Businesses Having Trouble with Credit Cards

Businesses have been accepting credit cards as payment for a long time but is it possible that this convenient method of paying for purchases could be eliminated one day? Although credit card use is still common today, there are many businesses that are finding that credit cards are less cost-effective for them than they used to be. With the cost of credit cards going up for businesses, many businesses may move to a cash-only method of payment acceptance or they may make other changes to the way that credit cards are used by customers to help balance out the financial problems that these companies are facing as a result of the credit card issues that are coming up in the economy today.

One example of a business that has had problems with credit cards recently is Target. This company produces its own credit card which customers can use exclusively in the stores. This is nice and convenient and even helps to bring some brand loyalty to the store because people who have the card will be more likely to shop at Target than shopping at a competitor’s store. However, Target is finding that customers can’t pay the credit card bills that they’re racking up at their own stores. Even with the money that is earned off of interest on those purchases, Target is finding that it’s not cost-effective for the company right now to maintain the use of their own cards. In fact, almost ten percent of the company’s credit card portfolio had to be written off last year.

Target isn’t the only business that is having problems with credit cards. And it’s not even just those stores that have their own credit cards that are facing problems with the use of them.

Another example is the utility company PG&E. The company had been using a two-year pilot program that allowed customers to pay their utility bills with a Visa card. That pilot program turned out to be ineffective and had to be terminated so it’s no longer possible for customers to use a credit card to pay their PG&E bills.

These changes that are taking place in the industry could be temporary changes that won’t ultimately impact the larger widespread use of credit cards in our economy today. However, they may also be a sign that bigger changes are afoot in the credit card world. If you’re someone who has gotten used to paying for everything with plastic then you may want to pay close attention to what’s going on with businesses and the way that they accept credit cards since it’s possible that there could be some changes to those methods of payment acceptance in the not-so-distant future.

This entry was posted on Tuesday, September 23rd, 2008 at 4:04 pm and is filed under Credit Card News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.