Select Page

Even as point-of-sale technologies change, credit cards remain a ubiquitous form of payment. Most consumers carry at least one card to pay for planned or impulse purchases, and they expect businesses to accept plastic as a matter of course.

For a small business owner, meeting this expectation may not always be the best choice. You have to weigh the pros and cons of credit card processing before deciding whether to invest in setting up merchant accounts and getting the right equipment.

The Pros of Plastic

The majority of customers prefer to use credit cards over cash or checks, and there are many reasons why your business can benefit from this payment method.

Larger Customer Base

Only 23 percent of people use cash to make purchases on a regular basis, so not accepting cards could shut out over three-quarters of your potential market. If your business is in an area with high levels of tourist traffic, taking credit cards attracts visitors using plastic to pay for vacation purchases.

Convenient Payment Method

For the modern customer, convenience trumps everything. Credit cards are much faster than cash, checks or making a run to the ATM. You also save time when customers choose credit because the information is delivered directly into your accounting software instead of being entered by hand when tallying the books at the end of the day.

Buy Now, Pay Later

Customers are less generous with purchases when they can see the cash they use. Credit cards create an “out of sight, out of mind” situation, prompting higher spending and more impulse purchases. This can be especially beneficial for cash flow during sales when customers come without specific spending plans and buy extra items to take advantage of low prices.

Keeping Up with Competitors

Large stores all accept credit cards, and customers may shop at these better-known locations by default even if your products and services are of better quality. Smaller local competitors with credit processing capabilities can also lure customers away.


For both you and your customers, taking plastic reduces the risk of money being stolen. You don’t have to sort through and transport large amounts of cash, and customers can pay for large purchases without worrying about carrying too much money in their wallets.

Card Cons to Consider

Despite the advantages, 55 percent of small businesses still don’t accept credit cards. For these companies, potential drawbacks outweigh benefits.

Cost to Your Business

Each credit card transaction incurs a fee of as much as four percent, meaning you lose a little bit of revenue whenever customers pay with plastic. Setting up point-of-sale hardware and software, opening merchant accounts and paying for PCI compliance can set your company back hundreds or even thousands of dollars.

Potential Liability

Credit cards are more susceptible to fraud than other forms of payment, and you could wind up losing both money and inventory if a customer pays with a stolen card. Using the newer EMV processing methods for chip cards can protect you from some liability, but fraudulent transactions can still occur and put you at risk of losing your merchant account.

Money Lost to Chargebacks

Should a customer decide he or she is dissatisfied with a purchase, you not only have to refund the money but may also be hit with a chargeback fee. Chargebacks can be initiated as long as six months after the original purchase. Too many chargebacks could threaten the stability of your merchant account. You can dispute these transactions, but this requires even more time and money.

With these pros and cons in mind, research the options available for accepting credit cards at your small business. Compare fees, liability laws and compliance requirements to find a platform with terms to meet your needs.

If you decide accepting credit cards isn’t good for your business right now, do everything you can to make sales transactions and easy as possible for your customers. Since a big part of paying with plastic is the convenience and reliability it offers, reproducing these qualities can help establish a good business reputation. The option to start taking credit cards is always available should it become viable for your business in the future.