Answers to questions that SMEs frequently ask when considering card payments.
The contents of UK consumers' wallets have changed in recent years, and so too have the ways in which they pay for goods and services on the high street. The cheque has all but disappeared and plastic is now the first choice settlement method for in-store shopping and online.
Card acceptance is no longer considered a convenient extra for small businesses, it is an expected norm. If businesses hope to increase trade and expand, they cannot ignore the benefits card payment technology will bring to their bottom line.
Here are some questions – and answers - that SMEs frequently ask when considering card payments.
Do consumers care about different payment methods?
In short, yes they do! A recent YouGov survey commissioned by CardSave revealed 62 per cent of people carry £20 or less in cash on them, yet almost everyone (93 per cent) carries a credit or debit card. And nearly a third (30 per cent) of the UK public said they had been inconvenienced by retailers who don't accept cards, while 16 per cent said they have walked out of a shop because of this.
According to the data, the average transaction value at small, independent businesses in the first quarter of 2012 was £64.13 - more than three times the amount of cash the average person carries. The message is clear: businesses who do not accept card are frustrating a growing demographic of modern consumers who prefer card to cash.
How do I start accepting card payments?
First and foremost, make an agreement with a card service provider who will process your business’s card transactions on your behalf.
Be aware that card service providers offer varying services and support, with a range of tiered cost structures. It is important for startups to do their research and pick the option that works best for them. The UK Card Association can provide further advice on this topic, but for increased ease and profitability, new businesses should consider a provider that operates with the small business merchant in mind.
What about the costs?
Some merchants may believe that the benefits of card payments are limited to the customer and actually come at a cost to the retailer. While there are small costs involved (transaction fees and terminal rental charges) it should be pointed out that banks often charge businesses even more for banking cash and cheques. Charges made by the card provider are relatively small and the cost will likely be offset by increased turnover from card takings.
What are the legal considerations I must take into account when taking cards?
Business owners must recognise that when they accept card payments they are handling customers’ sensitive personal data. They have a duty of care over this information, to ensure it does not fall into the hands of thieves. Data breaches are a nightmare for consumers, but they can also be catastrophic for the business involved.
It is important for your business to become compliant with PCI DSS (Payment Card Industry Data Security Standards), a set of practical measures designed to minimise the risk of such a breach. Fines can be imposed by the card acquirer on businesses which are found to be non-compliant.
Becoming PCI compliant can seem complicated, and there’s often a lot of dense jargon to digest along the way. However, some card service providers do provide catered solutions for small businesses and they can help you achieve compliance and make sense of any confusion, so don't be put off!
By opting to accept card payments, small businesses tap into a lucrative market and connect with a wider range of customers. The points mentioned above are some of the important issues that face startups making this step; by doing some research and choosing the right card services, you can be confident in this important business decision.
It is vital that small and independent businesses keep up with consumer trends, and choosing a card services provider that understands the needs and requirements of your business is your first step.
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