August 30, 2014

Why Service Businesses Should Accept Credit Cards

ProPay, to accept credit cards in your service businessLast week on the Small Business Trends Radio Show the topic was about accepting credit cards in your business.

My guest made a key point: that service businesses often do not think of accepting credit cards.

One of the biggest motivations for a service business (e.g., accountant, consultant, attorney, landscaper) to accept credit cards is to get paid faster.

My guest was Samuel Peery, an executive of ProPay. He pointed out that 24% of accounts receivables are at least 90 days old. You can quickly cut down the age of your receivables and get the money owed you, just by accepting credit cards.

Not only do you get paid faster, but your customers and clients may like the convenience of paying with credit cards, too.

Samuel suggested that when you sign up a new customer or client, you should get a credit card number and an agreement up front to charge the credit card if an invoice is not paid within 30 days.

ProPay also has a page in their website describing the benefits of accepting credit cards, for anyone who wants to learn more.

ProPay is a service that substitutes for a traditional merchant account. When a customer gives you a credit card, you either call in via phone or go online through the ProPay website to get the transaction approved. ProPay has been around for ten years.

Go here to listen to the radio interview with ProPay.

9 Comments ▼

Anita Campbell - CEO


Anita Campbell Anita Campbell is the Founder and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses, and also serves as CEO of TweakYourBiz.com.

9 Reactions

  1. Thanks for the tip! ProPay offers great service, but it appears only to US residents. I almost completed the application form when I noticed I’m required to enter my state and it assumes I’m from USA. Only then I noticed a note at the bottom “ProPay only accepts applications from U.S. residents”. Oh God. I mean everyone can browse that site and there is no clear indication that it is only for US residents. Waste of time.

    Can you recommend a similar service for Europe residents?

  2. Hi Ignat,

    For outside the United States, try http://www.Moneybookers.com. They offer merchant accounts to accept credit cards.

    I have not used the merchant account feature of Moneybookers, but when I was serving as Executive Editor over at Creative Weblogging we used Moneybookers to pay writers in certain countries outside the U.S.

    Anita

  3. I have been using ProPay for over 2 years now and it has been a lifesaver. I do believe that my sales have increased as a result of accepting credit cards. My website customers have the option of paying thru Paypal or credit cards directly thru me. About 90% choose credit cards instead of going thru Paypal. Credit cards also helps with wholesale customers placing larger orders. I don’t want to have to worry about collecting money, let the creditors do that.

  4. I began accepting credit cards in 1991, and rates have become better thanks to the Internet and alternative options to working solely with a bank.

    Credit cards definitely make payments quick and easy. Although few of my customers pay with Paypal, I do make that option available.

    I’ve heard of ProPay but have neither looked at the product nor have been asked by customers to install it. That doesn’t mean I won’t consider it, especially since you’ve brought it to my attention, Anita.

  5. Great show Anita. I am in complete agreement with ProPay for several reasons in addition to simply reducing the average collection period (ACP)of the receivable. To name a few: 1) providing the client an alternative form of payment allows the service provider(SP) the opportunity of increased profit margins and at the same time the client the ability to borrow (credit card) to finance the SP billable.
    2) In order to extend credit to clients, all SP’s will have to go through a credit review by the host bank extending the point-of-sale consumation. This effort provides several positive market “signally” effects. The first is the shoring-up of the SP’s balance sheet, namely, lowerer investment in AR, lowerer minimum operating capital, and lower financial risk. Second, the opportunity of offering clients credit card payment options is in effect “factoring” sales – NOT receivables (a potential negative business indicator) thus positioning young or small or high growth companies a sustainble competitive advantage.
    The cost of capital associated with transaction expense (i.e the cost to the SP to accept CC’s) is far surpassed by the combined savings associated with bad debt write-offs and AR capital financing.

  6. Accepting credit cards means you will be charged the appropriate transaction fees which directly cut into profits. To offset this, a 2%-3% fee should be charged if a client wants to pay by credit card.

  7. ProPay difinetly sounds like the way to go. The majority of customers that we deal with prefer paying with credit cards…receiving your money faster is always a “big plus”.

  8. Does anyone know how accepting credit cards over-seas works? My wife and I are finally making enough with our internet business to quit our day jobs. The beautiful thing is that we can do our job almost anywhwere in the world.

    So if I accept credit cards in a different currency how does this work?

  9. i need help!
    merchaunt acaunt moneybookers!

    brat88@mail.ru

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