According to a study done by payment processor TSYS in 2018, 54% of consumers preferred paying for goods and services with debit cards, 26% prefer credit cards, and only 14% preferred using cash. So why don’t more small businesses accept credit cards? A few misconceptions exist about taking credit card payments, and we’re here to sort those out.
Myth: Credit Card processing fees are too expensive
While credit card processing fees can range between 2% and 4%, there are some ways to ensure that cost doesn’t come out of your profits.
- The first method is easy - add a line item to your proposals that offers a 3% cash discount. Cash discounts are legal in all 50 states in the U.S., and include instructions on how to pay with cash or check as an alternative.
- Make sure and increase your Labor rate to cover the cost. Simply multiply your rate by 1.04, $50/hr becomes $52/hr.
Myth: Chargebacks are scary
You may have heard stories about the concept of chargebacks. A chargeback occurs when a customer isn’t happy with a job, and decides to use their credit card’s policy to dispute the charges. There are a few ways to prevent this:
- Start with a detailed estimate including exactly what you will, and won’t, do for the costs stated. Instead of saying something like “Paint the fence”, ensure that the estimate has the paint quality, types, colors, and process used so that there aren’t any miscommunications.
- Ensure that all procedures are outlined in your contract, and be sure you get a signature from the client. Electronic signatures are an acceptable, quick and convenient way for the client to acknowledge both the scope of work and the terms and conditions under which refunds are acceptable.
- Document the work with before and after photos as well as acceptance at each stage of the project, from the materials to be used to the techniques to be exhibited.
- Communicate with your client at each phase of the process. Companies that have great customer service are significantly less likely to see chargebacks.
Myth: It’s a hassle to set up
Most vendors of invoicing software realize that taking credit card payments is vital to their customers. The more streamlined you can make the process, the better it will be perceived by your customers. No longer do you have to hire a developer to integrate it with your website or implement expensive point of sales systems. For many, it’s just a matter of turning it on!
And now for the reasons to take credit card payments:
Truth: Your clients want them
A study in 2018 by payment processor TSYS showed that a full 80% of U.S. consumers prefer paying for most purchases with debit or credit cards. There are a variety of reasons - comfort, budgeting, rewards - but there is increasing pressure on vendors to support credit card solutions.
Truth: You’ll sell larger deals
A study in 2013 done by Mastercard showed that when people chose to pay for large purchases with a credit card, they did it in order to afford the purchase. That means by not offering a credit card as an alternative, you have shut them out of making that renovation and may force them to negotiate harder or sacrifice what they want for what they can afford immediately. In addition, customers who use credit cards are 100% more likely to purchase twice as much as they would using any other payment method.
Truth: You'll be seen as more trustworthy
The fact of the matter is that often, people don’t trust contractors. There is a stigma in the industry that contractors get paid under the table, get paid in cash so that they aren’t accountable, and don’t communicate well. 84% percent of consumers said that credit card payment options make it easier for them to find, select and recommend a business. Taking credit card payments is one way customers can feel comfortable with your business, showing that you’re a professional and stand behind your work. If you take the precautions of detailed contracts and estimates, that will be beneficial to both you, and your customer.
Estimate Rocket can help you set up credit card payments simply and our detailed estimating, proposal, and work-documenting capabilities will make sure you stay safe and protected from chargebacks. Book a demo to see how credit card processing works, or speak with a customer service representative today.