The humble and reliable credit card is now over 60 years old, relatively young as far as inventions in general go.
It was the brainchild of Frank McNamara, the founder of Diners Club International, who got the idea after forgetting to bring his wallet. It’d pave the way for an era when buying things without cash on hand is possible—the age of cashless payments.
Today, it is unthinkable how commerce would be without this piece of gleaming plastic. The global pandemic has accelerated the adoption of cashless payment systems by several years, thanks to the need to minimize physical contact.
With people unable to go to malls and shops as freely as before, they flock to online stores where the ideal form of payment is inputting credit card information.
The way forward
From a business perspective, it is clear that cashless is quickly becoming the norm if it hasn’t already.
A report by Business Insider estimates that the United States will have over 16 million mobile point-of-sale (mPOS) terminals in three years. Expect tech-savvy Gen Z and millennial consumers to make up the bulk of any business’s consumer base in the coming years (1).
If your business doesn’t have a cashless payment option yet, now is an excellent time to adopt one. There is a considerable risk of missing out on potential long-term customers, especially with big-ticket orders, if your business doesn’t go cashless.
This article will take an in-depth look into credit card processing and how it fosters growth for businesses big and small.
Continuous revenue stream
Fewer people are becoming willing to fork out cash for many reasons, COVID being one of them.
According to a Bank for International Settlements white paper, online searches for both COVID and cash use went up around the first few months of the pandemic. While some studies attest to viruses surviving for days on banknotes, the consensus is still up in the air (2).
Cash payments will remain an option for decades to come, but businesses must adopt cashless options to keep revenue coming in.
Unlike cash, which you need to deposit at your bank in person, credit cards facilitate payment transfer instantaneously. Neither the consumer nor the business has to handle actual cash, and the balance is updated in real-time.
This benefit works, not just on mPOS systems but also on traditional POS setups. For instance, apps like Jobber’s plumbing invoice software allow plumbing services to accept credit cards either on-site or through the business’s client hub. Crucial payment information is posted on the business’s database where it can also monitor work progress and other pertinent details.
Scientists have been interested in studying the effects of credit card use on controlling impulse or unplanned buying. The “buy now pay later” advantage this mode of payment offers tends to make consumers more confident about buying more.
In one POS provider’s testimony collected from its many merchants, Americans tend to spend 120 percent more when paying with credit cards. (3)
But impulse buying isn’t the only factor to consider. According to Pew Research, 41 percent of people earning USD$75,000 and above yearly said they don’t pay with cash for their weekly purchases. Even among those making less than USD$30,000 a year, only 29 percent said they pay for everything they need or want with cash in hand. (4)
Another factor is the total value of the purchase. A report by the Federal Reserve Bank of San Francisco discovered that most customers pay in cash for transactions below USD$25. Credit and debit cards become more commonplace for purchases between USD$25 and USD$100. The limitation to credit card payments is that most don’t accept purchases below USD$10. (5)
In short, credit card processing could potentially increase revenue by catering to consumer preferences. High-income consumers are more likely to pay with their cards, more so for huge transactions.
Trust is as vital to a business as revenue. Earning the trust of its customer base through quality service will result in return customers.
Consequently, breaking that trust will result in more than just customers taking their money elsewhere. It’ll also cause employee morale to drop across the board, affecting your company’s ability to do business.
Accepting cashless payments could help improve a business’s reputation, not just because of consumer convenience but also the responsibilities involved. For instance, by offering this option, you also provide means to protect sensitive credit card information from cyber threats. As countless cases of cyberattacks have proven, a data breach is no minor issue.
Whether it’s the bank or any other party that’s responsible for the breach, the business will end up paying dearly, as the business chose the merchant account, the issuing bank, and the processing system in use. For most consumers, reasons along the lines of “lacking the resources” to better protect the data won’t fly; they’ll still blame the business for being careless. (6)
Although cyberthreats are inevitable in credit card processing, choosing to adopt one paints a responsible image for your business. It means you are serious about reaching out to more people with expanded payment options, along with the necessary infrastructure to support them.
Enhanced property security
Finally, credit card processing limits the need for cash in hand, which goes a long way in better securing your assets. Leaving wads of banknotes in a safe or, worse, your drawer is a good way to lose them in one night. Even if your business has security cameras keeping watch, you are still prone.
Just this March, hackers from an unnamed global collective managed to gain access to live feeds from 150,000 security cameras in hospitals, schools, police stations, and companies. Retrieved footage can then be used to plan robberies and other criminal activities. The breach is as scary as it sounds, not just from a business perspective. (7)
As mentioned earlier, cashless payments update balances without forking over actual cash. Your business will be protected from financial loss, as its money will be safe behind the bank’s vaults and covered by the bank’s insurance.
As this article has thoroughly explained, credit card processing can go a long way in more than just improving business revenue. Cash-only businesses will be at risk from the current economic situation if they don’t adapt and adopt this technology.
- “Credit Card Industry in 2021: Market Analysis and Trends in Payment Processing,” https://www.businessinsider.com/credit-card-industry
- “Covid-19, cash, and the future of payments,” https://www.bis.org/publ/bisbull03.pdf
- “Cash-only business owners risk $100 billion mistakes,” https://www.cnbc.com/2013/11/12/cash-only-business-owners-risk-100-billion-mistake.html
- “More Americans are making no weekly purchases with cash,” https://www.pewresearch.org/fact-tank/2018/12/12/more-americans-are-making-no-weekly-purchases-with-cash/
- “Understanding Consumer Cash Use: Preliminary Findings from the 2016 Diary of Consumer Payment Choice,” https://www.frbsf.org/cash/publications/fed-notes/2017/november/understanding-consumer-cash-use-preliminary-findings-2016-diary-of-consumer-payment-choice/
- “What Small Business Owners Need to Know About Accepting Credit Cards,” https://www.finextra.com/blogposting/19830/what-small-business-owners-need-to-know-about-accepting-credit-cards
- “Hackers Breach Thousands of Security Cameras, Exposing Tesla, Jails, Hospitals,” https://www.bloomberg.com/news/articles/2021-03-09/hackers-expose-tesla-jails-in-breach-of-150-000-security-cams
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I am Adeyemi Adetilewa, a media consultant, entrepreneur, husband, and father. Founder and Editor-In-Chief of Ideas Plus Business Magazine, online business resources for entrepreneurs. I help brands share unique and impactful stories through the use of public relations, advertising, and online marketing. My work has been featured on the Huffington Post, Thrive Global, Addicted2Success, Hackernoon, The Good Men Project, and other publications.