Case Study: Small Business Owners Talk about Their Transition to Credit Cards

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Transition to Credit Cards

“Show me the money!” This famous line from the movie Jerry Maguire could also be the mantra for most small business owners, right? We sell our goods, perform our services, and want to be paid in a timely manner. In the “old” days (we’re talking fifteen to twenty years ago), accepting cash and checks was the way to go. The hassle of setting up credit card machines often didn’t make sense, especially for solo professionals who might operate out of their home or who were comfortable with a cash-only business.

Those days are definitely over. We live in a 24/7 era where people—i.e. our customers—expect to be able to pay with the click of a mouse or the swipe of a credit card. According to Community Merchants USA, an educational nonprofit project of the electronics payment industry, “58 percent of small businesses are asked by their customers to accept credit cards, on a regular basis.”

The good news is that the convenience factor isn’t just for our customers anymore. We business owners can benefit from the convenience as well.

So what if you’re one of those businesses on the fence and you’ve been thinking about making the transition to credit cards, but you’re just not sure? Is it really worth it? What vendors should you use? What steps do you need to take next?

We’ve rounded up some advice and feedback from other small business owners who made the transition to credit cards. We’ve asked them to talk about their reasoning behind the move, their preferred vendors, and their advice for fellow business owners thinking of making the switch.

Benefits for Customers AND Business Owners
Sure, you might think that accepting credit cards provides value for your customers, and this is certainly true: customers love the convenience. But small business owners acknowledge they receive many benefits as well.

James Genovese owns Milestone Group, LLC, a growing counseling/psychotherapy practice in Atlantic Highlands, New Jersey. He started accepting credit card payments within the last year. “My reason for this was to increase daily cash flow and reduce my accounts receivable. My policy is that all fees and copays must be paid at point of service, but sometimes clients would come to their sessions without enough cash or their checkbook. I have found that 99% of my clients carry at least one credit or debit card, and so this enables them to pay me at the end of their session.”

Peter Blatt, owner of Blatt Legal, PLC in Palm Beach Gardens, Florida, echoes these sentiments. After 10 years in business, his firm started accepting credit cards. “We traditionally ask for 50% of the fees for estate planning up front. In the past, clients would have to mail in checks. It would slow our process down by three to four days. Now clients are excited to gain points for paying with credit cards. We used a bank vendor to rent a machine. The cost is a little over 2% per charge, but clients pay three to four days quicker. We are up 10% since we started taking credit cards.”

It’s Hip to Be Square
One of the most popular forms of credit card payment that we heard about from the business owners who emailed us is Square. James Genovese provides an apt description: “What’s cool about Square is the ease and convenience it offers. The small reader plugs into either a smart phone or I-Pad and costs around $15; there is no other equipment needed. There is also no long-term contract to sign nor are there any minimum monthly dollar-volume requirements; they just charge a reasonable percentage per transaction.”

JJ DiGeronimo, founder and CEO of Purposeful Woman and Tech Savvy Women, has this to say about Square: “My customers are thrilled and often buy more now that credit cards are an option. They also love the immediate receipt option provided with Square that is texted or emailed directly to their desired location. This is great for corporate expenses. We have not encountered any difficulties or challenges, and actually leveraging Square has made tax preparation a breeze since I just download a spreadsheet, which allows me to sort and track all these transactions.”

Genovese does acknowledge that Square might not be for everyone: “Square works well for me but may not for a high volume retail business that would be better served by a more elaborate credit card processing system.”

Tiffany Powell owns Sapphire Bookkeeping & Accounting Inc. in Glendale, Arizona. Her firm has opted for something other than Square, noting that, “Square seems to consistently have higher pricing than other companies out there.” Her company’s solution? Intuit. “We currently process through Intuit/QuickBooks using the QuickBooks feature as well as their mobile GoPayment swipers when needed. We have tried multiple credit card companies not only for our business, but have dealt
with many on our clients’ behalf and have found that we get the best customer service and pricing through Intuit.”

