You are excited about breaking out the latest edition of the Monopoly board game for friends to enjoy during a social gathering on a Saturday night. When you open the game, you immediately notice the iconic moving pieces and the property cards that players hold after making a purchase. However, one thing is noticeably missing and that is the game does not include any faux cash. After you read the directions, you discover a player no longer acts as the banker during a game, but instead, a player plays a new role called a credit card processor.
A few weeks later you stand in front of a shuttered betting window in Las Vegas where you wanted to buy chips to play Texas Hold ‘Em with cold, hard cash. You discover poker games now require the purchase of chips via a mobile credit card processing system that the dealer access whenever a player requests more chips. What used to be called cash games are now called credit card processing games.
Although these two examples seem a bit far-fetched, one thing is certain: The once-relevant axiom that “Cash is king” is no longer true, especially in the business world where transactions increasingly involve the processing of credit and debit cards. Cash is no longer king, as credit card solutions have dethroned it as the principal way consumers pay for goods and services.
What is behind the transformation from a cash-based economy to one driven by credit and debit cards? The most influential factor in transforming consumer transactions started in early 2022, when the COVID-19 pandemic forced many businesses to temporarily shutter. Consumers no longer had the option to pay cash, as every transaction for most businesses took place online by using credit and debit cards, as well as a few other ways to purchase goods and services without using cash.
Regardless of why the trend towards a cashless society started, businesses across all industries need to start embracing the new economic model where credit cards are king.
What Are the Benefits of Online Payments?
The COVID-19 pandemic represented the unmovable force that has transformed the world economy. However, the movement from using cash to some type of digitally accepted card has increased in momentum for many years. According to Statista, digital payments should continue to increase from $8.5 trillion in 2002 to nearly $14 trillion by the end of 2026.
Consumers benefit from moving away from using cash for many of the same reasons why businesses have embraced the digital transaction paradigm. One of the most compelling reasons for consumers to use some type of digital card is that it helps improve their credit scores as long as they follow the steps required to experience a boost in credit.
Businesses that fully embrace the digital payment paradigm benefit from the new paradigm for several reasons.
Convenience
Convenience represents a benefit for both consumers and business operators. When buying a product or service online, a consumer does not have to wait in a long checkout line or spend time in a store searching for a specific product. Businesses enjoy the convenience of going digital because they can store and organize all transaction data in one easy-to-access file. Digital technology has advanced to the point where consumers do not even have to provide a physical credit or debit card to purchase products and services. They can access a site like PayPal and simply log into their accounts to complete a transaction.
Safety
Once again, safety is an issue that benefits both consumers and business operators. With the diminishing use of cash, criminals do not commit as many robberies since they need to obtain PINs and other types of security information to gain access to credit and debit card accounts. Businesses enhance their safety by not having to carry much, if any cash on-site to consummate transactions. Nonetheless, there is one caveat when it comes to the benefit of safety.
Both consumers and business operators must contend with the growing threat of cybercrimes.
Advanced Technology Features
Moving payments online for both consumers and businesses provides both parties with additional features that simplify the transaction process. A security model called tokenization allows customers to purchase products and services from the same business without having to present their credit or debit card details every time they want to buy something. Advanced digital payment platforms such as MYMOID allow businesses to accept recurring payments, which is a popular feature among businesses that charge the same prices for services on a weekly, monthly and annual basis
Increase Revenue
Businesses that implement the technology required to run an online payment system can expect to acquire more customers for many of the same reasons we have already mentioned. Installing an online payment system allows your business to sell its products and services anywhere in the world. This is particularly true if your business implements an international online payment gateway, which removes the physical boundaries between businesses and consumers separated by thousands of miles.
Decrease Costs
Boosting the bottom line for your business follows the standard profit margin formula of increasing sales and decreasing operating costs. Moving to an online payment model for your business decreases several types of operating costs. You can expect to use less paper to process credit and debit card transactions. A vast majority of consumers opt to receive account data via email and/or text messaging. Paperless receipts also forward to a company’s accounting department at the same time the bills go out digitally. Your business also spends much less money on other types of items such as stamps, printing, and storage. Since paperless payment options require less work to process, businesses also enjoy the benefits of lowering labor costs.
How Does My Business Accept Credit Card Payments?
We know the lengthy reign of cash as king of transactions is fast coming to end, as indicated by a 2022 Federal Reserve study that demonstrates just 20 percent of all transactions involve cash payments. With digital payments now the new king of transactions, how should your business go about accepting credit card payments?
Decide on a Credit Card Processor
Most credit card processors offer the same services, which means you can expect to receive the same types of services from major credit card companies. What you need to do involves deciding on what types of credit cards your business accepts. You also have to determine what percentage of your digital transactions take place online, over the phone, and at your business. Research the processing fees charged for different types of transactions. If you decide to run an online-only business, ensure the credit card processor selected seamlessly integrates its technology with your business website.
Create a Merchant Account
After you choose the credit card processor, open the type of merchant services account that matches your business model. Even if you have used a popular provider such as PayPal for personal transactions in the past, you still need to open a separate account for all your business transactions. Opening a merchant account with a credit card processor usually requires you to submit information about your business, as well as establish a connection between your bank account and the credit card processor.
Set Up Payment Processing Terminals
The last step for your business to accept credit card payments involves setting up payment processing terminals. If you run a brick-and-mortar business, you must set up the hardware required, such as POS terminals and credit card readers. You have a few options for installing credit card readers, including ones that accept a swipe, inserted chip, and/or contactless tap. If a percentage of your sales comes from online customers, you must set up the software needed to process digital payments over the Internet.
What Are the Best Options for Providing Credit Card Payments?
As an operator who takes pride in making savvy business decisions, you should have the same mindset when it comes to accepting credit card payments. You know consumers are increasingly focused on credit card issues, such as credit utilization and paying more than the minimum balance required during each statement period. Now, the time has come for you to pick the right company to help you accept debit and credit card payments.
Because of its name recognition and competitive transaction fees, PayPal is the best processor for credit cards for in-person transactions. The company offers merchants several options to process credit cards. When it comes to eCommerce Shopify charges the same fees for online credit card payments as it does for transactions that do not require the use of a credit or debit card. The company’s popular eCommerce platform is ideal for business operators looking to move at least a percentage of their business online. For businesses that want to complete transactions exclusively online, then Venmo represents the best processing option. The company is known for providing safe and mobile money-transferring services.
FAQS
What percentage of purchases are expected to be made with cash vs by credit card?
From a 2021 research study conducted by the Diary of Consumer Payment Choice, the use of cash and debit cards has decreased, while the use of credit cards has increased. Cash sales accounted for 19 percent of all transactions completed in the United States.
Are there fees associated with payments?
To accept credit card payments under any type of format, businesses must pay assessment, interchange, and processing fees. The fees go to a credit card’s issuing bank, as well as the credit card’s network and credit card payment processor.
How long does it take online payments to clear?
The electronic payment process differs among the credit card processing providers, but typically, funds receive verification between 24 and 48 hours after a completed transaction. If a payment comes from a checking account, the payment clears between three and five days after the funds transfer to a business bank account.
