Small Business Credit Cards

Does Your Business Need a Merchant Account?

Written by Chris Martin for Gaebler Ventures

One of the choices you must make as an entrepreneur is whether or not to accept credit cards as a form of payment. To help you resolve this issue, here are some myths associated with credit card processing.

As an entrepreneur, you have to make dozens of important decisions that will affect the way your business operates.

In many cases, you must weigh the costs of a given product, service, or approach against its likely benefits to your endeavor. This cost/benefit analysis applies to your marketing, shipping, networking, and accounting, functions of your business as well as many others.

One of the choices you must make is whether or not to accept credit cards as a form of payment. You may be wondering if the added costs and infrastructure investment associated with a merchant services account will be worth it to you in the long run. To help you resolve this issue, here are some myths associated with credit card processing.

Myth: People don't use credit cards that much.

In decades past, this was often the case. Generally speaking, consumers used cash or checks for their daily purchases and kept credit cards for high-dollar transactions. But today, credit cards are the preferred form of payment for many people for a number of reasons.

- Many individuals do not like to carry much cash on their person for fear that it will be stolen or lost.

- Individuals know that businesses commonly refuse personal checks because of the potential for forgery and fraud.

- Many entities operate rewards programs which allow customers who use credit cards to redeem "points" for free or discounted air travel, products, meals, or other services.

- Individuals know that if their credit cards are stolen, they usually won't be held responsible for the illegal charges made by the thief.

Myth: Merchant accounts will adversely affect a business's bottom line.

You may be focusing on the startup and operating costs of acquiring a merchant account. But you should also consider the effect this decision has on your revenues. Refusing to accept credit cards may keep expenses down, but it may also chase customers away who prefer to pay with a credit card. This lost business will definitely cut into your bottom line.

Myth: Merchant account costs tend to balloon out of control.

You may have heard horror stories from fellow entrepreneurs about how a merchant services provider was vacuuming funds away from their revenue streams. But in reality, you can minimize credit card processing costs in numerous ways, including:

- shopping around for a merchant account that best suits your business model
- understanding the fee structure and penalty surcharge conditions
- closely monitoring your account on a regular basis
- taking proactive measures to reduce or eliminate chargebacks

Myth: Accepting credit cards is too much of a hassle.

In fact, today's processing equipment is so user-friendly and technologically advanced that it makes credit card transactions as simple to conduct as cash or check transactions. Plus, credit cards funds are deposited directly into your bank account, eliminating the need for you or an employee to drive to a bank to deposit cash or checks. In addition, most merchant services providers have excellent technical support networks which can be accessed anytime via telephone or computer.

In short, for most types of businesses, there is no reason why you shouldn't accept credit card payments. The initial setup process may require a few weeks, but once the system is operational, it will usually function with a minimum of oversight. With so much potential revenue at stake, the decision to obtain a merchant services account is one of the most pivotal choices that any entrepreneur must make. So be sure to choose wisely!

Chris Martin has been a professional writer for the last seven years. He is interested in franchises and equity acquisition.

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