To determine the viability of credit cards, debit cards and cash for SMBs, it’s important to break down the spending patterns and buying behaviour of customers in recent years. Back in 2016, a popular payment processing company named TSYS conducted a survey of some 1,000+ customers. The customers were quizzed about their preferred payment processing options. The study generated interesting results:
- 11% of respondents preferred using cash
- 35% of respondents preferred using debit cards
- 40% of respondents preferred credit cards
Between 2015 and 2016, the same survey saw an increase of 5% in the number of respondents who prefer using credit cards as their payment method and especially when it comes to business credit cards for travel. Between 2015 and 2016, the preference for debit cards plunged by 6%. Credit card utilisation is increasingly popular for customers across the board. For example, travel and tourism, restaurants and grocery shopping, clothing stores, department stores and high-end purchases are typically conducted with credit cards.
This provides interesting data for SMBs seeking to adopt credit card processing systems on their POS terminals. The study concluded that debit card utilization is prevalent at discount stores, gas stations, and supermarkets. Credit cards dominate at department stores, and dine-in restaurants. Cash is particularly prevalent at coffee shops, fast-food restaurants, and to a lesser degree discount stores.
While these changes are notable at traditional retail outlets, POS terminals etc, digital wallets are having a hard time gaining widespread acceptance. Only 25% of SMB’s currently accept digital wallets, 36% of merchants on the retail side accept digital wallets, and 56% of big corporations now accept mobile wallet payments. The most interesting development in recent years has been the trend towards utilizing credit cards as the sole method of payment. In 2015, some 52% of respondents indicated that they paid off their credit cards in full every month, up 11% from the FINRA 2009 study.
Is There a Move Towards Greater Acceptance of Credit Cards with Businesses?
The ubiquity and pervasiveness of credit cards and debit cards is well known. Most everyone in the United States has at least a debit card, credit card, or both payments processing options available. In 2013, a study revealed that 55% of the 27 million SMBs in the US did not accept credit cards. That statistic has changed dramatically in the 5 years since. Community Merchants USA – a non-profit project – found that 66% of POS purchases were conducted with gift cards, debit cards, and credit cards.
By 2017, the cash component of sales plunged from 27% to 23%. The increasing dominance of debit cards and credit cards in the payments processing arena is thanks to the adoption of powerful, intuitive, user-friendly software and credit card processing options. For example, Merchant Maverick offers in-depth comparisons of payment processing solutions for e-commerce platforms. Rapid innovation in smartphone technology, mobile payments processing, and customer education has resulted in a Fintech boom in recent years. This has shifted the global landscape in a big way.
The barriers to entry for accepting POS systems capable of processing debit cards and credit cards have all but disappeared. Today, these point-of-sale systems and credit card processors are affordable, easy to implement, and highly effective. Credit card processing options include a host of providers such as Dharma Merchant Services, CDGcommerce, Helcim, Payline Data, Square, and others. By evaluating the pros and cons of each credit card/debit card processing service, it is possible for SMBs to select the best possible option.
e-Commerce operations and traditional retailers need to factor in multiple considerations such as PCI compliance fees, monthly minimum fees, early termination fees, interchange-plus pricing, annual fees, and the like. It also depends on the sales processing volumes that are conducted on a monthly basis.
Boosting Sales Revenue with Innovative Software
Some POS systems are only good for low volume processing (less than $10,000 per month). Of course, the adoption of various payments processing solutions for credit cards and debit cards should dovetail with increased efficiency in retail operations. The objective of streamlining business operations is to make it easier for the customer to access the products and services of a company. One way to do this is to decrease the amount of time taken to track sales data, send documents, finalize deals, etc.
Integrated software capable of delivering secure processing, in-depth analytics, higher closing rates, and maximum accuracy and efficiency are preferred. Businesses can do well by getting the best quote software on the market to boost sales and deals. Effective proposals, contracts, on boarding solutions and quotes can significantly enhance the profitability of e-commerce operations, and traditional retailers. The move towards digital solutions has already taken SMBs by storm, and 2018 is likely to see a strong uptick in adoption rates.