We’ve all seen it before. You walk into a local store, pick up the items you want, and walk to the checkout line. As soon as you get to the cashier, you see a sign that reads something along the lines of “Sorry, no credit card purchases under $5” or even worse “credit cards not accepted”. Why is this? Are business owners really dumb enough to not accept the preferred method of payment for most people in the United States?
The truth is they aren’t; in fact quite the opposite. Oftentimes, the cost of accepting a credit card is very high and can make certain purchases unprofitable for business owners.
The Cost of Accepting Credit Cards
For the most part, credit card companies take around 2-3% of the purchase as an interchange fee, but it can be even higher depending on the card. Additionally, they charge anywhere between $0.10 and $0.30 as a transaction fee. There may also be a flat monthly rate that further eats into margins for owners, making it really hard to accept credit cards.
Business owners also take on another cost with credit cards: the rewards. Certain cards offer rewards to the user through travel benefits or cash-back. What many people do not know is that these benefits are often paid for by the business owner through higher fees that get added on to the initial costs of accepting cards.
Not only are all these charges expensive for business owners, but they are also inconvenient as card swipes may take multiple days or weeks to reflect in an owner’s bank account. Credit cards are also constantly subject to fraudulent activity, which can harm the business when cardholders issue a refund, adding even further cost to the business.
An Alternative to Credit Cards
Luckily for business owners, there are options with emerging financial technologies to help relieve the cost burden of traditional payment processing. For instance, AeroPay is an alternative payment processing solution that allows customers to pay business owners directly from their mobile device through a simple bank-to-bank transfer - at a much lower cost to the business (hint: lower interchange fees and NO transaction fees). Included in the cost is a built-in global cash-back rewards program for their customers. Business owners will also benefit from payments settling within - and usually sooner than - 24 hours.
The best part, however, is that AeroPay can be used alongside a business owner’s already existing payments processing infrastructure. No need to interrupt or switch anything operationally.