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Payment Processing: Accepting Debit and Credit Cards

Sep 17, 2008
Running a business - whether online or retail - means being able to process your customers' payments in a variety of ways. While many people will pay with cash, a large portion of your customer base will likely use their credit cards to make purchases. You need to be ready for them by having a way to process those transactions. What's more, there is another challenge to think about when you're looking for a payment processing solution: debit cards.

Debit cards are becoming increasingly popular for a couple of reasons. First, they allow your customers to avoid having to place new purchases on their credit cards. By doing so, they can elude the hefty interest rates that their credit card companies would otherwise apply to those purchases. Second, debit cards offer your customers an easy way to manage their personal finances. By allowing the payment for new purchases to be deducted immediately from their checking or savings account, they can more easily control their spending habits according to their budget.

As the use of debit cards continues to grow, you'll need to be able to process payments that are made with them. Below, we'll discuss the advantages of processing credit and debit cards and why both are critical to your business.

Advantages Of Accepting Credit Cards

Despite the fact that more people than ever before are using debit cards to pay for items, credit cards still dominate the market. That is, a larger portion of your customer base will still be motivated to use credit cards. Further, this trend will continue into the foreseable future. From the consumer's perspective, credit cards have another advantage; protection. A federal law titled the Fair Credit Billing Act (FCBA) allows your customers to dispute fraudulent activity on their account. They have little liability in the event someone uses their credit card without their authorization.

Because millions of people continue to use credit cards to buy goods and services, you need to have a way to process those transactions.

Advantages Of Accepting Debit Cards

The main advantage of accepting debit cards is that more people are using them each day. There are a few reasons behind this trend. First, credit card companies have begun to pull back the amount of credit they offer their customers. When people are already near their limit, this effectively removes their ability to use their credit card. As a result, they often begin using their debit card for purchases.

Second, as mentioned, many people use their debit cards in order to easily balance their checking (or savings) account at the end of each month. The money for purchases is automatically taken from their account. When your customers review their bank statements, they can monitor their spending, balance their books and adjust their budgets, if necessary. As a merchant, this should encourage you have a merchant account that allows you to process debit card transactions. Over time, they're likely to become a growing part of your business and your revenue stream.

Accepting Both To Build Your Business

It should be clear that it's important for your business to accept both credit cards and debit cards for payment. Your customers will want to have the option of using both. In fact, some of your customers may only have a debit card. Fortunately, most banks have linked debit cards to the same network that facilitates credit card transactions. That means most merchant accounts will allow you to accept both easily. In other words, you won't need to choose. As the tide slowly shifts from one card to the other, your payment processor will be able to adapt seamlessly.
About the Author
This article is brought to you by PaySimple, a leading provider of merchant account services.
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