Should I accept credit cards?

It seems inevitable that at some point in the near future accepting credit cards will be synonymous with being in business. They are everywhere. Many small business owners have taken up the idea that they have “graduated” to a higher level when they have finally set up a merchant account and can accept credit card payments. I beg to differ.
Let’s first be clear that this is regarding small service oriented businesses. A retail store that does not accept credit cards may as well be selling trinkets to cruise ship passengers on the Jamaican coast. It is an absolute necessity. But a very simple fact exists for retail, restaurants, and gas stations: not accepting credit cards results in lower sales. McDonalds and Burger King, along with numerous additional fast food restaurants, have begun accepting credit en masse, largely based on fast food becoming two trips. A potential hungry customer, realizing they would first have to find an ATM to get cash, and then return back to the restaurant, would simply go home. Once one chain began accepting credit cards, the others quickly followed to avoid a distinct competitive disadvantage. The same applies for numerous other retail establishments.
In the service field, where it is known in advance there is a price to be paid, the advantage is not so clear. Especially when one considers the cost incurred. Current credit card processing rates vary from 1.5 to 3% of the overall charge, pre-authorization fees per transaction, and monthly fees. If accepting credit cards results in additional business, great! That’s the ideal. However, when current clients begin to replace current payment methods (cash, check) with a credit card, you have a problem. And this is far more likely to happen than a drastic increase in sales. When is the last time a client you “I know you have better service and more skilled technicians, but I’ll work with the loser down the street so I can use my card”? Hopefully, never (and if it has, that’s one hell of a coincidence).
Suppose your overall sales are $1,000,000 annually. With sales remaining the same, and just 20% of your payments now coming through credit cards, you will lose approximately $6,000 per year. Not a small amount of money, especially when taken from your marketing budget, where those dollars can be put to much better use. This picture gets far worse as the percentage of your overall sales paid with credit cards increases. Another question to consider is how each card is processed. Is the technician accepting payment at the customers’ home? Does he call the office, wait for your secretary to finish her cigarette break, get an authorization code, and then have your client sign a carbon tissue paper that will end up covered in coffee stains on the floor of the work van? Is that really the customer service you had in mind?
Clearly, all of this goes away if accepting credit cards results in business you did not previously have. But is this really the case? If you believe it is, then start now. If not, ask yourself which is better: Offering to pay 2-3% of the bill so your customer can have miles, or just buying the plane ticket for them?