Merchant services are fuelled by necessity. Any business success is incumbent upon weather or not consumers utilize their product or service. So if there is no need, no demand no necessity then there is little chance of success. These most common payment methods are here because we use them. If you are paying with debit or credit cards, you are supporting a huge network of business’ who survive on this aspect of commerce on many different levels. This industry is large, growing and now an essential tool of commerce across the globe. This has not come about by human necessity or accident; it has all been very carefully orchestrated and planned. It goes back many years and the basic principals of capitalism and consumerism make up the industries core.
In the past, people paid using cash. There is no lending or credit taking place when using cash. The funds must be available in order for a purchase to immediately clear. It is simple and probably the best way to live: if you can’t pay for it, don’t buy it.
On this note, debit or interact payments are always favourable as the user does not enquer any debt in the process. The money to pay for the transaction is immediately transferred from your account into the merchant’s system. If there is no money in the account, the transaction will not clear, so debit transactions are the equivalent to a cash transaction.
Checks have been used for a long time as well. Just like the debit transaction if there are not any funds available to clear the payment, it will be denied. There is however a far greater risk for the merchant to accept checks as payment. Checks are so risky; they are no longer the standard protocol for payment in any business, certainly not retail or any kind of business where product/ service fulfillment is immediate. The only place for checks in today’s business world is where invoicing and po’s are concerned, it is no longer a standard method of pay and is rarely accepted.
The most powerful and most common method of payment today is Credit Card. And this is strongly advertised and encouraged as the best method of payment for all and any products and services. It is also the most dangerous for the consumer. Credit Cards, unlike the past payment methods discussed here do NOT require any real money in order to purchase. You can use as much as your limit is, and owe the credit card company that money, in some cases plus interest. The encouragement in today’s media to “enjoy now pay later” can be harmful. Consumer debit if not carefully managed, can turn your lights out. The credit card companies stand to profit from this behaviour.
Credit Cards are generally unprofitable for the merchant’s accepting it, the only profitability and the reason merchant’s do accept it is because it has become the Standard method of payment among consumers. To not accept credit cards in your business is statistically denying yourself 25% incoming business that you do not even know you have lost.
The most benefit of this type of payment goes to the credit card companies themselves. On any one transaction between a customer and a merchant, the credit card companies profit about three times: 1. profit from interchange for providing the service itself. 2. Profit from the transaction fee’s that consumer’s are paying. 3. Profit from the merchant’s paying a percentage of each sale back to the credit card companies for being able to accept the cards.
Credit Card and the whole concept and existence of this method are also responsible for allot of good, and progress among humanity as a whole. If properly managed and carefully controlled! Cedit is essential now for all business and consumers to operate.