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WHY YOUR BUSINESS NEEDS TO ACCEPT CREDIT CARDS

RIGHT FROM THE START !

By : Stuart H. Rosenbaum

It’s the end of busy week for me. Until Friday afternoon, I never made it to the ATM. I finally sent my assistant with my ATM-Visa Check Card to get some cash so I would have some cash for my Friday-night poker game—you see, the guys don’t accept credit cards for their poker winnings...pity!
The amazing thing is how I got all the way through the week without a dollar bill in my pocket. Well, it started early Monday on my trip to work and my rush to grab breakfast. A quick trip through the McDonalds drive through usually suffices, and I can now use my Visa Check card there.
Now I know what you’re thinking—what kind of guy am I? A McDonald's-breakfast-eating, high-cholesterol, poker-playing kind of guy? Thankfully, I don’t have too many habits. But I do have one that you should be interested in if you have a business: I always use my card to pay for things. You see, the trip to McDonalds is for convenience and time because I have very little time. And a trip to the ATM can be a real hassle because my bank doesn’t have a drive-through ATM!
What’s our society coming to, anyway? Who has time anymore to do the little things in life like cook breakfast or make a trip to the bank to deposit a paycheck—never happens. But here we are in the roaring 2000s, and this is the way it is for many of us. We’re a society of convenience worshippers.
I, therefore, get through the rest of the week without cash because everywhere I go now takes my card. The local 7-11 for convenience items and lottery tickets (OK, so I gamble—not obsessively I assure you) takes my card. Several trips to Starbucks for needed caffeine intake--sometimes the coffee is less than $2, and they take my card. Lunch and dinner—I use the card (In fact, if there’s a restaurant that won’t take it, I avoid going there). Gas, you bet—I use the card. Parking in the city—use the card. CDs for my daughter’s 15th birthday—naturally on the card.
Now during the same week I had some business-related expenses, such as paying for some advertising, and marketing lists—and guess what? That’s right, I broke out the plastic...this time it’s the American Express card for business purposes.
You see, if you’re in business and don’t accept the plastic, then I’m you’re worst nightmare! Let me share an experience with you that truly epitomizes why YOU NEED TO ACCEPT CARDS IN YOUR BUSINESS—no matter what type of business you're in.
Last year, I worked late one evening and decided to stop off for a quick bite before going home. I went to a new Chinese restaurant in the neighborhood. I thoroughly enjoyed the food, and when I was done I took the bill for about $10 along with my credit card to the front counter. I handed both to the cashier who promptly handed back my card, and said, “Cash only.”
As usual, I didn’t have any cash. I apologized to the cashier and the manager who was standing beside her and told them that I just assumed they accepted credit cards. They pulled a copy of the menu from behind the counter and showed me a memo written in a one-inch square box on the lower corner of the menu that read, “Cash Only.” They then pointed to a small sign on the front window that said the same thing. I, of course, didn’t notice either before deciding to dine.
Well, I thought, I have the solution. I had my checkbook with me. I’ll ask them to take a check and call it even. Well naturally, they also don’t accept checks! How inconvenient for me. So I tried to reason with the manager asking him what he expected me to do. He pointed to the back of the restaurant where he had installed an ATM cash machine. I asked, “So you want me to use that; how much is the fee?” He told me it was $1.50. My bank charges me $2 if I use a third-party ATM machine. Anyhow, you probably can guess the rest—I used the ATM machine in the restaurant and it cost me—the customer—an extra $3.50 for a $10 dinner. How many times do you think I’ve frequented that restaurant since then? You guessed it...zero. And, I won’t recommend the place to anyone either. Because, although the food was pretty good, the amount of inconvenience and extra cost for me amounted to just way too much BAD SERVICE.
US Card Payments Rising Rapidly
In the U.S. today, consumer payments made with cards is about to top 40%. That means four out of every 10 clients that frequent your business expect to be able to use their card. In 2001 in the U.S., card payments exceeded $1.8 trillion! By 2011, card payments in the U.S. are expected to exceed $4.2 trillion and grow to more than 48% of consumer payments. No business that transacts with consumers today can afford not to accept cards.
Many previously non-traditional businesses are accepting cards. Today, businesses that you never would think would accept cards are now accepting them. To name a few, insurance companies, apartment complexes, doctor’s offices, the U.S. Post Office, attorneys, fast-food restaurants, you name it.
Americans are carrying less and less cash these days because they don’t need to. When Starbucks accepts my card for $1.55 coffee, they’re making a statement to the world. They’re saying they want our business! They realize that any inconvenience they may cause their customers will cause them to lose customers. I appreciate their attitude toward customer service, even though it wreaks havoc on my caffeine addiction.
Visa/MasterCard Check Cards Change Consumer Spending Habits
The check card has changed the face of our nation’s use of cash. Until about seven or eight years ago, only those who qualified for a credit card had a Visa, MasterCard, American Express, etc. Some folks used their ATM/Debit card for some convenience purchases, however this type of card acceptance at the point of sale wasn’t as widely accepted as your traditional credit card. Then, a few years back, some genius at either Visa or MasterCard came up with the idea for the Visa or MasterCard Check Card! Wow—why couldn’t I have thought of that?
Check cards have revolutionized the card payment industry and consumer spending habits. Now, anyone with a checking or savings account can also have a Visa or MasterCard. In fact, even the folks without any type of a bank account—whether savings or checking—can have prepaid Visa or MasterCard.
Visa and MasterCard’s check card products are taking cash out of the pockets of many consumers and replacing that cash with the convenience of plastic. Look out if your business doesn’t yet accept these cards—because this trend will continue to grow. In fact check cards are the fastest growing segment of the card payment industry accounting today for nearly 30% of all card purchases.
If you’re not convinced now that your business must accept cards, consider these facts:
The average card purchase is substantially larger than a cash purchase in the same business.
Customers view businesses that don’t accept their plastic as “fly-by-night” operations or inexperienced and not well-established.
99% of on-line purchases are with a card.
Consumers are less likely to do business anywhere that their card is not accepted, and they experience the inconvenience that I have described above.
Your business has a far greater chance of attracting the impulse purchase if you accept cards.

