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.


Essential Treasury Management Services

What is treasury management and why is it important for your business?

Treasury management is a generic term used to describe popular banking products and services for businesses and non-profits.

Treasury management, also known as cash management, allows organizations to easily control cash flow in an efficient and effective manner, while staying up-to-date with financial statements and collections. There are many tools available, and there is not a one-size-fits-all approach. Hopefully, this article be a valuable resource as you research what banking tools are best for your organization. This is by no means an extensive article, and further research should be done before deciding on your banking solutions.

What are the most popular treasury management services?

Direct Deposit of Payroll:

Direct deposit is quickly becoming the norm for medium to large organizations. This service expedites the paycheck distribution while also providing enhanced security. Instead of mailing out checks, the bank or credit union involved will electronically deposit the funds into your employees financial accounts. It is a great time-saver and should be considered by any business with employees.

Positive Pay:

Positive Pay was developed to eliminate check fraud for organizations. Your financial institution will only pay for checks that match your company profile (i.e. check serial numbers and dollar amounts). If a check written in your company name does not match up with the above criteria, then you will be alerted, or the bank will simply refuse the check depending on the type of positive pay in place.

Merchant Services / Credit Card Processing:

If you are a brick and mortar shop or an e-commerce only business, you will likely need merchant services. This service allows you to accept payments from all major credit and debit cards. It also allows your to automate reoccurring billing. Usually financial institutions offering this service will also provide point-of-sale (POS) equipment and a loyalty card program. Make sure that before you choose merchant services provider that you understand all of the fees associated with credit card processing.

Other Treasury Management Tools:

If you are seriously considering banking services for you business, you may also want to research Bill Pay, Remote Deposit, Wire Transfer, Sweep Account Services, Bill Pointe, Business Checking, and Automated Clearing House.

In conclusion, make sure that you do your research before deciding on your business-banking partner, so that you get good rates and state-of-the-art equipment and services. Also, understand that every business has different banking needs. If you are small “Mom and Pop” shop, you might not need half of the services listed above; however, if you are a medium to large corporation, it is probably essential for your organization to have the best of these services because of the security, efficiency, and reporting available.


Why Every Small Business Needs a Merchant Account

If you have a small business or even run a website on Ebay, then a merchant account may give you the ability to process credit cards and debit cards, which gives you the convenience of never having to turn away a paying customer because you can’t process their payment. There are many companies that offer merchant accounts for businesses. Below is some information on what it actually is and how you can sign up with a provider.

Why every small business needs a Merchant Account

A merchant account is essential for any company that needs to process credit or debit card payments. Not anyone can open a merchant account – only legitimate business organizations with suitable qualifications can open a merchant account. Because society is quickly moving to a cashless monetary system, you are leaving sales and income on the table if you don’t have the ability to process debit cards and credit cards for your small business – especially if you do business online!

Where to get a Merchant Account

Small business owners can get a merchant account from independent sales organizations (ISO), or member service providers (MSP), and merchant banks. Merchant banks are different than your standard investment bank because they make investments in small businesses with their own capital. ISO’s and MSP’s are licensed and accredited brokers of credit card services which maintain contracts with banks to process and handle credit card and debit card transactions. These independent companies provide various services to vendors including debit and credit card processing equipment, product sales & client service, settlement management, paper storage and other essential business services. North American Bancard for example, is a company that provides all these services.

Before selecting your merchant account provider you should confirm the independent sales organization’s credentials. A qualified ISO must be accredited and sponsored by a verified financial institution and all affiliations must be declares on all legal documents. One tip is to verify the ISO you choose is sponsored by an FDIC insured financial institution.

Businesses should also compare costs between the various merchant account providers before making their selection. But be sure to compare apples to apples and take equipment rental or purchase prices into consideration. For example some merchant account providers, such as North American Bancard, offer businesses free equipment, service and support, in addition to guaranteeing the lowest processing rates.

Processing Payments with a Merchant Account

The proliferation of online services and payment options has changed the merchant processing landscape in recent years, allowing merchants and businesses to accept credit and debit card payments online. Some merchant account providers offer online payment processing, but you find it better to go through a dedicated e-commerce site that specializes in these services.

Even with the increase in online shopping, the vast majority of payments are still accepted via a credit card terminal, similar to those you would see in a store like Wal-Mart, or your local grocery store. Credit card terminals permit clerks to slide the credit and debit cards through the terminal to read and process the transaction. Some of the more advanced credit card terminals can process gift cards, allow cashiers to manually enter credit card numbers or expiration dates, and even verify and process checks. The information is then securely transferred to the merchant bank or third party vendor via a secure phone or Internet connection.

In addition to processing credit and debit cards more quickly, credit card terminals offer less expensive rates for processing transactions and are safer for customers and businesses alike, because they reduce the need to keep credit card numbers on site and diminish the threat of credit card number theft and identity theft.

Who Needs a Merchant Account?

Almost any business could benefit from utilizing a merchant account. Whether your company is a fortune 500 company or a two person family based business, if you process credit cards or debit cards, or would benefits from accepting these forms of payments, then you can benefit from using a merchant account. Since many people no longer carry much cash, accepting credit and debit cards can be more convenient, safer, and quicker than having someone write a check, and it’s certainly better than missing out on a sale!


How to Create a Business Cash Flow Statement

Cash flow statements are extremely useful for a business to get a complete picture of all money coming into the business and all money going out of your business during a specific period of time.  When organizing your small business finances, you should create a cash flow statement annually at a minimum, but businesses of all sizes benefit from creating cash flow statements on a monthly or quarterly basis.

A common misunderstanding of cash flow statements is that it will show the same number as the “net income” from the Profit and Loss Statement.  This is not the case, because your net income on the P&L will show non-cash information, like depreciation and physical assets, and because net income is calculated from net sales – not actual cash payments.

How to Create a Business Cash Flow Statement

What Cash Flow Statements Are Used For

Business owners can rely on cash flow statements as the guideline for creating their budget.  It will show you where your income has been generated and where the money went.

If applying for a business loan, a lender will ask for a cash flow statement to analyze your ability to repay the loan.

If your business is publicly traded, you are required to create cash flow statements and follow the Generally Accepted Accounting Principles (GAAP).

How to Create Your Cash Flow Statement

There are three sections in a cash flow statement which can show the net change of cash coming in and out of your business during a specific period of time:

  • Operating Activities
  • Investing Activities
  • Financing Activities

Find your beginning cash balance – how much money do you have in the bank and in hand at the start of the month or period you’re creating a cash flow statement for?  For example, if your business has $1400 in the bank and $600 in petty cash, you’re starting cash balance is $2,000.

How much money came into the business –  include all income to the business from sales and  other business activities; including payment for old debts.  If you brought in $5,000 in sales and $350 from old debts people owed to you, your total cash in for the period is $5,350.

How much money went out of your business – include all expenses and purchases.  You’ll probably have salaries, rent, utilities, supplies, loans, taxes, etc.  If you spent $3000 in salaries, $500 for rent, and $220 for office supplies your total cash out would be $3720.

Calculate the cash flow – subtract the total amount of your cash out from your total amount of cash into the business for the period you are analyzing.  In our example, you would subtract $3,720 from $5,350 for a net change of $1,630.  If you have a negative number from this calculation, your business is operating at a negative cash flow and is in trouble.

Find your ending cash balance – add the net change you just found when calculating the cash flow to the beginning cash balance to get your ending cash balance.  In this example, it would be $3,630.  This becomes your beginning cash balance for the next period.