It’s not very common anymore, but many businesses used to require a minimum dollar amount for business credit card purchases. Ever wonder why?
Or perhaps you’ve noticed that a lot of places don’t take certain credit cards, but they take other cards without a problem. Did that ever strike you as odd?
The reasons for these subtleties of credit cards have to do with the business credit card processing arrangements that credit card companies have with businesses. And as a business owner or manager yourself, these are things that you should know about, especially if you’re considering a move to receiving payments via credit card.
There are lots of benefits to a business that can receive payments by credit card, but there are drawbacks as well. For instance, the reason why there used to be a widespread minimum dollar amount attached to purchases correlates directly to the fact that there used to be a much more substantial price attached to every credit card transaction. Every time you swiped your card at the grocery store, the store would have to pay a processing fee. When purchases made were of low dollar amounts, it simply wasn’t worth it to the store to take your card. Bet you didn’t know that.
But perhaps you did. And if you knew that, you might also know just what you can do by enabling your business to receive credit card payments. First of all, you can receive payments immediately via electronic means of communication. A client or customer can pay you over the phone, over the Internet, or even without any contact at all. Repeat clients can choose to store their credit card information with you, and thus pay you without even having to move. The speed and ease with which payments can be made using a credit card is a major boon to business.
Being able to accept credit cards is also a great way for a business to give itself a little safety in transactions. A business will frequently require a credit card number upfront so that if relations go sour or a customer fails to uphold his or her end of a bargain, the business can still get paid for the work it has done. This added level of safety could give a business just the edge it needs over a competitor.
The flip side of things is important to take note of, as well. Any business that wants to accept credit card payments should really invest some time into ensuring that a customer or client is able to keep their information safe when transacting business. With identity theft as one of the newest and scariest forms of Internet crime, sensitive credit card information is highly valuable to unscrupulous people. A business should ensure that it does everything within its abilities to keep its customer’s information safely hidden away or encrypted. Besides the shot that the business’s credibility will take as a reputable, safe place to buy, the emotional impact of knowing that one of your customers’ lives was taken over will likely stay with a business owner for a long time.
There are other intangible benefits to a business that can accept credit cards. For a small business, accepting credit cards can help to keep track of business spending and income. Since most credit card machines keep detailed records of everything that passes through them, it’s easy to see how much money has been swiped through a register during any given day.
A step up in professionalism is another intangible benefit that a business may enjoy when switching to plastic. A business that only accepts cash or check is sometimes seen as less professional or less ‘real’ than a business that can accept credit cards.
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