Which Credit Cards Should Your Business Accept?



These days, accepting some types of credit cards is a virtual necessity for most businesses. The question is, should you take all cards or only some. As you might imagine, there isn’t a one-size-fits-all answer.

The Advantages of Universality

In the best of all worlds, your business should accept all sorts of cards, including Discover, Visa, MasterCard, American Express and debit cards, and you don’t need an MBA to understand why. No customer wants to get to the register only to find that you don’t take their preferred form of payment. This type of consumer frustration has led to many lost sales.

The Downside

While pleasing your customers should certainly be one of your goals as an entrepreneur, you need to balance it against the costs. As you might have guessed, accepting credit cards brings fees along with the benefits.

In order to take plastic, you will need to open a merchant account. In most cases, doing so will enable you to take MasterCard, Discover and Visa. If you want to take American Express as well, you can apply for a separate American Express merchant account with the same application. Regardless of which cards you accept, you may need to pay a setup fee, monthly charges and/or an annual fee, depending on your merchant services provider.

When you accept a variety of cards, the real variation comes in the form of the costs you will pay for the different merchants and types of cards. For instance, Discover and American Express carry with them higher merchant account charges as do debit cards. American Express gives you the choice of paying a monthly flat fee for accepting their cards or paying a percentage of each transaction. In general, AmEx’s fees are higher, perhaps because this card is considered to be high-end or premium. Also, the percentage rates for rewards cards (such as those for airline miles) tend to be higher.

It’s Up to You

The question of which cards you should accept does not have one right answer. The only way you can truly make the best decision for your business is to look carefully at the buying habits of your customer base. If many of them would prefer to pay with rewards cards or American Express, it might be worth absorbing the extra costs associated with these forms of plastic.

On the other hand, if your patrons mostly make their purchases with cash or non-premium card types, you might be willing to put up with the occasional unhappy customer. Taking the time to study your customer demographics and your business goals can help you determine the types of payments to accept in your establishment.