Misconceptions about processing credit and debit card transactions can be quite misleading. While due diligence is necessary to find a processing company with the right mix of services, support and fee transparency, the decision to accept credit, debit and other payment cards is one that will pay for itself in the short- and long-term.
Myth #1: Credit Card Processing Fees Eat Profits
While it is true that all card processing comes with a percentage-based fee, that reality doesn’t equal an instant loss of profits. Yes, sales cost a bit more when made with a card, but the average consumer spends 20 percent more when paying with a credit card. Since that 20 percent is more than 4 times the expected processing fees, accepting card payments is an obvious bonus for businesses.
Myth #2: Compliance Issues Add Complexity
Adopting card processing payments involves added risks. Businesses that accept these payments must maintain PCI Compliance to avoid fines and other regulatory sanctions. Of course, working with a third-party provider and offering only terminal-based card processing dramatically reduces the risks for businesses. Businesses with e-commerce sales must offer card processing to reach potential customers. Without card processing, only local shoppers can finalize a sale. PCI Compliance is designed to be relatively easy to implement, as long as a business is not also the card processing company.
Myth #3: Payments Won’t Finalize, Leaving the Merchant with a Fraudulent Sale
A lack of direct control can make it seem like a transaction is vulnerable, but card processing terminals obtain instant authorization for each sale. That means the funds are guaranteed from the moment the terminal approves the transaction and prints out a receipt.
Chargebacks are a separate issue that can happen after a transaction finalizes and money deposits in a merchant account. Yes, consumers can dispute a charge, and yes, fraud is an issue; however, appropriate data capture at the register can help businesses minimize the number of granted chargebacks. The number of chargebacks reported is also minimal, with less than 0.5 percent of all transactions subject to a fraud report.
Myth #4: Upfront Costs for Equipment Are High
Businesses have many options when it comes to obtaining card processing equipment. Mobile terminals might be available at no charge with a slim POS. Processing fees for these setups are often higher, but there is little to no upfront investment. Top-of-the-line equipment often carries a price tag of approximately $600, but inexpensive options that process transactions quickly and with little friction might cost $200 or less. Lease options are also on offer. The upfront costs can be very minimal when starting to accept card payments. It often depends on the payment processing company offering the service.
Myth #5: Setup Is Difficult and Slow
Most card processing terminals today are essentially plug and play. POS systems already have built-in features to allow for card processing, so it is often simply a matter of hooking up the equipment and arranging for processing. That means a business can add payment processing in just a few days, as soon as the accounts finalize and the equipment is onsite.
With so much consumer spending switching to credit-based purchasing, along with a dramatic reduction in the amount of cash sales, the cost of not adopting card processing is high. Customers want quick and convenient payment options, and they’re willing to go out of their way to find merchants that accept their preferred payment methods. By offering card payments, merchants maximize their chance of retaining their customer base while improving customer satisfaction.