The term “small business” covers a lot of territory, from independent beauty consultants to home-based businesses to operations with 20-30 employees. Most small businesses don’t think twice before accepting credit card payments, but many micro-businesses might.
A micro-business is generally an independent operation and is something that can even start as a side project while working another full-time job. Some examples of micro-businesses might be a lawn care service, a pool cleaning service, a tutor, a delivery service, or a dog-walking service. Most of these services are available online and individuals can earn money signing up to do all of these things through an existing online company. The problem is, however, that company generally keeps a big slice of your income.
The truth is that almost anyone can start their own business, but the reason many do not is because it is sometimes difficult to build up clientele. What many may not realize is that one of the best ways to build up clientele is to accept credit card payments. It might seem like a small thing, but accepting credit card payments offers a number of benefits, including establishing trust. Here are 8 reasons to consider accepting credit card payments, no matter how small your business is.
- Credit cards come with built in fraud protection
When it comes to starting a business, there are some benefits to being paid in cash. Cash is untraceable, and refunds are almost entirely at your discretion. When people pay with credit cards, they have recourse if something goes wrong with their purchase. This is true of both products and services. When you are starting a new business, you are asking people to put a level of trust in you. While they may not fully trust you, they do trust their credit card companies if something goes wrong.
- You are more likely to be paid
When people have to pay cash for services, it can be all too easy to claim they don’t have any cash on them or that “the check is in the mail.” If you have already provided the service this can significantly decrease your chances of getting paid. When you accept credit cards, you are not only assured of being paid on the spot, but more likely to get paid altogether.
- You are more likely to get a better tip
Studies have shown that there is actually a psychological disconnect between paying with a credit card and the amount of money that a customer is spending. In other words, people who use credit cards are more likely to spend more money. This is also true of tipping. When a person actually has to pay you cash, they are less likely to tip well than if they just have to add a few numbers to the bottom of a receipt.
- More secure for you
If you ask people to pay in cash, then you also have to carry around a certain amount of cash in order to give them change. In addition, with cash you either have to make frequent trips to the bank or carry around larger and larger amounts of cash. Cash can easily be lost, stolen or misplaced. When you accept credit cards, the money goes right to your bank and you don’t even have to make change.
- Instills trust
While you probably run a perfectly legitimate and respectable business, some individuals who only accept cash tend to be viewed as being less trustworthy than legitimate businesses that accept credit cards. In fact, if you don’t accept credit cards, then you may not be viewed as a legitimate business at all. Credit cards establish clear paper trails and leave a clear record of money changing hands, which is exactly why some people don’t like them. You can show that you are a legitimate and respectable business and establish trust by accepting credit card payments.
- Easier bookkeeping
Even the smallest of micro-businesses will still have expenses. In addition, if your micro-business is profitable, you may be legally required to pay taxes on your income. Credit card payments help you track your income, enabling you to prove to the government that you don’t owe any more taxes than you are paying. Credit card receipts can also be entered directly into accounting software like Quickbooks, so you can quickly assess just how much profit you are actually making after you pay all of your expenses.
- You are more likely to be paid in advance
Once again, while cash may be more convenient to receive than credit card payments, it also comes with fewer guarantees. When you want to be paid in cash, you are less likely to be paid up front, since your clients will have no recourse if you don’t provide the services as described or up to your normal standards. Once you have already provided the service, it leaves you in a vulnerable position until you are paid. Getting paid up front is really the most ideal situation. Again, a credit card company puts weight in the consumer’s corner, so they can make purchases more confidently, knowing that they can receive a refund if they don’t receive the goods or services you promised them. This means a client is far more likely to be willing to pay you in advance if they can pay with a credit card than if they need to pay you in cash.
- Makes refunds easier
No matter how great your product or service is, at some point in time you may have an unhappy customer. One of the worst things that can happen to you is to have an unhappy customer start telling others how unhappy they are. It is incredibly difficult to build up a client base, so if you manage to do so, just about the last thing you would want would be to see it dry up because of one unhappy client. The best way to make unhappy clients happy is generally to offer them a refund. If they pay you in cash, it means you will need to refund their money in cash, but this may leave you no evidence that you did so. If they paid you with a credit card, then you can refund the money the same way and there is documentation proving that they received their refund.
No matter how large or small your business is, accepting credit cards has become an important part of doing business. But while most small businesses would not even question doing so, many micro-business owners might not see the benefit. No matter what size your business is, accepting credit cards is in your best interest.
For more information about accepting credit cards for your micro-business, or to sign up for a merchant account, please call (888) 924-2743 or go to Charge.com.