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Accept Credit Cards: Merchant Account Benefits for Your Businessby Joseph Lizio Do you know that the average credit card balance has increased from $649 in 1970 to more than $2,800 today? Further, the average consumer holds up to eight different credit cards, gas cards, or charge cards. This increasing trend in consumer credit card spending creates several opportunities for business owners. How you might ask? It's all about leveraging future cash flow. Consumers do it and so can your business. Consumers prefer the use of plastic over cash. Cash can be burdensome. Risk of theft, constantly going to the bank or ATM, carrying around all that change makes cash, in today's fast paced world, inefficient. Plastic is easier to carry, easier to use, and if you are like me, can be used to defer payment until after the billing cycle and grace period - it's a time value of money thing as well as a convenience. Plastic can also be a great way for consumers to leverage their monthly pay check to fund their current lifestyle. Buy now when the time is right or the desire is present and pay later after the pay check is deposited into the bank. Whether your products or services cost $1.00 or $1000.00, accepting credit cards help purchasers make "NOW" decisions. As part of your sales efforts, you do not want consumers leaving your store or site to contemplate the purchase. You want them to impulse buy while the desire and the need remains extremely strong; no time to "think" about it. Termed merchant accounts, accepting credit cards usually costs around 2% to 4% of the purchase amount. For every $1 in purchases, you keep $0.96 to $0.98 of that dollar. For a $100 purchase, your business still receives $96 to $98. Further, most merchant card processing companies will provide the credit card machines at no costs and provide 24/7 customer service to ensure that your business can easily and quickly implement the system. Most companies incorporate the cost of their merchant services into their prices - small prices increases of 2% to 4% (the amount it costs you to offer credit card payments) is usually not noticed by consumers or consumer are willing to pay this small increase for the convenience of using plastic. Moreover, when customers do pay in cash, your business can pocket the 2% to 4% price increase - OR - what I would suggest would be to offer cash discounts depending on what you pay. This could even further increase impulse buying from your customers - why not, you already completed the hard part of getting them into your store or on your site - so make it easier for them to buy. Lastly, accepting credit cards as a form of payment can save you both time and money. Once batched, funds can be deposited into your account within a day or two - saving you trips to the bank and lost productivity. Accepting credit cards can also help your business obtain financing. Need money that can be used for expansion, debt reduction (personal or business), equipment purchases, working capital, or any purpose? When banks say no, business cash advance companies will usually say "YES." Business cash advance companies provide funds (not loans) based on your "FUTURE" credit card sales. The advance (again, not a loan - but an advance) is paid back with a small daily deduction from your future credit card sales. Therefore, you only pay back the advance when you make additional revenue. If you have a slow day or week, no problem as you don't have to make a fixed payment amount like you would with a loan. As you make money, you pay back the advance. Advances do not report on your credit, they do not count against your loan-to-value ratios if you do have or anticipate a bank debt facility in the future, and there are: No Application or Closing Fees, Simple, easy, and can significantly improve your cash flow and grow your business. So, why not let your business take advantage of these trends in consumer spending? Joseph Lizio holds and MBA in Finance and Entrepreneurship and has a strong commercial lending background. In his current venture, Mr. Lizio is the founder of www.businessmoneytoday.com - a site designed to help business owners find and obtain capital to grow their businesses.
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