For most small-business owners, operations understandably start small and scale up over time. Unless a business hits the jackpot, this growth is usually slow for a while before it eventually takes off.

When business does start to pour in, operations often have to be completely restructured, reorganized or changed in order to accommodate the growth in the customer base. One function that small-business owners are frequently forced to reevaluate at this juncture is how they accept payments.

While cash and checks may still be sufficient for small-scale transactions, larger orders can force a business owner to consider accepting credit.

The Credit Card Dilemma

As researchers will tell you, credit cards have become the most common method of payment, regardless of industry. In fact, by 2017, it's believed that just 23 percent of all point-of-sale (POS) purchases will be made with cash.

But it can be intimidating to consider accepting credit as a form of payment for your small business—many of us assume the process is confusing, costly and time-consuming. But it might not be as challenging as you think. Contrary to popular belief, accepting credit cards is actually fairly easy. It simply requires a willingness to do some research and find a merchant service provider that will facilitate the process.

In addition, the benefits of accepting credit cards usually outweigh the drawbacks. According to the Small Business Administration, the convenience of making credit card payments is a leading factor in encouraging consumers to make “impulse purchases.” In other words, if a consumer has the flexibility to pay for something on credit, they're much more likely to make a point-of-sale buying decision. FitSmallBusiness.com reports that accepting credit cards can increase the size of a company’s average order by as much as 40 percent.

And while the advantages are great, you'll have to face some challenges, and anyone considering the move to credit should understand the possible risks and costs.

The major benefit of cash is that transactions are clean and streamlined. When paying cash, your customer gives you bills and coins, the money goes into a safe storage drawer, then it’s taken to the bank.

It’s a bit more complicated with credit cards. To purchase with credit, customers are required to give private information to the credit card payment processor. While this information is fairly effectively protected and hidden from prying eyes, there’s always the possibility of fraud or security breach. From a business standpoint, this carries inherent liabilities and increased responsibilities.

It’s also true that accepting credit card payments may complicate your bookkeeping practices. Recording will take more time, payments may be delayed and additional fees will be involved.

Credit card payments also entail processing fees. When weighed against the common increase in purchases, however, the fees are usually insignificant. If you’re searching for a credit card processing system, it’s best to shop around for low transaction fees and rates.

Understanding Merchant Service Accounts

If credit card payment processing systems and merchant service accounts are new concepts for you and your business, don’t worry. Integrating them into your business is a simple process, thanks to advanced technology and highly intuitive software.

A merchant service account is essentially a service that acts as a holding point between a customer’s credit card and your bank account. After your customers swipe their credit card, the service provider processes the information, funds are approved and the money is then transferred from the customer’s personal account to your business bank account.

Without a merchant service provider, you can't accept credit. Fortunately for businesses, there are plenty of merchant service accounts and credit card payment processing systems to choose from. Some, like Shopify, even come with mobile POS capabilities and enhanced features for on-the-go store management. 

Things to Consider Before Accepting Credit

While accepting credit card payments tends to be a beneficial move for the majority of small businesses, it’s still vital to consider the following questions before you proceed:

• What do my customers think? Before investing in a merchant service provider, consider the opinions of your customers. Have they expressed interest in being able to pay via credit? Will they be more apt to increase their purchases if credit is offered?

• What are my competitors doing? It’s always a good idea to consider what the competition has put in place. If all your top competitors are accepting credit, that’s probably a sign you need to jump on board. If only a few are, switching may be a way for you to gain a competitive advantage.

• Am I prepared for the upfront costs? There are some upfront costs associated with accepting credit card payments. While the benefits are likely to outweigh the initial costs over the long run, it’s worth considering whether you can afford it at the moment.

As technology grows and small businesses are afforded the same capabilities of larger corporations, it becomes important for small-business owners to consider their options and make strategic decisions to acquire technologies that facilitate growth and increase sales.

Are you ready to accept credit card payments?

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