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Accepting credit cards – pros and cons

By Beatrice Thomas

A store without credit cards is like a pub with no beer. These magic plastics are now more common than cash.  

Sonja Kanban, a business adviser at the Small Business Development Corporation (SBDC), stresses that small business owners not accepting credit cards could put them at a competitive disadvantage.  

However, they need to be aware of the fees involved and to check first that this option is right for their business,” she says. 

The customer convenience of credit cards can also be a cost to business, depending on the financial institution and the products in use.  

Benefits of credit cards 

Increase the customer base: People are using cash less and less and expect to be able to use credit cards. Credit cards are convenient for most consumers, wherever they are in the world.    

Flexibility: Payments with credit card can be made 24/7 particularly through online shops. You don’t physically have to have your shop doors open and be there to take the money.  

Increased buying from your business: Credit cards can result in more impulse buys. When someone has only a $50 note in their wallet, they’re less likely to spend it. They’re more likely to spend past that $50 with a credit card.  

Cons of credit cards  

Fees: Make sure you know exactly what these are. You can recover fees from the customer, but you need to make sure that at the point of sale there is a sign saying what the extra charge is if the customer uses Visa or Mastercard for example.  

The Australian Competition and Consumer Commission offers guidance for small business owners to ensure they avoid passing on excessive payment surcharges to customers. 

Support: Customer support needs to be there for your credit card equipment, no matter what payment gateway you use. If your credit card machine isn’t working, you need to be confident your bank or supplier can help you fix it quickly. 

Security: There are issues around people stealing credit cards or other forged activities. In addition, there is evidence that some businesses have handed over the EFTPOS machine to the customer and they have entered stolen credit card information or inflated the sale price and later claimed a refund. It is important to secure your point of sale terminals as you may be liable for any losses incurred if you don’t.  

There are also circumstances where a customer has used a credit card to buy an expensive product from a small business and then gone to their bank and said they never received that particular product 

So, the bank has then taken the money out of the small business’s account and given it to the client or customer.  

It is therefore worth considering a limit on how much payment you accept on a credit card from one person.  

If someone comes in and wants to spend $20k in your electronics store, do you accept that? It’s a case of thinking about what the risk might be and then structuring your business process accordingly. 

Sometimes the pros outweigh the cons, so it’s good to be aware that there are some risks attached, but ultimately, for most businesses, they recognise the benefits far outweigh those risks. 

A store without credit cards is like a pub with no beer. These magic plastics are now more common than cash.  

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