How Credit Card Processing Can Help You Grow Your Business

Credit card processing fees and monthly service charges can add up. But if you’re trying to grow your business, accepting credit cards makes good sense.

The more payment options you offer your customers, the better your chances are of making a sale, often with an increase in ticket size. Reports show that shoppers may spend as much as 20% more when they have the option to pay by credit card. What’s the underlying reason for this increase in sales? It can definitely be linked to the psychological and emotional dynamics of “impulse buying”.

Impulse Buying

Studies record several reasons shoppers are tempted to spend their hard-earned money impulsively. Among the top are:

1. SALES: Merchants have long understood the importance of tempting their customers with the notion that they’re saving money. Buyers are often swayed to purchase an item because it’s on sale NOW, whether or not the item was on their “shopping list.”  Another “sale” strategy is “BOGO” ads. Why pay for two items when you can pay for one and get the other one free! Since we are bombarded daily with ads for sales, you’d think that as consumers we’d become inured to their effects. But that’s not the case. Impulse buying is based on emotions and often the need for instant gratification, and not always on sound economic judgment.

2. VANITY: Think about it…how many times have you been tempted to buy an item because it’s in style, it’s purported to be good for you, it’ll help you get in shape, or even because your neighbor just bought “one”?

It’s human nature to want to look good or feel good. Merchants have learned to play on that emotion.

But all these psychological studies leave out another – and maybe the most important – reason shoppers make impulse purchases: BECAUSE THEY CAN. Not because they can afford the tempting item, but because they can have it now and won’t have to pay for it until later if they charge it on their credit cards.

While consumers are reacting to pretty shop displays and big sales signs, they are also being swayed by the access to easy credit and the lure of rewards for making purchases. For years, credit card companies have been competing with each other to get their share of the user’s market with all sorts of different promotions: offers of free interest, sometimes for as long as a year; rewards points that can be redeemed for merchandise or free travel; or even cash back on purchases. These incentives have fueled the rising use of credit cards. Admit it… at some time or another you’ve said to yourself: “I can’t really afford this new (fill in the blank), but I can get a good deal on it now while it’s on sale and I can pay for it over the next six months, interest free.” Or can you picture yourself in this scenario: The check comes for dinner and you tell your friends you’ll take their cash and put it on your card because you want the points! We’ve all done it. Merchants have come to rely on this behavior to boost sales, and view the cost of credit card processing as a necessary cost of doing business.

So let’s get back to the question of “Can I Afford To Accept Credit Card Payment?”

Some of your credit card processing costs will be offset by the benefits of accepting credit cards. An increase in sales tickets is just one benefit. Accepting credit cards also improves your cash flow. Electronic transactions are cleared for payment in as little as 48 hours. In some cases that means you have your money before an item even ships. And while your customer is taking advantage of “paying later” for that impulse purchase, you have your money upfront. Your transaction is settled and the money is deposited into your account on a timely basis so you can meet your business’s financial demands. Yes, you give up a percentage of your sale, but the offset is no cost for billing, no waiting 30, 60 or 90 days or more for payment, and no collections!

And you get to take advantage of the phenomenon of impulse buying. That person who was  “just looking” when she came into your store may walk out with a shopping bag full of merchandise if you can reply YES when she asks “Do you take credit cards?”