Another thing to keep in mind is the growing trend that involves consumers using their mobile devices to pay for goods and services. Marketing Land reports on a Nielsen study where “38% of tablet users claim to have made a purchase through their device, and 24% of mobile phone users have done the same.” It’s all about apps, and Square has its version for consumers called Square Wallet.

As Tech Crunch reported in July, “Mobile payments crossed the 10 percent mark in the U.S. as a percentage of in-store purchases, indicating efforts like the Starbucks mobile app, Apple’s Passbook and Square Wallet are popular among users.” (Starbucks also uses Square Wallet, which is not surprising, considering it has invested in the company.)

Innovation and Customization – Make It Your Own
Of course, some businesses may need something a bit more customized than what Square or even QuickBooks Merchant Service has to offer. That was the case for Jay Suites, a NY-based flexible office space company.

Dorin Rosenshine, marketing manager for Jay Suites, describes the problems with attempting to collect rental payments via check or cash, especially as the company grew and added locations. “Collecting rent payments from a multitude of tenants and keeping track of the common meeting room usage proved particularly challenging, especially as some tenants qualified for credits, or ordered add-ons, such as catering items. Double booking was another concern. To avoid it, all tenants were required to book the meeting rooms through the receptionist, who was only available during weekdays and business hours.”

Rosenshine explains that the company was reluctant to rely on externally hosted software, so it decided to launch its own meeting room booking and payment system a couple of years ago. “In addition to displaying real-time room availabilities across the company’s five locations, this proprietary, web-based system automatically calculates each tenant’s meeting room usage and available credits (facilitating billing) and accepts online payments for the rent and meeting room usage, combined. To enhance security, all activity is logged…The system is secured by 128-bit encryption, and all sensitive data is stored on the servers of, our payment processor.”

Rosenshine said that shortly after the launch, activity increased dramatically, and ROI improved as revenues grew. A few months ago, Jay Suites surpassed 10,000 bookings.

Follow Nike’s Mantra…
So what should you keep in mind if you decide to make the leap to credit cards and mobile payments? Many of the folks who emailed us said “just do it.” But you probably could use more direction than that, so here goes.

Dorin Rosenshine says, “Compare offerings. There are many providers of competing payment-processing systems; use this to your advantage and shop around! Make sure you get a great deal, because accepting online payments can otherwise be costly. Focus on [the] interface. Make sure your payment pages are friendly, inviting, and easy-to-use; otherwise, your customers will resist using them.”

James Genovese agrees with Rosenshine’s tip about comparing offerings. “My advice to any small business owner who is considering taking credit card payments—I say go for it, but first shop around for the best possible deal.”

JJ DiGeronimo offers five points of advice: “First, don’t be nervous. It is easy to install and get started. Second, start now. You are likely losing sales because you are not providing this option. Third, try a few purchases with your own credit card to get comfortable with the system. Fourth, login to the service online and download your records from step #2 [which you can do with Square] and see how you can easily sort data. Fifth, connect it to your cell phone so you can accept purchases anywhere with your mobile service provider.”

Tiffany Powell echoes the thought that you really have nothing to lose and a whole lot to gain. She says, “There are plenty of credit card processors that have decent rates and do not charge monthly fees, so if you are having trouble collecting payments from customers/clients and you think that they would be more likely to pay on time with a credit card, you have nothing to lose by trying it out.”

Need more info? Here’s a fabulous article from Small Business Trends that objectively discusses key vendors and what you need to know to make the right decision for your business.

What about you? Does your business accept credit cards? When did you make the switch, and how are you liking the experience? If you haven’t made the transition, do you think your company will do so soon? Share in the comments below!

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4 thoughts on “Case Study: Small Business Owners Talk about Their Transition to Credit Cards

  1. The topic of credit cards is very important. As we move to a point where every transaction is done electronically, online bill pay will become the norm. Until then, credit cards still need to be accepted. The more information that is available to reduce the ‘cost’ to the business will improve our small businesses.
    Peter Blatt Financial Advisor and Estate Planning Attoreny

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