Gone are the days when people carried around wads of cash to pay for their goods and services. Today, gangsters and the Queen appear to be the only people who rely on notes rather than plastic for large bills.
Small businesses owners have to work out how they deal with an increasingly cashless society. If you operate an online-only business or one where large amounts of money need to change hands, this means that you will have to accept debit and credit card transactions.
Most banks with business account offerings will provide you with what’s called a merchant account. This will allow you to accept card payments, although you will have to provide a business history and details on your customers and sales before they provide you with one.
Your bank will also be able to lease you a credit card terminal to process payments, although advances in technology means that iPhone and Android Smartphones can run cheaper payment programs.
In return, you will have to pay a surcharge, usually 1-2% of the transaction total, for each card payment, along with the terminal lease fee. In addition, since 2003, Australian businesses have been barred from claiming back this amount, leaving them with the choice of absorbing it or passing it onto consumers.
For these reasons, some small businesses insist on cash only transactions. This makes sense if you are dealing with small transactions, such as in a sandwich shop, and there is the added benefit of instant income, rather than waiting for card payments to clear.
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However, it makes sense for most businesses to have some sort of card payment option. There are avenues other than merchant accounts – for example, online businesses can charge customers via PayPal. All the payee needs is a credit or debit card and the payment can be processed.
PayPal, founded in 1998, now has around 70 million accounts around the world and has become a standard mechanism for many online shoppers. Offline businesses, however, still have little option other than to pay their bank for the opportunity to take plastic as well as cash.