Processing credit cards does add a slight amount of complexity and cost to a previously cash-only business. However, the cost of not accepting credit cards can be high as well. Many customers these days simply do not carry cash, so if they cant pay with plastic, they wont buy. And then theyll go buy from a business that will do credit card processing.

Over and above lost dollars, businesses that do not accept credit cards or have an insufficient credit card processing system risk being perceived as unprofessional. Conversely, accepting and processing credit cards correctly and easily can raise a small or mid-sized business in the eyes of the customer, making the playing field more level against bigger competitors.

Considering this matter from the customers perspective is a worthwhile exercise.

Cards Offer Convenience
More than any other reason, customers use credit cards because theyre convenient. Swipe and go, then receive a detailed statement at the end of the month noting the charges. Its a procedure that people have gotten used to and enjoy. Its just so darn easy.

This easy feeling rubs off on businesses that engage in credit card processing.

Cash Doesnt Offer Givebacks
Credit card companies are quite creative when it comes to rewarding their customers, adding another layer of incentive for credit card use. Customers often think of the airline miles or shopping dollars they are acquiring as theyre swiping their card over and over again. Unlike cash, which leaves the hand and is gone, credit card processing has a giveback aspect to it.

This giveback aspect rubs off on businesses that engage in credit card processing.

Credit Card Refundability
Reputable credit card companies, especially American Express, frequently offer some level of buyer protection. Especially in the case of online sales, the buyer protection clause is not to be underestimated. Studies have shown that this protection relaxes buyers, and is one of the main reasons responsible consumers often prefer to use credit cards. Not everyone is out charging up the card as an act of irresponsibility. Some people are doing the exact opposite.

This feeling of being protected rubs off on businesses that engage in credit card processing.

Better Credit Processing Technology Means Lower Cost
With the improvements to credit card processing technologies, the whole deal has gotten pretty easy, especially after the initial set-up is completed. Credit card processing can occur on the Internet, through point-of-sale terminals specially installed, even through mobile phones.

Meanwhile, credit card processing is a lot cheaper than it used to be. Transaction fees industry-wide are regularly under two percent of gross sales, and all sorts of freebies are thrown at new customers, including free installation and reduced monthly rates. Its a buyers market.

Business decision-makers who have ruled out processing credit cards may want to take a new look at the possibility. There is nothing inherently wrong with making the decision to not deal with credit card processing at all. But processing credit cards can draw in more customers.

Sources
CARD--Credit Card Industry Research
Federal Trade Commission