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How many credit card transactions do you do in a day?
In this day and age, it is hard to find places that don't take credit cards. Even a lot of taxis are now taking credit cards. But with companies paying an average of 2% on every transaction, is it worth it? How much business do you think you would lose by not having a credit card machine?
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7 Answers
Credit cards are crucial to a businesses large and small. Too many customers have credit cards and by not offering that option, you reduce your market share. Credit cards aren't always used because the consumer doesn't have cash. Many people use them as a means of convenience or to gain rewards such as airline miles.
According to a 2010 survey, 29% don't have credit cards, which is up 10% from 2009. So less people have credit cards, but credit card holders still dominate the market place.
Yes, taking the 2% hit in fees can hurt a business' bottom line, especially if it is a small business. But will that business see and increase in sales that cancels out the fees? I've seen cash-only businesses that have an ATM in the store, so the consumer takes the hit on the fees. Some places even offer a discount for paying with cash. I've seen a trend in gas stations that will give you 10 cents off per gallon if you pay in cash.
So there are options out there, but in my opinion you can't survive in today's market place with accepting plastic.
I know personally, from a consumer standpoint, that I used to never have cash on my person, and therefore if I encountered a place that only took cash, I wouldn't go there. Just like you said, in this day and age everyone relies so heavily on their credit card/debit cards. If you take that option away, it is my belief that you simply won't get as much business. Restaurants, for example, are one business in particular that I believe this to be a vital factor, for I would simply go to another place and not think twice about it. So I would say it is definitely worth the cost.
Before I started doing this as a career, I will admit to pretty much only carrying enough cash to get me by. If a place (ex: restaurant) did not accept credit cards, it had to be an exceptional place for me to want to go there. Even then I hated the fact I had to make sure I had the cash before going there.
As to my sales experience – I recently signed an automotive repair shop. He stopped taking credit cards when he felt the fees were too high (they were – very high). However, he also admits he took a 20% loss in business. People simply do not carry the cash nor do they really want to write a check for the larger amounts. Instead they would prefer to charge the transaction and have some time to pay the bill. I realize merchants do not like the fees, but think about why McDonalds takes credit cards: It increases business.
I should also add to always pay attention to the extra "fees" a processor can add. In addition, find out how long it takes to have your funds deposited. I have heard horror stories where the funds are not deposited for 4-5 days.
Let me know if there is anything I can assist with (mosullivan@valuedmerchants.com). I do not have any expectations of you or anyone else becoming a customer. Rather I would like to assist as one never knows when he or she could use some advise as well.
Recently, I signed a couple of customers where both stopped taking credit cards. In both instances, the owners reported business was down 20-35% respectively (auto repair shop / hair salon). In both instances they directly attributed most of the decline to the lack of credit card transactions.
Simply put, a good number of people do not carry cash nor do they have checks. In addition, many are looking to for the extra days available from the time of transaction to the time the bill needs paid.
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Cash, commodities
USPO money orders
As last resort, prepaid DEBIT card for electronic transactions.
Paypal on rare occasions.
Written agreements to pay installments on time that are properly drawn up and signed.
Handshake and Word of Honor to accomplish the above without paper.
Barter
Actually, what's a debit card that defaults to account overdraw with penalty instead of declining transaction? Well it says "debit" so I'll assume that.
Actually, I think a negative loss, or increase in profits from time saved manually checking over each record for accuracy, and resolving disputes item by item.
Remember the "Some things money can't buy" ?
Some people have enough ethics to refuse bribes, for others the temptation appears too much.
http://crooksandliars.com/susie-madrak/criminal-investigation-targets-sec-at
clarification, my mistake for assuming.
In Australia I wouldn't have any problem either case.
http://en.wikipedia.org/wiki/Credit_scoring#Australia
They even calculate score with Random Forest Algorithm.
http://en.wikipedia.org/wiki/Random_forest
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