A few years back, people were sceptical for entering their credit card information in an online site and today, 3 out of 4 people using the internet are making payments online using various methods. Online payments may seem a complex procedure at first, but, once learnt well, you will know that it is a convenient way to provide simplified payment procedures to your online customers or members. For those who do not know what an online payment is; it is an internet-based technology for processing money transactions. It lets online vendors accept payment from their customers, members, donors, and anyone willing to pay them any sum of money.
People have now adapted to the online payment methods and therefore, irrespective of the type of website you have created, it is essential that you provide the online payment methods in order to grab more of your targeted audience. Talking about the online payment methods would be incomplete without ecommerce websites. Well, it is the place with the highest number of online transactions as compared to any other websites. There are many online payment methods such as Net Banking, Debit Card, Credit Card, UPI, and other payment gateways. However, many websites prefer only credit card payment. In this article, we will be discussing the reason why websites accept only credit card payment, the pros, and the cons of the credit card payment method.
What is Credit Card Payment?
Credit Card Payment is a form of electronic payment wherein the card issued by any financial institution to the cardholder can be used to make payment online or via an electronic device without the need to pay by cash. To literally define, credit cards are thin small rectangular plastic or metallic slabs that are issued by a financial company that lets the users borrow funds to pay for any goods and services. These credit card issuers, however, impose a condition stating that the user needs to pay back an interest amount in addition to the borrowed money, along with any mutually agreed charges. The credit card issuer may also grant a LOC or Line Of Credit which implies to the borrowing limit within which the user can borrow the money. The user will not be allowed to make any further payments once the LOC is reached. The credit limit is set based on the credit score of the borrower.
Why do some websites accept only credit card payment?
The primary reason for a few websites accepting only credit card payment is that it is the most preferred payment method across the globe. Researchers have proven that more than 42% of online shoppers across the globe prefer to pay via credit cards. Today, there are billions of credit cards used by people from all over. The transactions of credit cards are easier, faster, as well as secure, making it the most preferred mode of payment. Unlike debit cards, people do not have to pay the money from their account on the go; instead, they can pay the charges in installment with a credit card. Moreover, people love the rewards, bonuses, and other benefits received when using a credit card.
However, using only credit cards for receiving payments is a completely bad idea and you are leaving back a good amount of your potential customers as well as the revenue on the table. You must consider integrating multiple payment options by which all kinds of customers can purchase products and services from your business. For instance, when you create a store with Builderfly Ecommerce Platform, you are provided with multiple payments as well as shipping options that let you sell your products and services across the globe in its true sense.
What are the pros of accepting credit card payment?
It helps legalize your business
When your business website displays the logos of the credit cards accepted in your website, you are instilling trust in your potential customers while grabbing credit cardholders’ attention. These credit cardholders trust the credit card brands enough to keep them in their wallets and that trust shifts to the online merchants providing that payment method.
It improves the cash flow of your business
Experts suggest that integrating the credit card payment system improves the cash flow of the business. The payments done with credit cards are credited to the merchants account within a few days of the purchase date, which can potentially improve the cash flow of your business. With credit card payments, businesses no longer need to wait for payment checks to be cleared from the bank or send invoices to the customers and wait for them to make the payment. Thus, accepting credit card payments helps businesses receive cash faster in an easy way.
It helps to boost sales
The increase in the online shopping population has resulted in a shift of almost every target market to make online payments. And, the most widely used online payment is credit card payment. Therefore, when you tap into this online shopping population using credit cards, you are broadening your potential customer base significantly.
It gives a competitive edge to businesses
Whether small, medium or large scale, the majority of the businesses accept credit card payment. The small businesses that accept credit card payment get a chance to compete with the large scale business giants. Providing customers with the option to pay from credit card keeps them away from finding another competitive site.
It triggers impulsive buying decisions
Every human likes to purchase everything they like without the limitations of sufficient bank balance or cash in hand. Credit cards are issued with this concept in mind; lending money to let people purchase the products first and make the payment later in installments along with the interest added. Credit cards enable shoppers to complete transactions speedily. Moreover, studies have proven that getting a credit card payment option in an online website triggers them to purchase the products or services they like leading to impulsive buying.
It minimizes the risks
For small business owners, keep large chunks of money on hand is a serious security threat. The lesser you have in-hand cash, the lower are the chances of your money being stolen. Accepting credit card payments is an excellent way to boost your sales and improve the cash flow while minimizing the risks of losing your money. Additionally, it eliminates the risks involved in dealing with bounced checks. You no longer would need to waste your time in tracking the customers to make them pay the amount for the products or services purchased.
What are the cons of accepting credit card payments?
It need not be said that every coin has got a flip side which means with good there comes the bad. Although there are significant advantages in accepting credit card payments, there are some cons as well:
The credit card charges
The credit card companies impose processing charges on the businesses using credit card payments. Moreover, every time a business is running a credit card, it has to pay the transaction fee and a portion of the sales amount to the credit card company. However, there are a few credit card companies that charge every month.
Disputes
When a credit card customer dispute charges, the businesses would need to pay charges as well. The credit card companies can provide a refund for their customers wherein you would need to pay the refund amount to the customers. Moreover, when the credit card customers dispute charges, you might also need to pay an additional fee which is termed as the chargeback fee. Usually, this amount equals the original amount of the product or service.
Credit card frauds
The credit card frauds are not new to any business. If the information of the customers’ credit cards falls into the wrong hands, there is a chance of them getting fraudulently charged. According to research, the charges for fraudulent credit card charges are to be paid by the merchants. Apart from that, the businesses would also need to pay the fees associated with fraudulent charges including the processing fee, charge-back fee, and the shipping costs. Additionally, the merchant could be at loss for the sold product or service as there is no likeliness of getting a product back from a fraudulent purchase. Another major problem is identity theft. When the identity of the credit card information is stolen and used to make purchases from your business, neither will the customer receive the product you sold nor will you receive the money for that product or service.
You might now be well-aware of the pros, cons, and the reasons many websites are only accepting credit card payments. However, you need not follow that pattern, anyway, if you wish to broaden your customer base, boost your sales, and enhance your business revenue, efficiently.
