The average American holds 3.84 credit cards, according to data collected by Experian. With many credit card options available with rewards for everyday transactions, credit card-savvy consumers are quick to swipe their cards to rack up points or miles. It makes sense from a consumer standpoint because it doesn't cost them any more to put a purchase on a credit card than it does to use a debit card or cash.

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But if you're a small business that doesn't yet accept them, why is accepting credit cards worth it? There are some definite advantages to accepting credit cards, but there are also some disadvantages you should know about before making a decision. 

Overall, the pros outweigh the cons of accepting credit cards. And for the majority of business owners, it is worth it. Here's why:

Larger customer base

If you don't accept credit cards in your business, you're limiting your customer base. Just 26% of transactions are paid for using cash. Most often, cash is used for purchases of$10 or less, at 49% of all transactions. Consumers who prefer to pay with their credit cards may opt to go elsewhere if you don't accept credit cards, making you lose out on what could have been a large sale.

Accepting credit cards can also allow you to expand your product or service offerings. If you want to sell online, it's difficult for consumers to pay for things with cash, especially if they don't have a bank account. When you accept more forms of payment, you can increase your customer base both in-person and virtually.

Convenience

Taking credit cards as payment provides convenience to the consumer and business owner. The consumer doesn't have to worry about having enough cash in their wallet to make a purchase; they can just swipe their card. Business owners can set up their merchant account or payment processing system to integrate with accounting software, making bookkeeping and inventory tracking easier.

You also no longer have to create a merchant account to provide processing and credit card terminals. Business owners can use payment service providers like PayPal or Stripe to accept credit card payments. This is another way to accept more forms of payment, which adds convenience and can improve your customer base.

Consumer trust

Consumers trust credit card companies because they offer fraud protection and chip technology that keeps their personal information safe. By accepting credit card payments and displaying the familiar logos near your point-of-sale system, the trust transfers, and your business gains legitimacy.

Higher Sales

When someone has a cash budget, they can only spend that amount in your store. But with a credit card, their spend limit is as high as their available credit. When paying cash, the average transaction is$22, while the average non-cash transaction is$112. You don't want to lose that transaction to a competitor down the street. That$84 difference could make accepting credit cards worth it for the average small business owner.

Not only will you get more sales when you accept credit cards, but it can also improve safety for the consumer and business. It can be dangerous to walk around with large amounts of cash. If they see your customer counting dollar bills at the register, they could follow them out or wait around to take it from the register. Thieves are always looking for a distracted person or someone heading to the bank to make a deposit so they can make their move.

Faster transactions

Even if you do more B2B business and rarely interact with consumers, accepting credit cards can be worth it. You can spend less time sending out invoices and following up on late payments. You won't have to wait days for a check to clear or find out one of your clients bounced a check.

When you accept credit cards, the transaction is processed and settled quickly. Within a day or two, you can have your funds in your account. The invoicing process can usually be integrated into your payment processing software, requiring you to click a few buttons to send it off in seconds. You'll get a notification that the payment has been made by credit card, and you won't have to worry about a late payment or a check lost in the mail.

Competition for merchant accounts

One downside to accepting credit card payments is the cost of processing fees. Business owners have the upper hand when selecting a credit card processing company with so many options available. Even small business owners and online merchants can use competition to their advantage to get the best deal on payment processing services. The increased sales and wider demographic provided by accepting credit cards can easily pay for the additional cost of merchant services.

Setting up a merchant account is easier than it used to be. Once you've selected a payment process and negotiated your fees and terms, you're ready to set up your point-of-sale system or payment gateway. For small businesses, a credit card reader may be the right move until you have enough volume to justify the additional cost of a terminal.

Alright, what are the disadvantages of credit cards?

Business owners should be aware of chargebacks and credit card fraud, which could create a liability. A consumer can open a dispute for a service or product, which could cost the business if the credit card company agrees to refund the purchase. Digital credit card fraud, or card-not-present fraud, is expected to cost retailers $130 billion from 2018 to 2023. Businesses can protect themselves by asking for ID when accepting credit cards and improving online security and variation layers for digital purchases.

For consumers, high fees and interest can add up quickly, causing them to pay much more than the original cost of products or services. Using a credit card can also makes consumers more likely to spend increased amounts of money.

The verdict? The pros outweigh the cons

The main motivation for retailers to accept credit cards or debit cards is increased sales per person. Consumers are likely to spend more when they aren't restricted by the amount of cash they bring to the store. 

It also gives retailers a larger demographic of people who use credit cards for everyday purchases, especially those whose cards wrack up rewards

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