Why some don't accept plastic -- but should reconsider

By Meg G.

Accepting credit cards opens the door for tons of customers. Some small business owners, for one reason or another, do not accept plastic as a form of payment. These entrepreneurs are chopping out a large population of potential customers from their company's base. Let's take a look at some common reasons why credit cards aren't used in some businesses.

Reason No. 1: Costs of terminals
Renting credit card terminals and keeping them up is an added cost of business. Some companies don't want to incur these costs.

Reason No. 2: Costs of transactions
Each transaction from a credit card costs a business money. Some businesses don't think that these fees are worth accepting cards.

Reason No. 3: Hiding income from the IRS
Some not-so-ethical business owners don't accept credit cards because the cards provide an easy-to-follow paper trail. Cash and sometimes even checks are easy to hide from the IRS. However, this isn't a good rationale for not accepting checks. The IRS can figure out or estimate your earnings in other ways.

Despite these reasons for not accepting credit cards, there are some reasons why accepting cards is a great idea.

Benefit No. 1: Builds customer base
Some consumers can't purchase items with cash. Credit cards are how they finance the vast majority of their purchases. In addition, some credit card customers will keep coming back, and repeat business is the bread and butter of any business.

Benefit No. 2: (Almost) Immediate Funds
The funds provided through a credit card transaction are received almost immediately. This means that uncollectible accounts are highly unlikely. The cost of paying a collection agency to collect a past-due account will likely far exceed the cost of a credit card transaction.

These are just a few of the arguments over why a business should accept a credit card. Of course, making the determination whether or not a credit card is right for your company depends on your business's particular situation.

Article by Meg G.

Published: April 8, 2010