Credit cards can be a great convenience to your customers. If you have a sufficiently large customer base, issuing a credit card can result in higher sales, greater customer loyalty and increased profits. You can also earn interest revenue and fees from your credit card operation and save on the costs you will incur when your customers pay with other credit cards at your business. You'll incur some risks by issuing your own credit cards, but these risks can be minimized though careful management of your card program.
Decide whether you're going to issue your cards internally or contract with an external vendor to do it for you. While you can earn interest revenue from issuing the cards yourself, there are many advantages to using an outside organization to perform this function. You'll avoid the problems that come with making credit decisions, funding receivables and assuming credit risk, which is why many businesses choose to outsource these functions to another company.
Develop a credit policy that specifies whom you will grant credit to and how much credit you will grant. Arrange for access to credit reports from a local or national credit bureau. You'll also need to develop a credit application that collects information about your customer's income, employment, assets and other obligations.
Produce an attractive card design and marketing materials for your card such as a brochure and signage. A direct mail package that you can send to your customers along with an application for your card is also advisable. You may want to consider adding incentives, such as discount coupons and/or a promotional rate period, to induce customers to apply for the card.
Train your staff on the features and benefits of your new cards, and to instruct them to solicit applications from customer when they visit your stores. "Take-one" applications for your card should also be prominently displayed at your cash registers and at other locations in your place of business.
Process all applications for your cards promptly after receiving them and deliver the card to your customer as soon as possible thereafter. In the event that an application is declined, you should send a polite letter explaining the reason. You should also evaluate the approval rate for your credit applications after two or three months have elapsed to ensure that is sufficiently high. If not, you'll need to adjust your credit criteria or risk upsetting many of your valuable customers.
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