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How do I get my company to accept credit cards?
We are a small firm that has been traditionally cash/check only. I want to start accepting credit cards, but I don’t know where to start looking. Any thoughts?
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7 Answers
I am going to take the position that you shouldn't take credit cards.
Why?
First, from reading your web site, your firm appears to be B2B oriented.
Second, if you take credit cards or even PayPal, you are giving the credit card processing firms 2-3% of each invoice. Do you want to lose that money? I find it interesting that some folks are opposed to payday lending and check cashing places that charge low income folks 2-3 percent to cash their checks but have no problem expecting others to take their credit and debit cards.
Third, it is not very likely that your customers unlike B2C customers will spend more money if they can "charge it" and have it out of mind. However, if the reason you want to take credit cards is to improve your cash flow, then I would recommend that you have their card number on hand and then charge them when the invoice goes out. Another alternative is to change your terms to 2 percent net 10 or perhaps 5.
Fourth, as business people, we should be responsible. I don't see how reducing your profit margin is in your company's best interest. Nor is encouraging people to run up their debt as many small businesses are financed with personal credit card debt. We have enough debt in our country.
Hey there, Lucas -
Great question and I applaud you for thinking out of the box.
Here are some thoughts...
Your bank is probably the first place to start. They may offer competitive rates (maybe not the cheapest), but may offer other perks. For example, I personally accept credit cards and have it through my bank (Wells Fargo). So long as I hit my own cut off time of 4p, funds are available at midnight that night. If I didn't have it through Wells, it'd be an extra day or two to receive funds.
Other vendor options are Costco (who has a fairly low rate) and Quickbooks. You may have a Quickbooks installation already and having the CC option in the software may be a nice feature. Physically where you are when you authorize credit cards may also be a factor. I do a fair amount of work at neutral locations or even in my office. A client may not have a check to which I say - no problem. I have my credit card auth through my iPhone.
Not sure what is motivating you to accept credit cards, but accept them proudly. They can improve your cash flow, ensure funds are actually good (no bounced checks) and the likelihood of a chargeback is fairly low.
To my peer comments - yes, there is an underwriting process involved and you are rated based on industry, etc. Gambling sites, collection agencies and gentleman's clubs tend to pay the highest rates for service. Physical retail outlets (i.e. you have a clothing store) tend to pay the least in fees. It's all about risk here. And yes, various cards have different rates, but you'll pay a couple of points on the discount rate, plus usually swipe or authorization fee.
Hope that helps,
Josh Nowack CPA
joshn@nowackcpa.com
The first question to ask is if there is a demand for credit card payment option from your clients, will it help with cash flow and collections? Then based on how you would take payments what would the rates be? Will you be seasonal? I have been in the industry for 9+ years and sometimes the best way to start out is with a pay pal option. No real risk to start and it may help company cash flow and increase sales. Are you losing business to a competitor that does accept credit card payments? A couple of tips....equipment does not have to be expensive, make sure you get something that is non-proprietary and you do not have to sign a long term contract. A good company will be sure enough of their rates and customer service that they will sign you month to month. Also, it's not just a single quoted rate, there are many ways to hide fees so get an explanation of how things work. Feel free to shoot me a message with any questions.
There are many, many options for you. I just set up our company to receive Credit Cards and please do your research before signing.
The rates and authorization fees you get quoted will be based on the "risk" factor of the business itself. The risk is measured by how many "refund" situations you might come across in the industry. Also the companies financials also come into play. Each card type usually has a different rate as well. So if it is a business american express that card could cost you 3.5 percent while the personal visa could cost you 1.8.
People will quote you all sorts of numbers but I could probably get you a solid quote if you could tell me what kind of business we are talking about.
Thanks,
Nate
If your are going to do business on the Internet, credit cards are obligatory. You can get a quick and dirty solution through PayPal or Worldpay. As well as online transactions, you will also be able to take payments for individual transactions.
If you are going to do any serious credit card volume though, you need to speak to your bank who will offer you a clearing service and provide you with a list of online clearing houses. If you are not going to trade online they will also provide you with a payment terminal or a virtual terminal which you can use from your computer
Links:
http://www.paypal.com
http://www.rbsworldpay.com/
http://www.cash101.co.uk
I see several good answers here and while I STRONGLY encourage you to do your own research I will also let you know that I personally have set up several merchant accounts at various businesses I've worked with.
I also have a friend who is in the merchant services business and he told me that (surprisingly) for small businesses who don't have a lot of volume, you should check out your local Costco store.
Apparently if you have a Costco business card you can also apply for a merchant account through Elavon I think. My friend said that Costco's rates were below HIS COST.
Hopefully this tip proves useful and helps get you going in the right direction.
Andrew Smith
andrew@taxqueries.com
http://www.taxqueries.com
.
I think accepting credit cards is a completely acceptable idea considering that you need to do more (like offer to accept cc) to drive business (sales and receipts). I know of several merchant service companies that I could introduce you to for some additional info.
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