Credit cards are a way of life in today’s world, and most businesses accept them as convenient payment for their customers. However, with the variety of credit cards available it’s not always in the best interest of the business to accept every card. Having merchant accounts can prove to be expensive, and credit card processing can wind up taking a big chunk of a business owner’s profits. When considering which credit cards a business should accept, it’s good to keep a few things in mind.
The first consideration is often for the customers. The more choices customers have for paying, the greater the chances they will patronize a business. Customers who need reward points or other awards from their credit cards will want to use them as much as possible, so accepting these cards can be an advantage. However, depending upon the merchant accounts a business has these may wind up costing a business more than the credit cards are worth. Opening merchant accounts usually means paying a setup fee, monthly fee and possibly an annual fee. Upon opening the account, a business can accept Visa, MasterCard, Discover and possibly American Express.
While these fees don’t change if a business accepts one, two or three cards it’s the transaction fees that can vary depending upon the card used. If a customer uses a premium card or one offering rewards, a merchant may get charged a higher fee. Credit card processing generally costs businesses 2-3 percent of each transaction, while some cards may have per-item fees attached as well.
American Express cards work differently than Visa or MasterCard, which can explain why so many businesses do not accept them. These cards charge merchants a much higher rate than Visa or Mastercard. Because American Express cards are seen as premium cards, most small merchants choose not to accept them because of the higher fees associated with them.
Another dilemma for business owners is whether to pass along swipe fees to customers. Customers have expressed displeasure with this, and often will not patronize a business that does so. If businesses do this, they must post a sign at the entrance and at the checkout, and are not allowed to pass along any surcharges to customers. By taking all this into account, a business owner can make the right decision as to which credit cards to accept.