Business Advantages and Disadvantages of Accepting Credit Cards

Merchant swiping credit card

No matter the size of a business, most customers expect to be able to pay using credit cards. Businesses have to assess the pros and the cons of accepting credit card payments before deciding if it is the right option for the business.


Accepting credit cards offers several advantages.

Increased Sales

Credit cards can increase the sales for a business. Primarily, this is because accepting credit cards broadens the base of our business, opening the doors to customers that cannot or choose not to pay cash for products and services.

Accepting credit cards also breaks down the geographic barriers of doing business because a business can potentially accept a credit card payment from anyone, anywhere in the world at any time.

Higher Sales Amounts

According to Small Business Trends, credit card acceptance can also increase sales amounts. In point-of-purchase transactions, credit card use can increase sales amounts and increase the chance for impulse buys because the customer doesn't have to have cash on hand to purchase something they see in the business location. For example, a customer might come into the establishment to buy a gift for a friend, but walk out with a greeting card, gift bag, a candy bar and a bottle of water in addition to the gift they originally came to buy.


Customers can buy what they want now rather than having to wait, so accepting credit cards adds a level of convenience for the customer. They do not have to run to an ATM to get the cash they need to make a purchase. Credit cards allow customers instant gratification because they can buy now and worry about paying for it later.

Improves Cash Flow

Elaine Pofedlt, financial journalist, says accepting credit cards can improve a business's cash flow. Credit card payments hit the merchant's bank account within a couple days of the purchase date, which improves the cash flow of the business.

The business no longer has to invoice clients and wait for payments or wait for payment checks to clear the bank. Businesses receive cash faster and easier by accepting credit card payments from customers.

Makes Business Competitive

Most businesses accept credit card payments, no matter how big or how small the business operation is. For small businesses, accepting payments in the form of a credit card levels the playing field with big competitors. Giving customers the choice to pay with credit helps keep customers from buying from one of your competitors based solely on the options they have to buy the product or service with this particular form of payment.


With the good comes the bad. Credit card acceptance can potentially bring some disadvantages to a business as well.

Costs and Fees

Credit processing companies charge fees to process credit card payments. Each time a business runs a credit card, it pays a transaction fee and pays a percentage of the sale amount to the processing company. Some companies also charge monthly fees and fees for equipment, such as credit card processing terminals.


When customers dispute charges, this can cost the business money as well. Credit card companies can issue refunds to their customers, which requires you to return the charge amount to the customer.

In addition, when a customer disputes a charge, the credit card company can charge you an additional fee, which is a chargeback fee. This typically equates to a percentage of the original charge amount.


Fraud is a problem that accompanies credit card acceptance. If credit card information gets into the wrong hands, fraudulent charges can be made to customers' credit card accounts. According to The Fraud Practice, it tends to be the credit card company that picks up the cost when fraudulent charges are made to a credit card. Beyond this, the business also has fees associated with fraudulent charges. These include:

  • The processing fee
  • Shipping costs
  • Charge-back fee

Additionally, the merchant can be at a loss for the product or service because they are not likely to receive the product back from a fraudulent purchase.

Identity theft is another problem. When an identity thief steals credit card information and uses it to make purchases from your business, you can find yourself out of the product or service you sold and the money fraudulently charged to the card for the purchase.

Complicates Record Keeping

According to the U.S. Small Business Administration, accepting credit cards adds another level to the bookkeeping and records for the business. A business has to assess the time, effort and cost of the additional recordkeeping.

To Charge or Not to Charge

While you can weigh the pros and cons of accepting credit cards before deciding it is right for your business, it is safe to say that the benefits of accepting credit cards far outweighs the disadvantages that come along with it. This is particularly true since customers tend to be willing to spend more money with businesses that accept credit card payments.

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Business Advantages and Disadvantages of Accepting Credit Cards