every part of your business, especially when it could lead to more sales and revenue. I recognized this early on with my retail business.
The following will illustrate the credit card processing solutions for different types of businesses:
E-Commerce
If you sell any type of good or service over the internet, it is imperative that you accept credit cards. If you do not accept credit cards on your website, you will not be able to grow your business, or the business could fail. The e-commerce world is ultra-competitive, so you need to do everything you can to make payments convenient for your customers.
There are two types of internet merchant accounts: virtual terminal and weblink gateway. The virtual terminal is a good fit for businesses that have low volumes of sales on a daily basis. An administrator on the business’s side will manually verify credit card information and process orders that have come in through the website. The weblink gateway is more suited to business that have more financial resources and higher volumes of sales every day. Credit card information from each online order is automatically verified, thus making the fulfillment process shorter.
E-commerce businesses must deal with fraud related to credit cards, and this sector has been hit hard with chargebacks. Internet merchant account fees are typically higher than other types of accounts, since the provider is taking a higher risk on the possibility of fraud.
Brick and Mortar Businesses
Any type of physically located business most likely performs credit card processing. If they don’t, they are stunting their own growth. You could easily increase your total revenue by 20% by accepting credit cards. It’s not that you will see an increase in quantity of sales, but you will see an increase in the amount of revenue per sale. Studies have shown that customers spend more per purchase when using a credit card. Personally, I used a company called North American Bancard for my retail business’s credit card processing. The revenue per sale increased by about 30% when I started accepting credit cards in the mid-1990’s. I would definitely recommend this company for providing retail merchant accounts.
Contractors and Outside-Sales-Oriented Businesses
Wireless merchant accounts are the latest technological advancement in the credit card processing industry. These types of accounts process credit cards with a terminal that swipes credit cards and processes the financial information through a wireless connection. It creates a competitive advantage for people who deliver their goods and services to customers’ homes or businesses. Instead of invoicing, they accept payment on the spot, and the transaction is done. This also can improve your cash flow, since the accounts receivable turn over should, in theory, decrease, allowing more cash to flow into your bank account.
Conclusion
Hopefully you learned something new from this post. And if you did, I am happy to say that I did my job. Just remember to do your research and ask a potential account provider many, many questions.