How would you like to increase your businesses’ average order size by 40% just by making one small tweak in your payment processing system? Doesn’t that sound great? The first step is to make sure your small business accepts credit card payments.
Before we dive into the details on this topic, we suggest you check out Square, a free POS system that can manage inventory, process credit cards, and track sales by item. Visit Square to learn more.
The infographic below, created by Merchant Warehouse, tells quite the story. Small businesses accepting credit cards for the first time can see an increase of their average order size by up to 40%. More importantly, people tend to spend more when using plastic instead of cash, perhaps because spending on credit never feels quite as “real” as handing over bills from your wallet.
Shoppers spend 12 to 18% more when using their credit cards, and adding mobile payments ups the ante even more.
Small businesses still lag behind the times when it comes to accepting credit cards. Intuit’s research indicates that slightly more than half, or 55% of all small businesses in America, still do not accept credit cards. When you consider the fact that additional research points to 66% of all point of sales transactions completed using credit cards, the gap becomes crystal clear: many small businesses are missing an easy opportunity to increase sales, improve service, and add to their bottom line by refusing to accept credit cards.
What’s the barrier to accepting credit cards at your small business? Is it the confusing fee schedules attached to many bank acceptance programs? If so, then you’re in luck. Now more than ever, small businesses have an incredible array of choices when it comes to adding payment methods to their businesses.
Key Take-Aways for Small Business Owners
Accepting credit cards is no longer a “nice to have” service – it’s a necessity.
- Banks are still one route to accepting credit cards, but mobile and online payment options give small businesses greater flexibility and convenience than ever before.
- Other services enable you to convert your smartphone, tablet or other mobile device into a portable credit card acceptance machine. The initial investment is minimal, and customers are increasingly accepting and even expecting such services. Restaurants, food service businesses, artisans and retailers can all benefit by using mobile payment methods.
- Services frequently used by small businesses to easily and smoothly accept credit cards include PayPal, Square, WePay, and Intuit’s GoPayment. Each offers slightly different terms, but most require the purchase of a low-cost device that connects to a smartphone or tablet, and a per-transaction fee. Your service account securely connects to your bank account to keep cash flowing from the transactions into your accounts.
- While it’s tempting to add a small amount to each transaction to cover credit card fees, customers tend to balk at paying extra for something they expect. You’ll generally make up the fees through increased orders, so accepting the cost per transaction of credit cards as part of your company’s operating expenses is a smarter move than tacking on fees to credit transactions.
According to the previously cited Merchant Warehouse article, McDonald’s saw their average order size climb from $4.50 per order to $7.00 per order once they started accepting credit cards. Such an increase looks very promising for most small business owners. With so many benefits and few risks to your business, it makes sense to add credit card payment options to your businesses’ accepted payment methods.
Want to Reduce Retail Theft and Better Manage Your Inventory? Click Here to find out how.