There are many upsides to accepting credit cards for your business. By accepting credit and debit cards, businesses can increase their customer base by 25-30% overnight. Accepting credit cards opens up the possibility for more traffic, especially through online and over the phone transactions. When businesses open a merchant account through Painless, they will have the option to select a full range of major credit cards. Here are some of the pros and cons to consider about each type of card:
Visa and MasterCard
One of the two largest credit card companies around, accepting Visa cards is a major boost to most small business traffic. More than 75% of the population relies on credit cards to make everyday purchases. Credit card user are more likely to spend higher and buy more on impulse. Visa currently has some of the lowest processing fees, as they have agreed to keep their interchange fees capped at 1.5% for the next few years on most transactions. They also offer percentage based fee plans and bulk transaction fee plans that allow retailers to predict their monthly bill and pay a set amount each month.
MasterCard is the other most popular credit card carried by consumers. They are also part of the agreement to cap interchange fees to merchants at 1.5% short term. Visa and MasterCard are both card processing networks that are owned jointly by banks around the world. As a result, their cards are subject to the individual rules set forth by the retailers and banks themselves who issue the cards. Their processing fees and structure are very similar all around.
American Express is typically seen as premium card which is more selective than either Visa or Mastercard. As far as credit card processing goes, they are independently owned and operated on a much smaller network. As a result, their fees tend to be higher than that of Visa or MasterCard, but the transactions are less likely to be fraudulent or risky. Depending on the size and type of business being operated, their fees can be as high as 2.9% of the total transaction amount, but larger businesses will receive lower rates. American Express card holders typically receive points or other rewards for their spending, so they are driven to spend more on their cards to gain those perks.
Discover is another independently owned processing network. Discover also has many international products and services which allow businesses to reach a greater market of customers. They offer many unique and specialized clubs for customers in different parts of the world and with different interests. Discover uses “acquirers” to process their fees, and allow those processing institutions to set their rates based on the type of account they are processing for. Discover is another highly selective premium credit card which typically holds higher value customers overall.
Accepting BitCoin is another option for retailers interested in opening up more payment options to their customers. While BitCoin is not a credit card, it can still be processed online. BitCoin is growing in popularity as a means of paying for services. Bitcoin is unregulated and there is a learning curve for customers to send you money. Bitcoin rates are also very low so you retain more of your money. The currency is also volatile and the Bitcoin value can go up or down in hours so its not for everyone. Its especially useful for anonymous transactions.
Overall, the addition of credit card processing to any small business is likely to draw in more customers and encourage them to spend more money. Recent changes in credit card laws have limited the amount of fees that a credit card company can charge to merchants, and has given merchants the opportunity to pass those fees directly to the customer with proper notification. With so many people relying on credit cards for their regular spending, it is the best way to reach customers conveniently.