I would think one of the benefits to a merchant for accepting a CC is that the merchant doesn’t need to worry about collecting the funds. I assume Visa/MC/Whoever guarantees payment as long as an approval is obtained.
I have no idea what percentage of revenue for a merchant is in the form of bad checks, but if it is greater than 2% it seems the guarantee of payment from the CC is offest completely. But 2% in bad checks does seem like it would be awfully high.
There are a bunch of other issues in addition to the one named (my best friend owns a small retail shop here in New York). First, security. Not only are you reasonably assured of being paid with a credit card - although the merchant can end up losing a fair amount on a fraudulent charge - but you don’t have to contend with having cash in the store. Considering that during the blackout he was robbed at gunpoint and damn close to murdered (a couple wandered in as he was being led to the back of the store, probably to be shot), having lots of cash around is not a good idea. Prompt payment is another reason - although it isn’t as quick is one would want, it’s often faster than waiting for a check to clear. Third, customer expectation; especially here in New York, no one uses checks for shopping anymore (it’s one of the provincial practices I find quaint <grin>). And lastly, but in some respects most vitally - with credit cards, people buy more. My friend’s shop specializes in non-essentials - gifts, tableware, skin care, that sort of thing. People with plastic will drop $400 for teakwood panels imported from Indonesia. Without plastic, they might not.
You can get the JCB card in the USA, but, according to their FAQ, you have to live in one of five states: California, Hawaii, Illinois, New York or New Jersey.
A friend of mine carried an Amex card while he was building his house as even retailers who accepted the card were reluctant due to the very high fee percentage. But then he didn’t use the card…
“What’s your discount for paying cash?”
“We don’t have a discount for cash, sir”.
“OK, I’ll pay by Amex then”.
“Err… how about 5% off for cash?”
Small business are those the probably most benefit from credit cards. We as a society are going cashless – the only cash I ever have is from Michigan bottle deposit refunds, and that’s just to pay for coffee at work. Places that don’t take credit cards often don’t get out our business unless there are special circumstances (vacation for example). Lots of places are seeing the light – I remember Chicagoland Burger Kings that accepted plastic back in 1996. Recently at least one local Taco Bell accepts credit cards, and maybe other fast food now. There’s a great chain of coney island restuarants around that serves beer – making it the perfect place with good food, except for not taking credit cards. They don’t often get my business, which is too bad since we’re pretty good spenders and eat out frequently.
Not taking credit cards is just plain silly. No cite, just anecdotal, and probably a little too opinionated for GQ. Sorry.
As for Amex, I don’t carry one because it’s not as universal. Plus I’m really racking up the airline miles on the current card.
I run a small retail business in the UK.
Several years ago Amex offered to sign up a lot of local businesses for free - no start-up fee, no terminal rental, just pay a percentage of each sale, using the existing terminal.
Fine; I did so. Put up all the usual stickers, etc. but still only got a handful of Amex sales annually. But they were still sales, even if they cost a bit more than similar Visa/Mastercard/Switch sales…
Last year (or early this year) they imposed a monthly fee in addition to their sales percentage. Most months I didn’t even take an Amex payment so I was immediately losing money and the monthly fees would have at least equalled my profit on an average year’s Amex sales…
That’s why I don’t take Amex.
This isn’t really on topic, but seeing as how I’ve been summoned…
From what I’ve seen, revolving credit, as used in the US, doesn’t exist in Japan. The longest a debt for a purchase can remain is two months, and even then you have to pay half after one month. You also have to ask the retailer to mark it as a two-month payment, or else the card company will expect it all at once. This effectively makes Visa, MC, and JCB more like charge cards than credit cards.
I run a very small web design and web software business. We accept the "big 4 " credit cards and yes we do have a separate account for processing Amex (we don’t use a terminal as all of our transactions are done online).
I don’t know the exact amounts it costs us to run transactions, Visa/MC/Dic versus Amex, but oddly enough when we do our monthly hosting billing we always end up collecting twice as much money from our Amex customers than our Visa/MC/Disc customers. It’s quite worth it to us to pay for the Amex account because we’d be losing over $2000/month in sales if we didn’t have it. That’s alot of money to us considering our sales are only about $3500/month.
I also think that “b2b” type businesses run into alot more Amex cards than a regular retail business would. Amex is big on getting their cards out to business owners.
Also, being able to do credit card business is a godsend, no matter what the fees. As others have speculated it’s much easier and secure to do the transactions via plastic. We have about 4 customers who prefer paper invoices. They have the hardest time remembering to send their $20-25 check each month for hosting and it takes me alot of time and effort to get it out of them. The credit card clients, on the other hand, gleefully hand over their money to me every month because no one has to bother with anything. Just click and go
Visa and Master Card lost the most recent round of appeals. The issue was over Visa and Master Card not allowing merchants to accept other cards or which banks could issue them, something like that.