Debit or Credit?
There are currently 576.4 million credit cards in the United States. There are just about as many debit cards, at 507 million. That's over 1 billion cards that people are using every day to make purchases for their babies. Every day, baby shop retailers across the country accept credit and debit cards at the register, over the phone, and through the Internet for toys, furniture, clothes, and other items.
What happens when the credit card is swiped or used to pay through the Internet isn't something most retailers think about on a daily basis. But the truth is that working with the right partner/vendor to make that transaction work smoothly, efficiently, and be cost effective can actually be a strategic advantage for any baby shop owner. Making a few simple changes to the way you accept and process credit and debit cards can impact your bottom line.
Debit or Credit?
You've probably asked or been asked this question too many times to count. Unfortunately, many retailers don't know why they ask the question or what the answer means to them. The truth is that every time a customer chooses credit, you as the retailer pay higher fees and therefore lose a few pennies each transaction. Those pennies add up over hundreds or even thousands of dollars each year.
In the payment processing business, credit card transactions will always cost the retailer more than debit transactions. This is because debit transactions are processed electronically with the customer's bank and happen very quickly. They are simple transactions and don't need to go through a third party, like Visa or MasterCard. When a customer chooses credit, those third parties need to get involved and therefore charge you for their service.
Doing more debit transactions instead of credit transactions can save you a lot of money over time. First, make sure your register or terminal accepts pin pad IDs. Then, instead of asking "Credit or debit?" train your staff to ask "Do you mind if I run this as debit?" Most people will agree, and you'll all be happier.
Take Cards, Get Cash
Cash flow is critical to running your business, especially these days. You need to have it to pay your employees, order inventory, advertise, and make your rent. Every time you do a credit or debit transaction, it takes cash out of your business for a time. In some cases, it's just a few days, but those few days could make a difference in ordering the new items on time or paying a bill.
Most payment processing companies out there have found a way to shorten the number of days it takes to get you the money you have made. You should be able to turn most of your card payments into cash no later than the next business day. Take a look at your agreement with your processing company. If you're not currently getting your money by the next business day, ask them if it would be possible. If they don't offer this option, consider looking elsewhere.
Why Lease When You Can Own?
Leasing is a commonplace practice in business. Chances are that you rent or lease a lot of the equipment you use to keep your store going. At some point, someone told you that it would be cheaper to borrow something monthly and pay a small fee than to buy it for yourself.
That is not the case for credit card processing terminals and pin pads. You can often purchase machines used to take and process credit and debit transactions for less than the cost of leasing them for one year. That means significant savings over time.
While the idea of changing all your payment terminals to ones you've bought may seem overwhelming and undoable, it's actually quite simple. All you need to do is have the vendor/representative come in, close out or "batch out" the current machine(s), unplug the terminal(s), plug in the replacement and new machine(s), and test. It takes very little time – an investment worth it when you consider the savings over years.
Be Secure
November 2009, Hancock Fabrics. March 2010, Mary's Pizza Shack. April 2010, Mad Capper Saloon & Eatery.
You probably haven't heard of any of these companies. They are small businesses all over the country. But they all have one big thing in common: They've suffered a data breach. They've also had to send out an alert to their customers letting them know that their credit and debit card numbers were violated. They've all had their reputations tarnished, and they're all in danger of possibly losing their ability to take credit and debit cards in the future.
The truth is that no business is immune to data breaches. If your payment processing company isn't talking to you about the dangers of data breaches, you may have a problem. The Payment Card Industry, made up of companies like Visa, MasterCard, and American Express, has developed Data Security Standards that you must comply with in order to take their cards. Call your payment processor and ask if you are compliant.
Charge Ahead
Taking credit and debit cards should help your business. By learning a little, you could benefit a lot and get back to what really matters – making babies and their parents happier.