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Benefits of Payment Cards for Small Businesses

The impact of technology on the world is evident across the board. So much so that technological innovations have completely transformed even the most basic functions of everyday life. One of the most evident examples of this is developments in payment and cashless transactions.

Indeed, these developments have made transactions more efficient and more convenient for both businesses and their customers. This is especially true when you look at things from an eCommerce standpoint, as it has made making purchases easier than it has ever been before.

Now, this has resulted in massive online sales for big corporations like Walmart but how has it affected smaller businesses? To answer this question, we’ll be taking a deep dive into how payment cards benefit smaller businesses.

Along with its benefits, we’ll also be discussing what small businesses need to keep in mind when transacting with payment cards. This way we’ll be able to get the full picture in regards to how payment cards affect how small businesses operate.

Payment cards

Advantages of Card Transactions

To fully grasp how card transactions can benefit small businesses, let’s first take a look at what they have to bring to the table. From there, we can further examine how they can affect the day-to-day operations of small businesses.

Offers Alternative Payment Options 

One of the biggest advantages that card payments have to offer is choice. Making card payments available gives customers the ability to choose how they want to pay for a product or service. 

And while this may not seem like much, offering customers alternatives is a great way of enhancing the overall customer experience. This goes a long way when it comes to promoting continued patronage.

To add to this, research shows that more and more Americans are making fewer purchases with cash. Not entertaining card payments effectively locks your business out from transacting with a significant chunk of the populace. 

Being able to deliver good customer service is one of the most important things that small businesses must offer. They simply can’t afford to offer poor services, which is why it’s imperative that they cater to as many payment options as possible.

Expand Into the Digital Space

As we’ve already mentioned, payment cards allow businesses to expand into eCommerce. This is significant, as it effectively gives businesses access to a bigger market with more potential customers.

Businesses that fully utilize eCommerce open themselves up to a global market. This is only possible via card payments, as it is one of the more common options in terms of cashless transactions. By tapping expanding their operations, businesses lay the groundwork for growth.

By extension, this also prepares a business for the future. This is especially true when you consider how fast the world is shifting to eCommerce, as seen in the industry’s 20% growth in 2020 alone. 

And while eCommerce won’t replace brick and mortar stores, it’s something that can no longer be ignored. In fact, small businesses that pivoted to eCommerce saw record-breaking sales numbers in 2020. This just goes to show how useful this medium can be for small businesses.

Efficiency is Key

One of the biggest selling points of card payments is its efficiency. This is true for both online and offline transactions, as paying with a swipe of a card is infinitely faster than having to go through the motions of cash transactions.

Online transactions are particularly efficient. So much so that sites have even offered a one-click checkout option. Anything anyone could ever need is now literally just a click of a button away.

Now, small businesses may be dissuaded from card payments due to the fees attached to them. And while it is true that processing payments will cost businesses money, it will be worth it in the long run considering how much time and resources will be saved by streamlining transactions.

Reduced Risk

Cash businesses always carry risks, as they can be vulnerable to things like theft or other occurrences that can jeopardize the cash. Card payments reduce this risk, as there will be less cash in the physical premises of where a business’ day-to-day operations are conducted.

While this may seem negligible, theft or burglary is actually pretty common when it comes to small businesses. In fact, 9% of 1,002 small business owners that were surveyed say they’ve fallen victim to either burglary or theft. 

Pay By Card

Factors Small Businesses Need To Keep In Mind

Indeed, card payment technology can be quite convenient but it is far from perfect. Accepting card payments also come with a few caveats that small business owners have to keep in mind. 

Now, this isn’t meant to dissuade small business owners but it’s best to get the full picture to better prepare your business to accommodate card transactions. Here are a few things you have to keep in mind when accepting payment cards.

Declining Usage

You’ll have to consider who your customers are and the market you’re catering to in regards to card payments. This is because a decline in credit card use has been observed in certain groups that could prove to be significant depending on the industry that the small business belongs to.

Surveys have found that only one out of three millennials carries a credit card. This means that people age 18 to 24 are more likely to pay with cash and should be something a small business considers when making decisions regarding card payments.

Additional Fees

The fees attached to card payment transactions should also play into a small business’ decision on payment cards. While these fees are reasonable, the number of transactions a small business is involved in should dictate the practicality of card payments.

Depending on the size of a small business’ operations, the fees could really eat into their revenue. This becomes an even bigger problem if card networks decide to raise the card fees. 

This was the case when Visa was planning a change in its card fees that would have cost merchants $100 billion a year in fees. This is something that small businesses have to monitor closely in order to make the necessary changes and adjustments.

In some cases, businesses will also need to acquire a merchant account to accept card payments. Some merchant account service providers will charge businesses a fee for supplying a business with hardware that will be used to process card payments. 

This is especially true for small businesses that are looking to branch out into eCommerce, as they’ll need to avail of a merchant account to receive payment for their products and services.

If you want to know more about these fees and merchant account service providers, we have a comprehensive discussion on payment processors on ProcessingCard.

Growing Threats

While card payments reduce the risk that comes with cash businesses, they also introduce new risks and threats that can jeopardize your business. This becomes even more evident when you consider the billions that are lost in fraudulent transactions.

In fact, global payment card fraud losses reached a staggering amount of $28 billion back in 2019. Fraudulent transactions hinder businesses as they’ll need to handle the disputed transactions, in some cases even refunding the amount to the consumer.

How Payment Cards Can Help Small Businesses

Payment cards can be quite beneficial for small businesses when implemented correctly. They give potential customers more options when it comes to payments, effectively making for a more convenient and pleasant customer experience.

Payment cards also allow small businesses to expand into the digital space, giving them access to a broader market. This goes a long way when it comes to leveling the playing field and is one of the most cost-effective ways to grow a business.

With that being said, there are certain things small businesses have to consider when accepting payment cards. Choosing the right merchant service provider is vital, as the fees could really eat into the revenue of a business if the service provider isn’t a good match for the business.

Small businesses also have to take the necessary precautions to protect their customer’s data, especially when they’re expanding their operations into the digital space. While eCommerce can be fruitful for small businesses, they must always be wary of fraudulent transactions.

Given all of the information stated above, should small businesses make use of card payments? Unfortunately, there is no catch-all answer to this question. While card payments do yield certain benefits, this will all still depend on a small business’ current situation.

If a small business sees a high volume of transactions or if a high percentage of their customer base makes use of cards to pay, then by all means make use of card payments. However, if a business chooses to operate on a smaller scale then card payments may not be necessary.

We hope this discussion on the benefits of payment cards for small businesses has answered any questions you may have on this subject. If you think we missed anything or if anything is unclear, don’t hesitate to let us know in the comments below!

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Lynne Huysamen

Mommy to a pigeon pair, blogger and online marketer. Lover of chocolate, good books and buckets of coffee.

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