Plastic is a popular payment option for most consumers. conducted a study to prove it. In 2014, they found that 40% of Americans carry less than $20 cash on a daily basis. In addition, 9% carry no cash. This leaves the checkbook (not always accepted) and debit or credit cards to pay for goods and services. In fact, the Federal Reserve says 60% of consumers will go for their card before cash when completing a transaction.

Think about who your customers are. If men are your primary demographic, they may be more likely to have cash on hand than women.

Where are you located? If you’re in South Dakota, did you know that midwesterners are more likely to carry cash compared to those in the West?

Whether you choose to offer the option to swipe or not, make an informed decision. Jodie Kannas, Assistant VP and E-Services Administrator for Plains Commerce Bank lays out the pros and cons of your conclusion.

Pro: Sell More

The ability to buy now and pay a bill later may mean your customers will buy more. The end result? Your business may achieve higher sales volumes! Having a credit card option can also encourage those who don’t carry cash to buy.

Con: Pay More

Depending on your merchant contract, you’ll pay different fees. Before you jump into a contract, be sure you comprehend how you’re charged for processing. This is where it pays to ask questions and shop around.

Some business owners also want to know the difference between fees for debit and credit card transactions (i.e., Visa® debit card versus Visa® credit card). With some contracts, card companies may charge the same amount for processing credit card and debit card payments. Sometimes our team at Plains Commerce Bank helps our business customers with their merchant statements. We tend to see merchant accounts with fixed-rate pricing (where debit and credit rates are the same) and component pricing (interchange pass through—the company discloses how much you’re paying, for what, and to who). Depending on the card type, you’ll have different rates.

As an owner, you need to determine potential fees for processing credit cards. Then calculate the extra volume you need to sell to make up for the cost.

Pro: Improves Customer Experience

Consumers like to use cards because they’re convenient. When you make shopping or purchasing services from your company easy, it’s all a part of offering a great customer experience. Say you have a boutique in town and your competitor next door doesn’t accept cards, but you do. Taking plastic could also be a competitive advantage in this situation.

Con: Means More Work

If you only accept cash, that’s all you have to account for in your books. This means less time spent managing them. If you add credit cards to the payment mix, you’ll have to spend extra time on recordkeeping. You also have a responsibility to stay up-to-date with the latest regulations and security features of credit and debit cards. This takes a conscious effort.

Pro: Reduced Security Risk

With less cash in the till, you’re less likely to be a target for theft. You can also spend less time running to the bank.

Con: Increased Liability Risk

Debit and credit cards carry some liability risks. If you accept cards, you have a responsibility to protect your customer's information. You’ll have to keep customer and payment privacy top of mind. This includes remaining PCI (payment card industry) compliant. PCI compliance standards are in place to protect consumer data.

If you’re currently accepting credit or debit cards or will soon, stay on the lookout for Europay, Mastercard, and Visa (EMV) chip cards. This is a hot topic right now and will change the payment experience for business merchants and the cardholder.

On October 1, an EMV liability shift will take place. This shift applies to in-store payments. Chip cards generate a one-time code for every transaction. This prevents the counterfeiting of cards. According to Visa, if your business can’t process chip technology and a customer has a chip card, you’re liable for fraudulent sales.

So, what’s right for my business?

You want to be there for your customers. After all, your business relies on their patronage. Ask yourself: Do I have the time to manage more responsibilities? Can I afford it or make up the cost? Am I losing customers? Weigh the pros and cons of your decision.

If you want guidance from a business banking professional, our team would be happy to discuss this subject with you.


While we offer this link for your convenience, please note that we are not responsible for the content provided by third-party websites. We encourage you to review the policies of any website prior to sharing personal information to ensure privacy and security. Any products or services accessed through this link are not provided by, endorsed or guaranteed by Plains Commerce Bank.

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