Accepting Credit Cards
Credit and Debit Cards
Merchant Accounts

Would accepting credit cards increase or decrease your bottom line?


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2009-09-15 06:12:03
2009-09-15 06:12:03

When looking into accepting credit cards, remember that credit card transactions and credit card processing are a business in itself. The main goal of merchant account providers and credit card companies is to make money. This is a business that you are paying for. Therefore, it is important to evaluate whether the costs you pay for accepting credit cards are worth it in relation to the benefits it provides your business.

The money your business pays for accepting credit cards is called ?interchange.? Interchange is ?the clearing and settlement system in which raw data is exchanged between the acquirer and the issuing bank.? Although you may be quoted one rate for this service, everything depends on how your account is set up before the rates you pay are actually determined. To receive the best rates possible, it is important to understand how the costs will affect your revenue.

Evaluating the costs is the trickier part of the equation. The benefits that your business would derive from accepting credit are easier to identify. The one thing all customers seem to desire is more options. Accepting credit cards provides your customers another option for making payments, and they will be more willing to buy something because they don?t have to worry about having the actual money for it right now. Also, accepting credit gives you unlimited ability to reach new customers. Some customers prefer not to patronize a business in which they can?t use credit, so accepting credit will open you up to a whole new customer base.

Most importantly, accepting credit will add tremendous profits to your bottom line. Profits generated from credit cards will keep your employees paid, allow you to pay for better healthcare for your employees, and offer better discounts and services to your customers.

Therefore, you must evaluate the total cost of accepting credit cards (including all payments and fees) and weigh that against your customer base. After evaluating your customers, including what they buy, how much they spend, and what forms of payment they use; it will be easier for you to realize whether accepting credit cards would truly benefit your business.


Related Questions

A debit would increase and a credit will decrease .

Increase liabilities = credit Decrease labilities = debit

Inventory is an asset, and so it is a debit to increase, and a credit to decrease.

Prepaid Rent is an asset, therefore to decrease the asset (or use up the rent) a decrease would be a credit. Assets generally maintain a debit balance, which means to increase the balance we debit and to decrease the balance we credit.

Any credit is an increase to an account. A debit is a decrease to the account.

increase items in business we use debit. decrease items in business we used credit

A cash account will always be decreased by a credit, but a credit will not always decrease a cash account. The only time a credit decreases cash is when the company pays out cash, whether it's to purchase supplies, inventory, or pay wages etc. Here is two examples of a credit in a transaction, one will decrease cash, the other will not. Company X buys $1,000 in inventory from Company Y and pays CASH. The debit for this transaction will increase inventory, the credit will decrease cash since company X is paying cash for this transaction. Using the same transaction however, changing Company X wants to purchase this inventory on "credit" the debit in this transaction as above will still increase inventory, however, since Company X has chosen to purchase this inventory on credit and not use cash and accounts payable will be set up and the credit will "increase" accounts payable. Remember, Assets will "always" increase with a debit and decrease with a credit. Liabilities will "always" decrease with a debit and increase with a credit.

Paying by cheque is a cash transaction. Assets: debit =increase credit=decrease

Credit causes the decrease in assets only because assets has debit balance as a normal balance while all other items has credit balance and credit causes the increase in them.

Accounts receivable is a debit.Answer:Accounts receivable is an asset and therefore maintains a debit balance. This is an account listing what a person or company owes you, or money that you expect to receive. Since it is an asset (all assets maintain a debit balance) it means to increase the account you debit it and to decrease it (when a payment is made by the customer) you credit it.Assets = debit balance (increase with debit, decrease with credit)Liabilities and Owners Equity = credit balance (increase with a credit, decrease with a debit)(GAAP)

Yes, a debit decrease liability and a credit increase liability. if a debtors/customer make the repayment obligation, it will decrease debtors, meaning decrease in liability.

The accounts payable balance is a credit, so a debit to this account will decrease the balance.

Remember the basic accounting equations Assets = Liabilities + Owners Equity (Stockholders Equity) Assets increase with a debit Liabilities as well as Equity increase with a credit Liabilities have a credit balance (meaning you must credit the account to "increase" it and debit the account to "decrease" it) this makes liabilities a credit.

debit purchasescredit cash

a decrease in a receivable is a decrease in an asset therefore its a credit.

All payable maintain a credit balance. A payable is a liability account and therefore like a liability does increase with a credit and decrease with a debit.

Purchases account is personal account in nature so debit means increase and credit means decrease.

increase By debiting an account means,specific amount will be deducted for credit to the account for whom it is intended, which is contra entry by nature.

Yes, liabilities maintain a "credit" balance, which means they will increase with a credit and decrease with a debit. For example, if you purchase land on credit, the Note Payable is a liability and is increased with the credit. The book transaction may look something like:Land (debit) $50,000Note Payable - Land (credit) $50,000

The Fees Earned account has a credit balance. This means that you credit the account to increase the balance, and debit the account to decrease the balance.

It increases the amount owed, because creditors would be credited

Ground Rules of JournalisationThe following ground rules should be followed in recording the elements of transactions in journals:Increase in assets and decrease in liabilities (also equity) = DebitDecrease in assets and increase in liabilities (also equity) = CreditExpenses and losses = DebitIncome and gains = Credit

When an item is purchased on credit accounts payable increases. For example if you purchase something for $250 on credit this is the entry to increase accounts payable. Purchases 250 Accounts Payable 250 When you pay for your purchases it will decrease accounts payable. Accounts Payable 250 Cash 250

When a derogatory item is removed from your credit report, them yes, your score increases. If you have a credit account with no derogatory items (late payments) and you close it, then your score is likely to decrease.

In a double entry accounting system, you decrease the cash account with a credit.

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