Top 5 Ways Credit Cards Help Your Small Business Stay Profitable

Small business owners don’t like paying credit card processing fees. But new research shows why accepting credit cards is still a great option for most small businesses.

When you factor in the convenience and reliability of credit card payments, small businesses benefit greatly from accepting this popular method of everyday transactions — and business owners also gain additional benefits and rewards that small business credit cards can use to cover business-related expenses.

Let’s look at some of the ways credit cards help small businesses stay profitable.

#1: Accepting Credit Cards Increases Small Business Revenue

Many studies show that accepting credit card payments can help small businesses increase their average transaction value by 10-15% and increase revenue by up to 20%.

By making it easy for your customers to pay with a credit card, your small business can make customers more likely to spend more money with you, which can translate into a significant increase in your overall business revenue.

No. 2: Credit card transactions are cheaper than cash

It’s true that credit card processing fees are the biggest expense for small businesses, knocking several percentage points off each purchase. But compared to the cost of cash transactions, credit cards are a bargain for business owners. If your small business still accepts cash, you may not notice it, but receiving cash payments also costs you money.

Research cited by Square found that cash costs about 9.1% of the cash received. There are costs and risks associated with handling cash — cash drawers, safes, cash management, and bank fees. Not to mention the risk of cash being stolen, mishandled, or lost.

Compared to the mess and friction of cash, credit cards seamlessly transfer numbers from customers to a company’s bank account. Isn’t that worth paying a few percent to the credit card companies?

No. 3: Credit Cards Help Small Businesses Enter E-Commerce

Want to sell online? You need to accept credit cards. E-commerce is becoming a larger part of the retail industry than ever before; according to Census data from the second quarter of 2024, e-commerce sales accounted for about 16% of total U.S. retail sales.

No. 4: Higher-income customers are more likely to use credit cards

According to research from the Federal Reserve, credit cards are more popular among consumers with higher incomes. The Fed’s “2024 Findings from the Diary of Consumer Payment Choice” report found that the higher consumers’ incomes, the more likely they are to use credit cards to pay:

Data Source: Federal Reserve, “2024 Findings from the Diary of Consumer Payment Choice”

If your small business wants to sell to high-income, high-spending customers, accepting credit cards is a must. Make it as easy as possible for affluent consumers to reach for their wallets and shop with you.

No. 5: Business Credit Cards Help You Earn Rewards

In addition to the benefits of accepting credit cards for your small business, there are some underrated benefits to using credit cards as a business owner. Small businesses can reap significant rewards from using business credit cards to pay for everyday expenses and monthly bills.

In 2024, credit card companies have become more competitive in offering generous welcome bonuses, special offers, extra rewards points, and other incentives to attract new business credit card customers. You can earn cash back, travel rewards, and other benefits that help your business — simply by changing how you spend money on your business.

The best business credit cards can give you great benefits, such as:

• 1.5%-2% unlimited cashback on all purchases
• Bonus loyalty points in the categories where your company spends the most
• Frequent Flyer Miles when you book a business trip

Summary

Small business owners are always concerned about the bottom line, and it’s easy to feel the sting of credit card processing fees. But think about the value and risk management your business gains from accepting credit cards: reliable revenue, predictable transaction costs, and the added value of being able to participate in e-commerce.

And if you decide to be more proactive in using your corporate credit cards for business expenses, you can earn even more with cash back, reduced business travel costs, and more.