Credit cards are good for business
While consumers love using the credit card to buy goods and services, it should be remembered that businesses benefit from their doing so.
Businesses exist to make a profit from the sale of goods and services. They know that if consumers had to save enough money before they could purchase goods and services business would be very slow. The credit card is a boon to businesses allowing consumers to purchase goods and services without having ready money. The consumer can purchase goods and services on credit allowing him/her to spend without having to save up. Businesses have the security of knowing credit card issuers will honour all transactions that have been authorised by the credit card issuers. The businesses know they will receive the money from the sale even if the credit card holder subsequently does not make any payment to the credit card issuer. In some ways, from the retailer’s point of view, a transaction by a credit card is safer than cash as it removes the temptation for thieves to steal. The relatively recent use of chip and PIN has meant that fraudsters are no longer able to transact using stolen credit cards unless they happen, due to the credit card holder’s negligence, to know the PIN.
While businesses benefit from the usage of the credit card by consumers they have to pay for the convenience it affords them. Typically the business will pay a commission on each credit card sale to the credit card issuer. Depending on their size the businesses will be able to negotiate different levels of commission on sales by credit cards. As a result some businesses, particularly smaller ones, may not accept payment by credit card for transactions say under £10.00.
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