Question

Why is it generally beneficial for a business to accept major credit cards as payment for goods and services even when the fee charged by the credit card company is substantial? And what type of costs do businesses avoid when they accept major credit cards as compared to handling credit sales themselves? Think of a business of your choice,  Consider yourself running a business of your choice. Tell everyone what business it is, and how t do you think accepting credit card sales would affect your business? You could discuss the risks and benefits of accepting credit card sales in multiple facets, including the effects on the customer base, cash flow management, and your relationship with your bank, etc..

Answer 1

BENEFITS OF ACCEPTING CREDIT CARD SALES

• Accepting credit cards legitimates the business.:By displaying the logos of the credit cards you accept at your POS register or website ,you grab cardholder's attention and give them a sence of trust in your business.
• Accepting credit cards can boost sales : When you take your business from a cash only operation to one accepts credit cards ,your potential customer base broadens significantly.
• Accepting credit cards helps level the playing field with your competition:Your competitors are already accepting credit cards and when you also start a new competitor entered in to the market structure .
• Credit card encourage impulse buying :Shoppers like being able to complete the Transactions quickly and easily without having to write a check or run to the ATM ,which limit their expenditure to their available funds .
• Accepting credit cards can improve your cash flow:Credit card transactions are processed electronically and settled quickly ,with proceeds quickly deposited in to the bank account
• Accepting credit card is crucial if you do business online :
• Accepting credit cards eliminates the risk of accepting bad check.
• Credit cards are convenient for customers
• Accounting credit cards is a relatively inexpensive business expense.
• Getting set up to accept credit cards is quick and easy.

RISKS OF ACCEPTING CREDIT CARDS

• Fees: Most payment gateways require initial setup fees as well as additional credit card processing rates .
• Extra Work: Adding credit card payment options also mean extra bookkeeping .
• Fraud and security: Adding credit card and debit card options increase the risk of fraud and other security issues.