One of the very first things you need to do when starting a business is figure out how you're going to take money. Whether you're selling a product or a service you must make it as easy as possible for your customers to pay. The easiest way for most people to pay you will be by credit card. Nearly everyone has either a credit card or debit card with the Visa and Mastercard logo. If they don't have one they can easily go to their local drug store and purchase a prepaid one.
Many people think accepting credit cards is expensive. I believe that NOT taking credit cards is expensive. For example let's compare it to checks. If someone writes you a bad check the bank fees can be in excess of $25, not to mention the damage to your reputation, and you rarely if ever are able to recover the product which they wrote the bad check for. A check is essentially an IOU and anyone can get a checking account or produce a fake check on their computer. The total cost of taking checks is hard to measure because taking a bad check will lower the quality of life and cost you the amount of the check.
Credit card processing typically will cost you about 3-5% of your total sale. At first this sounds like a lot but when you consider it removes many of the risks involved with taking checks and many other conveniences it's not too bad. The biggest benefit to to accepting credit cards are all the customers you'll get. More and more people are only carrying a credit card as opposed to cash. So many times the only way they have to pay is with a credit card.
When it comes to online businesses you really have to take credit cards. And if you think a Paypal account will be enough you're wrong. It's common knowledge that anybody can get a Paypal account so having Paypal as the only way to pay on your site is an indication to your visitors you're either small time, a crook, or too cheap to have credit card processing. Having an authentic merchant account is going to tell your visitors you're for real. By accepting credit card payments through a merchant account you're sure to see an increase in your conversion rates.
You'll want to make sure you accept Visa, Mastercard, Discover, and American Express. Don't make the mistake of being too cheap to take Discover and American Express. I frequently run into small businesses that don't take American Express because they perceive the fees to be higher than Visa and Mastercard. The truth is, the cost for taking credit cards will be about the same regardless of the card type once you add in all the "not so obvious" fees Visa and Mastercard charge. In addition American Express card holder tend to be more affluent and more loyal. I personally carry an American Express and if I stumble on a business that doesn't take it - yes, I'll give them another card or cash but I'll got out of my way not to bother shopping there again.
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