Using payment cards for your business

Many businesses accept payment by card for their goods and services, which undoubtedly offer some distinct advantages. However, there are potential drawbacks that should be considered.

Advantages of accepting payment cards for sales

• Responding to customer preferences - people expect to be able to pay by card.
• Encouraging impulse purchases - the customer doesn't need to have cash with them.
• Avoiding lost sales opportunities - if a customer leaves to get cash they may not return.
• Reaching a wider customer base - you can accept payment by phone, mail and online from customers who can't reach your premises.
• Cashflow improvements - card payments usually clear more quickly than cheques, although this depends on your merchant agreement. Funds can take up to four working days to reach a business' bank account for face-to-face sales - this may be different for online sales.
• Improved security - you hold less cash on your premises.
• Easing your admin - a regular statement of card transactions is easier to reconcile than numerous cash transactions.
• Cards can be used internationally and currency conversions are handled automatically - offering an important payment method for tourist-sector businesses or those selling to consumers overseas.
• With card payments, the customer's card is checked to see if it is valid and that it hasn't been reported lost or stolen. In addition, in a majority of cases, the customer's account is checked to ensure the funds are available.

Disadvantages of accepting payment cards for sales

• There are costs involved - though these aren't usually prohibitive. See the costs of accepting card payments.
• Accepting cards can increase your exposure to fraud - see your liability for disputed card payments.
• To accept and process certain major charge cards - including American Express and Diners Club - you must reach a separate agreement with the charge card company.
• You will need to train staff - in the technical and administrative issues of processing a card payment, as well as in fraud prevention measures.

Take into account the expectations of your business sector. If you run a service-sector business or shop selling higher-price goods, life will be difficult if you don't accept cards.