Small business owners don’t like paying credit card processing fees. But new research shows why accepting payments from Credit cards It’s still a big deal for most small businesses.
When you consider the convenience and reliability of credit card payments, small businesses gain a lot of value from accepting this popular method of everyday transactions, along with the benefits and rewards of small business credit cards that business owners can use for their business expenses.
Let’s look at some ways credit cards help small businesses stay profitable.
#1: Accepting credit cards increases small business revenue
Several studies have shown that accepting credit card payments can help small businesses increase their average transaction size by 10-15% and boost revenue by up to 20%.
By making it more convenient for customers to pay you with credit cards, your small business can make it easier for customers to spend more with you and generate significant increases in your overall business revenue.
#2: Credit card transactions cost less than cash
It’s true that credit card processing fees are a major cost for small businesses, shaving a few percentage points off each purchase. But compared to the costs of cash transactions, credit cards are a good option for business owners. If your small business still accepts cash payments, you may not realize this, but receiving cash payments actually costs you money, too.
Why a business credit card could transform your small business
These business credit cards offer a convenient and efficient way to separate personal and business expenses, simplifying accounting and tax reporting.
Additionally, business cards can provide valuable benefits like reward points, cash back, and expense tracking tools, improving financial management and potentially helping save money in the long run.
Studies cited by Square have shown that cash costs approximately 9.1% of cash received. Handling cash involves costs and risks (cash drawers, safes, cash management, and bank fees). Not to mention the risks of theft, mishandling, or loss of cash.
Compared to the mess and friction of cash, credit cards seamlessly transfer your customers’ numbers into your business bank account. Isn’t it worth paying a small percentage to the credit card companies?
#3: Credit cards help small businesses take advantage of e-commerce
Do you want to sell online? You need to accept credit card payments. E-commerce E-commerce is becoming a bigger part of the retail industry than ever before; as of Q2 2024, according to Census data, e-commerce sales accounted for roughly 16% of total U.S. retail sales.
#4: Higher-income customers use credit cards more
According to research from the Federal Reserve, credit cards tend to be more popular among higher-income customers. The Federal Reserve’s “2024 Findings from the Diary of Consumer Payment Choice” report found that the higher consumers’ incomes, the more likely they are to use credit cards to make payments:
|
Household income |
Percentage of payments made with credit cards |
|---|---|
|
Less than $25,000 |
11% |
|
$25,000-$49,999 |
21% |
|
$50,000-$74,999 |
26% |
|
$75,000-$99,999 |
31% |
|
$100,000-$149,999 |
39% |
|
More than $150,000 |
50% |
Data source: Federal Reserve, “Consumer Payment Choices Journal 2024 Results”
If your small business wants to sell to high-income, high-spending customers, accepting credit card payments is a must. Keep making it as easy as possible for wealthy consumers to continue shopping at your business.
#5: Business credit cards help you earn rewards
In addition to the benefits of accepting credit card payments for your small business, there are some underrated benefits of using credit cards as a business owner. Small businesses can reap significant benefits by using business credit cards to pay their daily expenses and monthly bills.
Throughout 2024, credit card companies have become more competitive in offering generous welcome bonuses, special offers, extra rewards points, and other incentives to attract new business credit card customers. You can earn cash back, travel rewards, and other benefits to help your business, simply by changing the way you spend money for your business.
He The best business credit cards It can provide you with huge amounts of value, such as:
- Unlimited 1.5%-2% cashback on all purchases
- Additional reward points in the categories where your company spends the most
- Additional frequent flyer miles when booking business travel
In summary
Small business owners are always looking at the bottom line, and it’s easy to feel the pain of credit card processing fees. But think about the value and risk management your business gains from accepting credit card payments: reliable revenue, predictable transaction costs, and added value from being able to engage in e-commerce.
And if you decide to be more proactive about using business credit cards for your business expenses, you can unlock even more value with cash back rewards, lower-cost business travel, and more.