How Accepting Credit Cards Can Increase Customer Base

The day of unaffordable credit card processing is over.  In the past small businesses often found that a merchant services provider was too costly for their business to contract, due to their fees.  These fees ranged from a minimum monthly processing fee, a service fee for every swipe, and monthly rental fees.  This pushed many start-up and small businesses to hold cash only establishments.  With the emergence of e-commerce, an industry that allows consumers to shop from the comfort of their homes and pay by simply entering their credit card information into a secure server, these traditional brick-and-mortar businesses have no choice but to start accepting credit cards.  In fact during the beginning stages of the economic turmoil, the e-commerce industry posted a gain of 10.8 percent in 2009.

Although these numbers may cause one to draw the conclusion that e-commerce is going to overtake the traditional brick-and-mortar businesses, it’s wrong. Even with a 10.8 percent gain in 2009, a whopping 92 plus percent of retail transactions are still completed offline.  Americans still prefer shopping in person where they can physically see the items that are being purchased and monitor the processing of their credit/debit cards to ensure no fraud is taking place.  Many Americans still do not trust putting personal information on the internet even if the site is proven secure.

Shopping In Person

It is a proven fact that online sellers can offer a lower price to consumers and that they are more effective.  But this leads us to question why they only hold roughly 8 percent of retail sales.  If we American consumers are as shrewd as some say, wouldn’t we always be looking to the internet for better deals?  Especially with sites like Amazon and Overstock offering us basically anything we could ever want for a discounted price you would imagine that e-commerce would account for more than 8 percent of retail sales.  After all an over whelming amount of Americans (about 80 percent) have access to the internet on a daily basis.  The answer is simple: Americans are not consumers, they are shoppers.  What’s the difference one might ask?  A consumer purchases a service or a good because he/she needs it.  Yes, a shopper does do the same but there is a major difference.  The shopper enjoys the activity.  They get pleasure of going shopping, trying on new clothes, and conversing with salesmen.  To many Americans shopping is a hobby.  This claim has been backed by poll after polls.  Americans enjoy shopping, and would prefer to physically do the shopping to ensure everything is the correct; whether that is the fit of an article of clothing or the use for a good.  Who likes ordering a shirt online, waiting 5-7 business days for deliver only to find out the fit is wrong and it needs to be sent back for an exchange?  In instances like this it may take up to two weeks before you can actually wear the shirt you purchased.  Compare this to physically shopping in which one ensures the fit is right before purchasing and has the opportunity to wear it on the same day.

Credit and Debit Cards

Few modern businesses can survive off of a cash only check out policy.  Sure every neighborhood has those ma and pa nooks that have been around since what seems like the stone ages that are cash only, but they are already established and the customers going there already know that plastic is not an acceptable form of payment.  This is not the same when it comes to shopping.  Customers expect stores to cater to their wants and needs and in the end, want a pleasurable shopping experience.  If their experience is not pleasurable they will go elsewhere.

So why do some stores refuse to accept credit and debit cards?  In order to be able to process electronic transactions, a merchant service account must be obtained. These accounts are offered by banks and other authorized financial institutions, and they charge fees for each swipe of the card.  After the customers’ card is swiped the merchant service provider will either approve or deny the transaction.  When it is approved the provider will send an electronic bill to the cardholders company.  Once the necessary funds have been remitted the provider will transfer them into the merchants account with a fee deducted from the total deposit.  This process can take a few days.

Why are they Necessary?

If you want to see your small business grow, or your startup businesses succeed it is extremely necessary to accept plastic as a form of payment.  Six out of ten purchases are paid for with a credit or debit card.  Cash accounts for less than thirty percent of retail transactions, and that number has been steadily dwindling for the latter part of sixty years.


The main reason companies and businesses remain cash-only is they do not understand the fees associated with these accounts. Yes it is true that when a customer pays with plastic the merchant will receive less than if that customer paid with cash.  This is just an unavoidable part of this industry.  Providers charge transaction fees and discount rates on every single purchase.

However, when these payments are being made in person, the merchant is charged with lower servicing fees.  This is because the threat of fraud is at its lowest when a payment is made with a credit/debit card in person.  By simply choosing to accept credit cards a business’ customer bases grows as you provide more options of payment and create a more enjoyable shopping experience for all customers.

By High Yield Savings Accounts

The founder and editor of with a passion for personal finance and experience in the financial industry.