I thought I would continue to share some insight into the income versus expense of accepting credit cards since many of my networking associates of mine ask, “Is credit card revenue worth the expense?” or “Do the benefits of accepting credit cards outweigh the cost?”
If your business industry typically accepts credit cards, like restaurants and retail – the answer is a resounding yes. In other industries, like service based businesses, the answer is also a most definite, yes.
In fact, if you are bringing in revenues over $20,000 per year, the answer is probably yes unless it is all from one client who has proven that they pay on time and never bounce a check – and they prefer to pay by check…
In most states and businesses, your credit card fee expenses are tax deductible and offset your income. Typically you are allowed up to 2% of your adjusted gross income. (Remember, you should always check with your tax advisor on your state and local tax laws.)
For service industries, not typically known for accepting credit cards, adding this payment option can be a huge benefit:
- – Improving the timeliness of collections rather than chasing money
– Shifting your focus from creating business to closing outstanding receivables
– Increased revenue because the client can budget and pay over time if needed
– Offer a timely alternative to paying via check on a recurring basis
– many systems have recurring payment features & we offer a large variety of them in our technology solutions
– Increased revenue value of accepting credit versus cash
– Industry statistics show an average increase typically of 20% in revenue when a company adds credit cards
– Closing deals by offering flexible payment processes
A large percentage of TransAct clients are service based and even with higher average transaction, have found that their sales have increased once they started offering credit card payment service. Clients add on services, commit to more services and buy more.
Plus, with the right partner, even seasonal businesses can see fair pricing that the “flat rate” competitors, like Square, PayPal and Stripe don’t offer. While they have made it easy to get started with credit card processing their pricing model is one size fits all which we know isn’t really a good fit for everyone – especially as sales reach and exceed $12,000 annually.
If you’re considering accepting credit cards in your business, we can help you evaluate programs available and even estimate your expenses based on prior sales. Then, armed with the right information, you can evaluate the cost versus the return and answer the question “is it worth it” on your own.
~ Mary Ann