Accepting credit cards is key to growth, says study
A new study called "Get Growing," which leverages data from AOL, Business News Daily, Intuit and the Small Business Administration, suggests a number of small retailers are missing out on pivotal sales by not using point-of-sale (POS) terminals that can conduct credit card transactions.
The majority of smaller retailers accept cash (82 percent) and checks (86 percent) as a means of collecting payments from shoppers. While many do accept credit cards as well, it is still not as common as either of the other two payments at smaller retailers, which means they may be losing sales to customers who prefer credit cards.
Moreover, credit card users are a lucrative market to tap, according to the report. Credit card users spend 50 percent more than cash users, which means the processing fee – the reason many business owners don't accept credit cards – will be easily covered by these new sales. There are other benefits to accepting credit cards, such as making more sales, getting paid faster, reducing bad debt or no payments and making upward of $20,000 more per month.
Sixty-one percent of retail merchants who recently began accepting credit cards say they no longer lose a sale when people don't have enough cash to buy their products or services. Additionally, 51 percent said it was relieving to know payments will go through.
"Small businesses still commonly rely on cash and checks for payment, which are reliable and free forms of payment for the most part," the report explains. "Problem is, by not accepting credit cards, these businesses stunt their growth potential."
"Cash is still a standard, but card payments are becoming increasingly popular … businesses may lose customers in the future if they don't start accepting credit cards," the whitepaper concludes.
Consider a POS upgrade
While credit cards are a good start, retail merchants should consider other POS upgrades as well. For example, mobile payments are beginning to gain traction, particularly as smartphones become more popular among American consumers.
In fact, a recent report from PEW Research suggests eight years from now, mobile wallet services could become just as mainstream as traditional payment types.
"By 2020, most people will have embraced and fully adopted the use of smart-device swiping for purchases they make, nearly eliminating the need for cash or credit cards," the research added. "People will come to trust and rely on personal hardware and software for handling monetary transactions over the internet and in stores."
