Benefits to Business and the Economy

In Their Own Words: Retailers Agree There Are Benefits to Accepting Electronic Payments

As a vital part of the 21st century economy, payment cards help businesses see more sales, greater fraud protections, and faster payment. Without this technology, commerce on the Internet would be virtually nonexistent. Indeed, the current system is a finely tuned economic engine that is performing better and better each year.

Connecting Consumers, Businesses Globally

"Without them [electronic payments], the incredible boom in e-commerce would almost certainly never have happened…Credit cards are a perfect example of the free enterprise system at work, and we shouldn't bother it while it’s working."

– Larry Romero, Target Strategies, LLC, South Bend, IN
(Small Business and Entrepreneurship Council testimony to the House Subcommittee
on Commerce, Trade and Consumer Protection, 2/15/06)

• Electronic payment cards serve as an electronic passport to the global marketplace, connecting consumers and businesses around the world.
  
  
• Today, there are more than 14,000 U.S. payment card issuers offering cards on the American Express, MasterCard, Visa, and other networks. These cards are accepted at more than 24 million locations in more than 150 countries.

Leveling the Playing Field for Small Business

“No one is forcing me to accept credit cards. I just think it’s the easiest and most cost-effective way for my company to conduct business.”

– Rodney Grubbs, Visionary Sports, Brookville, Ind.
(Small Business and Entrepreneurship Council testimony to the House Subcommittee on Commerce, Trade and Consumer Protection, 2/15/06)

• Benefiting from flexible terms and ease of use, small businesses manage monthly expenses, track purchases, and weather short-term fluctuations in cash flow.
  
  
• This technology also levels the playing field, encourages entrepreneurship, and allows smaller retailers to compete with larger businesses.
  

Increasing Retailers’ Sales

"Our customers spend more money when they spend with plastic. Speed is critical to our success. We're synonymous with convenience."

— Ron Hannah, 7-Eleven, 1/10/2006, Knight-Ridder

• In today’s competitive marketplace, consumers favor retailers that are quick, convenient, and secure. For customers in a hurry or those who simply do not wish to risk carrying large amounts of cash, the ability to pay by credit or debit card is a deciding factor when choosing between retailers.
  
  
• By accepting credit and debit cards, retailers increase their sales. Indeed, when using electronic payment cards, customers are more likely to make a purchase than when using cash or check. And consumers are also more likely to make larger purchases when using electronic payment cards.

Controlling Operating Costs

“The system we have now works pretty well and is too valuable to our nation’s business community to tinker with.”

– Rodney Grubbs, Visionary Sports, Brookville, Ind.
(Small Business and Entrepreneurship Council testimony to the House Subcommittee on Commerce, Trade and Consumer Protection, 2/15/06)

• Electronic payments offer huge savings for small and large businesses alike.
  
  
• Experts believe electronic payments save retailers up to 70 percent of the cost to process a purchase order. Indeed, in a 2003 examination of spending, RPMG Research Corporation discovered that companies save approximately $23 billion annually by shifting from paper to electronic payments.

Improving Payment Reliability

“[Café] owner Margarita Uricoechea decided to stop taking cash… she says the credit card policy solved other major problems she faced as a small business owner: how to keep large amounts of cash safe and how to trust employees with her café when she can’t be there herself.”

— “Plastic Only: Café Refuses to Accept Cash,” NPR Morning Edition, 10/11/06

• Retailers receive faster payment for goods when consumers pay with payment cards instead of check. In addition, payment card purchases enable retailers to avoid many of the costs incurred by bounced checks, counterfeited currency, or theft at the cash register.
  
  
• Small businesses — businesses that are particularly hurt by slow and fraudulent payments — benefit from this more reliable form of payment, as they are the least able to absorb those losses.

Strengthening the Economy

“Retailers get a lot of benefit from accepting credit cards.”

– Ernie Del Giudice, Minuteman Press, East Haven, Conn.
(Small Business and Entrepreneurship Council testimony to the House Subcommittee on Commerce, Trade and Consumer Protection, 2/15/06)

• Payment cards account for nearly 90 percent of all purchases on the Internet. According to e-Marketer, online retail sales in the U.S. hit $102 billion in 2006 — an increase of 24 percent over 2005. Without electronic payments, this increase, or the exponential growth of e-commerce, could not occur.
  
  
• Electronic payments generate more than $2.5 trillion annually for the U.S. economy, which benefits all economic sectors and creates new jobs and opportunities for Americans.