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Good sense & credit cards

We live in a plastic world. And by plastic, I’m not referring to plastic surgery. I’m talking about the 54 mm by 86 mm piece of plastic we carry with us at almost all times — our credit cards.

According to a February 2010 Nilson Report, more than 576 million credit cards are in circulation — that’s in the United States alone. That number is especially staggering when you consider that the population of the U.S. totals 308 million.

These days, it seems that you need a credit card to go just about anywhere.

When was the last time you paid for an airline flight at the ticket counter? Chances are you paid online with a credit card. And most hotels won’t let you book a room without tying a credit card to the reservation.

The widespread acceptance of credit cards has caused many individuals, especially in younger generations, to essentially stop carrying cash.

I recently spoke with a friend who couldn’t cover the 75-cent toll for a roadway in the Dallas area, so he drove through the toll tag lane and waited for the bill to arrive in the mail. He hardly ever carries cash, which has become characteristic of an entire generation who depend on their credit cards.

But the toll road is a rare exception to the increasing number of places where cards are accepted. And sometimes paying through credit card is the only way a business will accept payment because of the security it offers.

Credit Card ProcessingBut that security comes with a price — a price many consumers don’t think about when they hand their card over to the cashier.

With each credit card transaction, a business incurs processing fees. Depending on variables pertaining to that individual transaction, the fees may range anywhere from 1 to 4 percent. So next time you pay for that $10 lunch at Vitek’s BBQ, take into consideration that the restaurant only realizes about $9.65 of your sale amount, if even that much.

That may seem like a small amount in the grand scheme of things, but those processing fees add up, especially when a significant chunk of the business’ sales come by way of credit cards.

Some small businesses have simply decided the processing fees are not worth it. And in a city like Waco, depending on the business, they can sometimes get by with cash and check only. But for some businesses, they don’t have much of a choice. They have to take credit cards.

Two points to remember

For those businesses, there are several things they should probably consider, regardless of whether they’re currently accepting credit cards or if they’re contemplating accepting cards for the first time.

First, avoid contract terms that carry with them a hefty early termination fee. This fee, which can run upwards of $250, can usually be waived. The last thing you want to do is lock yourself into an unfair contract.

Secondly, I’m a big believer in running your merchant account through a local bank, and I say that not just because I work in treasury management at a local bank. Most of the local banks in the Waco area can meet the merchant processing needs of just about any business, and most provide much more personal, honest and transparent service than you’re likely to experience by going through a large, national merchant processor. There might even be an opportunity there for the bank to reduce your processing fees.

It is a plastic world, and with continuing changes in technology, it may only be a matter of time before credit cards themselves are no longer needed as they become replaced with smart phones. But there’s one thing that’s not changing anytime soon: More and more businesses will need to accept electronic forms of payment. And many of the local banks area are well-situated to assist any business when it comes to credit card processing, providing both fair rates and local service.




Bryan is a treasury management specialist and the director of marketing at Central National Bank. He enjoys running, reading (anything by Malcolm Gladwell), binge-watching House of Cards on Netflix, volunteering and playing the trumpet.

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