The following content is sponsored by the Small Business Payments Alliance.
The ability to accept credit cards has become not just a convenience but a necessity for businesses, especially small businesses working to compete against the largest mega-stores. Whether you operate a local bakery or a yoga studio, offering customers the option to pay with credit cards can significantly improve your bottom line and overall business growth. Customers prefer the convenience of cards, and business prefer the ease and expediency card transactions have over cash.
Unfortunately, some in Congress are making arguments better suited for the last century. A bill currently under consideration in the United States Senate, the Durbin-Marshall credit card bill, would force government mandates onto small businesses and threaten the security, access, and benefits of the electronic payments system.
The bill is being pushed by the nation’s largest corporate mega-stores and would come at the expense of consumers and small business owners – even as study after study clearly shows that small businesses earn greater income when customers use credit cards.
Credit card transactions guarantee payment and avoid the costs and risks associated with cash. Credit cards reduce the chances of counting errors that are common with large amounts of cash, not to mention the issues with storing, transporting, and safeguarding that cash. A day’s worth of credit card transactions will never be entirely dependent on an employee safely making it to a bank in time for a nightly drop off. In fact, the cost of processing cash payments can add 10 percent to overhead costs for a small business.
Small businesses earn greater income when customers use credit cards. When a merchant begins accepting card payments, they experience a 10 – 15 percent increase in average transaction size. A typical small business will earn 220 percent more on an average credit card transaction compared to cash. Debit and credit card transactions are two to four times larger than cash transactions, and the size of an individual transaction typically decreases when a consumer uses a payment form other than a credit card. In 2022, credit-card purchases averaged $95 per transaction compared to an average of $39 per transactions for cash purchases.
Credit cards also create opportunities for small businesses by granting access to e-commerce and mobile commerce channels, which are growing rapidly as more and more customers take advantage of online purchasing. Digital transactions are widely accepted by small business and are attributed to helping them grow and manage the business in a more effective way.
In addition to the enhanced safety and security, credit cards provide a host of advantages for small business owners. According to consumer surveys and new research conducted over the first quarter of 2024, credit cards remain a top funding source for small and medium-sized businesses. Credit card rewards programs were also cited as the top borrowing tool for unplanned costs.
Access to credit cards helps these businesses lower their operating costs and finance major purchases, such as travel, inventory, and accommodations. Rewards programs, such as cash back, give small businesses access to funds they can then use to re-invest in their businesses or give back to their employees. Customers also benefit from secure and efficient transactions, including enhanced fraud protections.
Credit cards are a valuable source of financing for small and medium-sized businesses. Numerous surveys have found that credit cards, particularly those offering rewards, are consistently ranked as a top source of small business funding – above other resources such as lines of credit or loans.
Credit card acceptance is not just about keeping up with technological trends but also about meeting the evolving expectations of consumers and maximizing growth potential for small businesses. By offering convenient, secure, and efficient payment options, small business owners can enhance customer satisfaction, increase sales, and position their business for long-term success in a competitive marketplace. Credit cards are an essential part of doing business in a modern payment ecosystem – and a strategic imperative that can pave the way for sustained growth and profitability.
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