When your business is brand new, you generally have one chance at gaining the business of loyal customers. If their first impression is favorable and convenient, there’s a great chance they’ll do business with you again and refer others. Why take a chance at losing sales? Take cards, all of them, and give your business the best chance to survive and grow.
Let me wrap up with an example of what a tremendous difference accepting cards has made for a business.
There’s a famous restaurant in San Jose, California, near my home. This restaurant is well-known for its great cuisine and it’s always packed. In addition to its great meals, this restaurant was also well-known for another facet of their business—they only accepted cash! The owners of this establishment cited that all of their customers knew they only accepted cash and they always filled every table, so why would they need to accept cards? Amazingly enough, this is what a wise salesperson was finally able to get them to look at:
Although every table was always full, they were not maximizing sales from every table because their customer’s purchases were limited to the amount of cash they brought with them. Instead of purchasing the $75 bottle of wine that could be conveniently placed on a card, the customer might settle for a $30 bottle, or the customer might skip the appetizer or dessert or order a less-expensive entrée...all because of cash limitations! Even though this establishment had many affluent customers, even the very rich don’t always carry a lot of cash.
After years of resistance and justification, the owner of this restaurant finally broke down and began accepting cards—and guess what happened? Their first month, without filling one additional table, they had more than a $50,000 increase in sales!
Trust me, take cards—your business will thank you for it!!

About the Author: Stu Rosenbaum has been in the merchant account business for over 10 years. During that time, he has seen accounts from nearly every industry. He has helped countless merchants--big, small, young, and old. He has seen the good, the bad, and the ugly. Stu is an entrepreneur who started U.S. Merchant Systems, Inc., in 1992 with two partners and $1,000. Today, they have grown this business into one of the industry's leaders. You may have read about Stu and his company in Advantage Networker and Spare Time magazines, or heard his interview on CEOCast.com. His Website is www.usms.com.

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