In business, what is the best form of payment. If you guessed cash then you are right. We now live in a society that doesn't always carry cash. I for one, am one of those people. I use my debit card for most purchases even to pay my bills. It has become just like the postal service vs email service, instant and easier. But the fees, we as bank customers often do not have fees unless you use your card obsessively or you over draw. That is the draw for consumers, most banks offer free checking with debit card. So who pays for all of the fees the bank has to pay to use the service. You guessed it, the business.
I am ready to expand my business again and I am having several reservations about what is my best options. I have been researching for months since that is what I do. Lots of research then choosing the best option. Only with this, I do not feel which is the best option, it is like choosing the lesser of two evils. Accepting credit/debit cards will increase my expenses most definitely, but will the additional sales be enough to cover the cost. I turn away a handful of people by currently not accepting cards but is it a $5.00 sale or a $100.00 sale. As a new business owner you always have overhead and competing with giant retailers on prices can make the extra expense a challenge.
I personally wish to expand my sales online and I need some sort of payment option other than mailing me checks or money orders. Checks themselves are another story. I tried to explain to my Girl Scouts last night that someone can write a check even if they do not have the money in the account to cash it. The process does catch up to them eventually but they can write several checks before that happens. I have been lucky that I have not gotten very many bad checks in the last 6 months of business. If you accept debit/credit cards you can avoid accepting checks by using the card and save yourself the returned check fees and loss of product. It also makes processing items online much easier.
Thanks to my support system, I can understand the fees involved in credit/debit processing. First thing to decide is to buy or lease a machine. Benefits to lease is if machine breaks they replace at their cost but you pay more in the long run and if you cancel your contract with them you are still obligated to pay the lease. A benefit to owning a machine is you pay a lot less for the machine but payment is due at one time. Over a period of time your machine may become obsolete and break and the expense if your to replace. The interest rates seem to be about the same for each service regardless.
Now that you have decided which option works best for you, a few other things to think about are your rates promotional and when do they expire? What fees occur each month regardless of sales volume? What is pricing strategy? It can be fixed or tiered. Do you accept American Express and what are rates for reward cards? Both have larger expense and may delay your settlement money. How much is application fee? If you own your machine, how much to reprogram? Is customer service available 24 hours 7 days a week. How long is down time if something is broken and needs replaced. How long does set up take? How much is application fee? How much are monthly fees from service provider, and Visa/Mastercard? Next question is security, there are a lot of fines if someone steals information from your service. They are enough to put a small business out of business. Some service providers carry insurance at a monthly fee to cover you in case this happens. You have heard it before I am sure, sometimes you get what you pay for.
Another option companies can now offer is gift cards. If you use their service they can sell you so many personalized gift cards for your location. May save the hassle of gift certificates in accounting for you.
Some companies offer a no contract fee but rates are higher. This may be an option if you just want to see how things go. Always ask about cancellation policies and have all your questions written in writing from the service provider. After you seen and double check the forms, you can decide if this works for your business. With all business decisions, there is risk. I need to decide if this is a risk I want to take to have opportunity to expand into bigger things.
The quote I want to end this with today is,
"Anyone who has never made a mistake, has never tried something new" Albert Einstein
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