In this article, you will understand the pros and cons of this type of sale for your company . So keep reading and stay up to date on the topic!
Disadvantages
1. Reduction in profit margin
Profit is one of the most important indicators of a company’s performance . In general, the higher the profit, the better for the company . The problem is that credit and debit card sales reduce the profit margin , becoming a weakness .
Operators usually charge administrative fees that commonly vary between 2% and 3.5% on credit cards, and may vary depending on the number of installments. On debit cards , the administrative fee is generally lower.
2. Lower customer recurrence to the company
When a customer buys on credit from the company, it is common for them to return to pay the bills or, at the very least, remember the company when paying the bills . This recurrence generates a relationship, as well as future sales .
However, credit or debit card sales do not generate this relationship, which can be considered a disadvantage — in terms of finance and sales . If the customer does not return to your company, it is more difficult to retain them in the long term.
3. Monthly expenses
In addition to the administrative fees already mentioned , selling via credit card generates other costs. All of these expenses added together are more expensive than any other form of payment.
An example of a monthly expense is the rental cost of the machine , which can vary depending on the type of equipment (conventional, reader connected to a cell phone or Wi-Fi). Add to this the installation and maintenance fee for the machine.
4. Possibility of fraud
Unfortunately, just like checks, credit card payments are subject to fraud . It is not uncommon to see reports in the news of cloned or stolen cards that have been used in various commercial establishments .
These scams cause losses for business owners who end up losing their products without receiving any financial return .
5. Receiving deadlines
Another disadvantage of credit card sales is the time it takes between making the purchase and receiving the money. In the case of debit transactions , the payment period is, on average, one business day .
However, purchases on credit usually take more than thirty days . Therefore, business owners need to have a good working capital or opt for advance receivables (a service provided by credit card machine operators ).
In this case, the full amount of the credit sale is advanced, but not without the charging of administrative fees.
Benefits
1. Reduction of default risks
Defaulting on payments is a major national problem, after all, it is known that many peoples have a bad credit rating. When the sale is made using a credit or debit card , however, the risk is transferred to the financial operator .
This gives the company more security, preventing possible defaults and “headaches” when it comes to billing. The transaction amount is paid by the card operator, regardless of the customer’s regularity.
2. Financial predictability in the company
In financial terms, cash flow is one of the most important issues. In short, this process consists of the amount received and paid over a certain period. The problem is that, due to delays and defaults, it becomes difficult to predict and secure receivables.
When the transaction is made by card, however, there is security and predictability for the receipt by the entrepreneur, since the payment becomes an obligation of the operator. Thus, it is possible to make financial estimates.
3. Increase in payment methods
A major advantage is the increase in payment methods. With the possibility of making sales using credit and debit cards, the customer’s life is made easier, which makes it possible to complete the sale.
When there are few payment methods, the company may be losing customers and revenue. After all, who doesn’t like having several ways to make a payment?
4. Mobility
Nowadays, there is a lot of talk about mobility. Smartphones and other electronic devices are the representatives of this mobile era and customers have already become accustomed to and enjoy the freedom acquired with these devices and the ease that online life provides .
Therefore, companies that use wireless machines for credit card sales provide a good experience and convenience for their customers .
5. Competitiveness
Attracting and retaining customers is not an easy task with so many options available. Small and medium-sized companies in particular find it difficult to expand their customer base.
Imagine a consumer arriving at a commercial establishment and having no alternative but to buy items with cash . Or worse, accessing the company’s website and discovering that he can only pay for a product with a bank slip . What a disappointment!
However, organizations that value innovation and practicality in their services delight customers , who in turn attract more buyers by revealing their satisfaction in their relationship with the company.
Therefore, institutions that do not offer payment by credit card cannot compete with those that do offer this type of service. The result is customer migration and a lack of business attractiveness.