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Should you accept customer credit cards in payment?

Nov 12Jeff Matthews

For some industries this question is moot.  Of course those dealing with high levels of consumer activity must take credit cards in payment.  Retailers, restaurants and online merchants would find it difficult to insist on cash and might not like to receive consumer’s personal checks.  But for merchants who have a B2B business the answer is not as clear. 

The banks and processing firms charge high fees for merchant services.  Credit cards remittances to the merchant are often subject to a 5% discount and rarely can a merchant get less than a 3% discount.  Different types of MasterCard and Visa cards are subject to varying rates depending upon the volume the merchant processes and the rewards program associated with the card.

Credit cards make sense for this latter group of merchants when they will facilitate payment from the customer who might not otherwise be able to pay.  Cards also make sense for the merchant who is strapped for cash and paying a higher rate of interest on borrowed funds.

I also believe that accepting credit cards for COD transactions is much simpler than asking delivery personnel to handle cash and customer checks.   Having the customer pay with a card that you can verify will be accepted prior to delivery is well worth the merchant fee.

Lastly, it is important to look at the customer relationship, your competitor’s practices and your pricing structure.  If you can recoup the merchant fees under your pricing policies, then why not get the fast turnaround on your funds.  If your competitor’s are willing to accept credit cards, it is difficult to not provide the same service.  Some customers are chasing rewards programs and might take their business elsewhere if they are not able to settle with a credit card.  My advice is to keep the customer, eat the merchant fees, and consider this cost when you next negotiate prices with the customer.

B2B CFO®

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