Accept Credit Cards or Lose Business

Q: Should I accept credit cards in my business?

A: Absolutely--unless you enjoy losing business to the competition.

Let's face it: We live in an age of plastic. And unless you're prepared to accept Visa, MasterCard, American Express and most flavors of bank debit cards, you face an uphill battle persuading all but your most loyal customers to pay with checks or cash.

Margaret Prusan presents four reasons an entrepreneur might want to reconsider a decision not to accept credit cards. She's the CEO of Illumin, a firm in Maplewood, N.J., that provides consulting, workshops, networking and resources to women-owned professional and service businesses.

• Perception. Accepting only checks creates the impression that you're a mom-and-pop shop, not a cutting-edge company.
   
• Commitment. Letting customers pay with a credit card creates a way for them to commit immediately to your product or service. This is especially important when selling online, where prospects can click over to a competitor's site in a matter of seconds.
   
• Ease of Use. It's much easier for customers to reach for their credit card than it is for them to write a check, find a stamp and drive to a mailbox. That's doubly true of a shopper who has already supplied his credit card information to an online payment service such as PayPal.
   
• Recurring Fees. If you provide a service that requires customers to pay on a monthly basis for fees, dues or subscriptions, accepting credit cards lets you set up recurring billing and charge customers automatically.

Of course, accepting credit cards has its drawbacks, too. The initial setup can be complicated, and credit card companies typically deduct a small fee for each transaction (from 1.5 percent to 3 percent) in addition to statement fees, internet gateway fees (if you accept cards online) and other fees charged by the credit card processor.

Merchants with too many chargebacks (cardholders demanding a refund of the money they paid for the products or services they purchased) may lose their ability to accept credit cards.

"But even with the fees and headaches, the advantages of accepting credit cards outweigh the disadvantages," Prusan says.