Businesses can only exist if they make a substantial profit from the sales and services provided by them. All business people are aware that if consumers were to depend solely on their savings/ready cash to purchase goods and services, then their businesses would run very slowly indeed. So, the act of purchasing goods and services on credit cards is a boon for a majority of businesses as this facility allows consumers to purchase goods and services even when they don't have the ready cash. The consumer is able to buy goods and services on credit, there and then.
Businesses have the security of the knowledge that credit card providers are committed to honour all transactions that have been authorised by them (credit card providers). Businesses also know that they will receive money from the sale even if the credit card holder later fails to make any payment to the credit card provider.
Also, the retailers are better off conducting transactions made on credit cards because they won't have the need to store large amounts of ready cash in their retail shops and this, in turn, reduces the temptation to steal/pilfer cash by opportunists present in the buildings. And what is more, the relatively recent introduction of the chip and PIN means that fraudster can no longer operate any transactions on stolen credit cards if they do not know the respective PINs.
While businesses benefit greatly from the regular usage of credit cards by consumers, they (the businesses) are obliged to pay the credit card providers for this convenience afforded to them. As is the custom, the business is obliged to pay a commission on each credit card sale, to the credit card provider. Levels of commission depend not only on the size of the business but also on the amount of sales made on credit cards and are negotiable. Because of this obligation, some small businesses do not accept transactions, of say under £10.00, when made on credit cards as it will not benefit them in the long run.
Syed Abedin is a mortgage broker and personal credit expert. His e-mail address is syzab@btinternet.com
Article Source: http://EzineArticles.com/?expert=Syed_Abedin
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