November, 2003
Inspection News and Views from the American Society of Home Inspectors

Credit Card Acceptance Makes Good Business Sense


Millions of consumers enjoy the convenience, flexibility and security offered by credit and debit cards. Plastic has become the payment method of choice for everything from airline tickets and retail store purchases to tuition payments and health care services. Consumers can even use their credit cards to make recurring payments, such as cable or utility bills or pick up a meal at a fast food restaurant.

Industry data demonstrates the growing reliance on credit and debit cards and the continued shift from checks to electronic payments. Credit cards are used in more than 40 percent of all retail store transactions, 65 percent of mail and telephone orders and 95 percent of e-commerce transactions. The American Bankers Association claims that electronic payment instruments, such as debit, credit and prepaid cards, will continue to displace cash and checks as the preferred payment methods of the American consumer. In fact, the Federal Reserve recently announced that the number of checks processed in 2002 decreased for the third consecutive year.

Currently, there are 502 million Visa and MasterCard holders in the United States and this number grows daily. Between 1990 and 2000, total credit card sales increased by an average of nearly 16 percent per year.  In 2001, Visa and MasterCard spending surpassed the $1 trillion mark and is expected to reach $2 trillion by 2005.

Of the $1.1 trillion in processing volume during 2001, more than $500 billion resulted from the 3.2 million small to medium-sized (SME) businesses.
For today’s businesses to be truly successful in the changing payment landscape and to continue to keep and attract clients, accepting credit and debit cards is critically important. There are various benefits of accepting credit cards to both the business and the customer. Providing your clients with a broad range of payment options will result in increased purchasing power, timely payments and customer satisfaction while making your business more competitive and improving your bottom line.

Key Benefits of Credit Card Acceptance

“Credit and debit cards are fast becoming an important payment method, yet small businesses are typically underserved by processing companies,” said Rob Paterkiewicz, CAE, Executive Director, American Society of Home Inspectors. “Our members are looking for cost-effective credit card processing solutions that offer a flexible range of capabilities at a simple and affordable price.”

Accepting credit cards makes good business sense. Below are seven key benefits that you can receive from accepting credit cards – all of which add up to
a smart business decision.

Increase Sales

Industry research indicates that the ability to accept credit cards increases revenue by as much as 23 percent. Broadening your scope of payment methods makes your services or products more readily available to current and potential clients. A main reason credit cards are so popular is they are convenient. Customers have the power to make purchases that they deem necessary even though they don’t have the cash on hand – and they appreciate the option of an additional, convenient way to pay.

Improve Cash Flow

Electronic transaction processing can help speed up the payment process. Instead of waiting for checks to clear, or 30, 60, or even 90 days for invoices to be paid, funds resulting from credit and debit card transactions are deposited directly into your bank account, often within 48 hours. Electronic payments will enable faster payment cycles which lead to improved cash flow and decreased billing overhead – a welcome relief for any business.

Increase Average Ticket Size

Giving your customers another way to pay their tab helps boost the average sale. In fact, customers paying with credit cards typically spend about 20 percent more than when paying with cash or check. Consumers generally feel greater financial freedom with their credit card.  

Improve Productivity

With credit card processing, the transaction flow is conducted automatically. Automated acceptance and settlement allow funds from the credit or debit transaction to be deposited directly to your bank account. By making the payment process more efficient and less time consuming, you do not have to worry about being a payment collection agent. Instead, you can focus on the other aspects of your business and leave payment processing in the hands of your bank or transaction processor.

Lower Costs

Accepting credit cards helps streamline operational costs and cuts down on overhead by eliminating the need to send bills and manage account receivables. For starters, it is often less expensive to process credit and debit cards than to accept checks.

Furthermore, it helps to control shrinkage – since the process is automated there is no cash on hand to walk off with.  

Better Customer Service

Credit card acceptance helps improve your customer service. Consumers like the speed, flexibility and convenience of electronic payments. Superior customer service translates into customer loyalty – clients enjoy the option of choosing from a variety of payment options.

Enhance Your Business Image

By accepting credit cards, you and your company gain valuable credibility in the eyes of both current and potential customers. Once you start accepting electronic payments, you can state that you accept credit cards and include the appropriate card logos on your business cards, brochures, office, or Web site.

These seven reasons highlight why it makes good business sense to accept credit cards. As you can see, acceptance of credit cards can help enhance your customer service, give you an edge over the competition, and ultimately improve your bottom line.

Turnkey Merchant Services Solutions

“Although we continue to see rapid growth in credit card usage, many small merchants are reluctant to expand their payment offering because of a perceived lack of technical expertise or they falsely believe payment processing is too costly,” said Paterkiewicz.

To realize the business benefits of accepting credit cards, you need to set up a merchant services account which is provided through a credit card processing company.

Typically, the easiest approach for a small or medium-sized business is a fully integrated turnkey merchant services solution. A turnkey approach means that it is implemented and executed by the transaction processor.

The processor will provide hardware, proprietary software and the necessary services and support so you can accept credit and debit cards in, over the phone and/or through the Internet. Your business can be equipped to accept all credit cards, including Visa®, MasterCard®, American Express®, Diners Club®, Discover/Novus® and JCB®.

When a customer makes a purchase using his or her credit or debit card, the processor will take care of charging the customer’s card account and ensure that once the funds have been processed the money from the transaction is deposited into your bank account.

You will pay the processor a low monthly fee for the tools and equipment as well as a small percentage of each transaction and leave the headache of management and upgrades to them. A turnkey approach means that your solution is customized to provide you with the payment flexibility that meets your unique needs.

Processors such as Moneris can also provide additional value-added services, such as gift cards and loyalty programs.

Transaction Processing Overview

Once you have upgraded your current payment system to process electronic transactions, credit cards will move through the system as follows.

Step 1: The cardholder makes a purchase at your place of business, over your Web site, through the mail or over the phone.

Step 2: You process the credit card sale through your point-of-sale terminal or processing software.

Step 3: The money for the card transaction travels electronically through the Visa/Mastercard interchange and to the other credit card companies.

Step 4: The cardholder is billed, and the money is electronically deposited in your bank account.

Step 5: Now you can spend the money for your business expenses, payroll, etc.


Accepting electronic payments can help lower costs, increase profits, improve efficiency and retain customers. In today’s dynamic business environment accepting credit and debit cards can help give you a competitive edge.