Credit Card Processing: A Cost-Benefit Analysis

Cash is not going away in the foreseeable future, but people are carrying a lot less of it around.  The Nilson Report estimates that cash payments will be 24 percent less by 2018, and that card payments will rise over 50 percent. If you own a business and are not set up to accept credit cards yet, it is time to get started.  

Some merchants do not accept credit cards because they are concerned that the costs of processing will cut into their profit margins and negatively impact their bottom line.  This cost-benefit analysis of credit card processing demonstrates the benefits and expenditures associated with accepting a wider range of payments.

The costs of credit card processing include:

  • Merchant account setup fees
  • The actual processing fees
  • Hardware, such as terminals and point-of-sale systems
  • Fraud liability and security measures

However, the benefits are numerous:

  • Increased sales: Credit card payments are linked to increased impulse buys, which raise both the frequency and total spending amount of purchases.
  • Customer satisfaction: 75 percent of consumers prefer credit and debit cards for purchases over cash (see graphic below).
  • Secure transactions: 53 percent of consumers feel that credit and debit cards are safer than cash.
  • Safer money-handling practices: Digital payments reduced the time and expense of counting, sorting and transporting cash to the banks. It also makes businesses less attractive to thieves since there is less cash on the premises.
  • Clear accounting records: With digital payments, there is a clear record of purchase amounts and times, and a point-of-sale system can provide greater insight to a merchant for accounting and inventory purposes.

In conclusion, if you’re unsure whether to transition from a cash-only business to one that accepts credit cards, you can perform a cost-benefit analysis to determine the benefits and costs of associated with digital transactions.  Every business is different, but any merchant can start with a smaller or even seasonal merchant account plan to see how their sales are impacted by offering credit card acceptance.

For more information about implementing secure credit card processing at your business, please contact us today.


In 2016, 75 percent of consumers chose credit or debit cards as their preferred form of payment. (Source: TSYS)
Preferred Payment Type - Tsys 2016

53 percent of consumers feel that credit and debit cards are safer than cash for in-store purchases. (Source: TSYS)
Preferred Payment Type - Safest