Many farmers start out by selling direct to consumers at Farmers’ Markets, Farm Stands or through shares and memberships (CSAs). It is inevitable that, at some point, you will have to decide whether you want to remain a ‘cash only’ business or whether you want to offer alternative ways for customers to pay.
There are some compelling reasons to accept credit/debit cards. Consumers are carrying less and less cash these days. If you want to make the sale you may have to accept that people will need to use some alternate form of payment. Electronic transactions are frequently faster and more efficient than cash and checks. You will have a paper trail which will make recordkeeping easier. On the other hand merchant accounts cost money and do have some risks attached.
Below are some questions to help in your decision-making.
- What is your average sale/customer? If your average sale is $10 or less then accepting cards may not be a good decision from a financial perspective. There are fees for these transactions and even if your overall sales increase it may add more to your costs than you will gain. On the other hand if your typical sales are $25 and up, it might make it easier for customers who typically don’t carry much cash.
- Do your customers have access to an ATM near your stand? If you are selling at a Farmers’ Market which has an ATM nearby then customers will have the option of getting cash. Of course this requires an extra step and if the next vendor has essentially the same product(s) and takes credit cards you might lose out to convenience.
- Do you have mostly regular customers or do you have a lot of tourists/visitors? If your customers are mostly regulars they will know you and come prepared. Since you know them you might feel more comfortable accepting personal checks for larger sales. On the other hand if your sales are mostly to tourists or people unfamiliar to you the option to pay by credit card might help sales.
- Do you want customers to place and pay for orders online? If you have a CSA or are affiliated with an online farmers’ market you should certainly consider having some form of online payment option. Most eCommerce vendors will tell you accepting credit/debit cards is an essential component of a successful enterprise.
- Do your customers include organizations and other businesses? If you are selling to institutions, organizations, businesses they might want pay with a credit card. The advantage to you is that you will see the money much faster than if you have to invoice for the sale and then wait 30 days or more for the payment.
Before you make the decision to accept credit/debit cards or some other online payment service such as PayPal or Bill Me Later do some research, consider the questions above and start slowly. If you do decide to offer alternatives to cash only transactions be sure to track your results. You will want to know whether your decision results in more overall customers, increased sales/customer and/or higher customer satisfaction. Any of those results could be interpreted as a good business decision.