When you choose to accept credit cards as a small business, there are a number of considerations that come into play. For example, the cost of your merchant account and internet payment gateway are things that you should think about and plan for.
Another often overlooked cost-factor is that of the fees associated with each type of credit card. Some merchants opt not to accept certain cards (such as Discover and American Express) because the fees for those cards tend to be higher.
While a percentage point or two may not make alarms go off in your head when you think about small transactions, the fees can add up substantially over a year or two. These are costs that should definitely be considered before you decide to accept cards with higher fees. There may be other fees associated with the types of cards that are more difficult to account
Another cost to consider when accepting credit cards is the cost of chargebacks. Chargebacks happen for a number of reasons:
- Customer dissatisfaction
- Consumer confusion
- Poor merchant communication
- Fraudulent or Unauthorized Charges (For example: a relative used their credit card without authorization)
You can't always stop or remedy these reasons, but many chargebacks can be fought (and won) or avoided altogether if you are careful to cover your bases and communicate thoroughly with your clients and customers about the charges that will appear on their credit cards.
Still, the cost involved in investigating and responding to charge backs, and the cost of losing them is something that should be taken into account when you decide to accept credit cards. This is especially true in businesses or industries that are more chargeback prone. (Mail order is a good example.)
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