Many businesses find it more efficient to offer credit directly to customers rather than to accept third-party credit cards.

Question

Quizplus · Accepted Answer

Maintaining accounts and notes receivable is expensive.In addition to uncollectible accounts expense,companies extending credit to their customers incur considerable costs for such clerical tasks as running background checks and maintaining customer records.On the other hand,the credit card company deducts a service fee (usually between 1% and 5%)from the gross amount of the sale and pays the merchant the net balance (gross amount of sale less credit card fee)in cash.However,in return,the merchant avoids the risk of uncollectible accounts,as well as the cost of maintaining customer credit records.Many businesses find it more efficient to accept third-party credit cards instead of offering credit directly to their customers.

Many Businesses Find It More Efficient to Offer Credit Directly