Accepting Credit Cards
Business owners discuss whether to take payment by credit card. September 4, 2005
Question
I have never taken credit cards. I don't believe in them and don't use them. But in the last two days, two customers have said I should take cards. I don't mind taking them, but I:
1 - Don't want to pay a monthly fee
2 - Don't want to have to meet a monthly minimum.
3 - Am willing to pay a higher % to the card companies instead of a minimum or monthly fee.
4 - Would prefer to do all the processing on the internet or on a phone.
All that said, do any of you have a setup that meets my conditions? If you don't take cards, do you know if you lose any sales because of it?
I feel that the customers I have can afford what I charge. If they are shopping for custom work, they usually have the money to pay. But I may be missing out on a few sales here and there as well.
Forum Responses
(Business and Management Forum)
I went through this a couple years ago and now accept Visa and Mastercard. It was a good decision for my business.
First, it is not that expensive if you shop around. I found that Bank North was the best for me. Rates are $7.00 per month service fee, $0.25 per transaction plus 2.4% of the charge amount. I do all mail order (no cards in hand), so my rate is higher. If your sales is going to be walk-ins and card swipes in your machine, then you could possibly get a rate as low as 1.8%.
Second, I don't worry about bounced checks. If I have a signed contract or card slip, then I should be fairly comfortably covered.
Why not charge your customer the added 2% for using a card? Or just add it in and don't ask for it. Many customers that have the money still prefer the card for their security, as well as yours.
We're looking into revamping our website and adding new products that we can easily ship. I wouldn't do this without a card sales system. We bought a Shopbot and are looking into some new products to add to what we already do.
The agreement you sign when you get set up to accept credit cards states that you will not charge an additional fee for accepting the card. If you know the job will be paid with a credit card first, you can bury the fee in your pricing.
We stopped taking cards because the jobs where people whipped out the card at the last minute were just too tight on profit to justify the cost. However, depending on your business, credit cards may enable you to get all your money up front, and that's a good thing.
There is nothing wrong with credit cards; it's the spending-more-than-you-make thing, when you don't have a windfall lined up. I use them to carry us until a job is completed sometimes. I think if a person advertises that they accept credit cards, it would surely bring in some work, especially on furniture. I take them using my Paypal account. It's as easy as selling a saw on E-bay, and the customer feels good because it's one less person with their credit card number.
I definitely think it's worth accepting credit cards. Basically, I like to give clients every option to pay. What I do is build in a 5% surcharge on every order. Then I offer a 5% discount for cash. Everyone's happy.
What's not to "believe in" in a credit card? They are what they are. I've been thinking of doing this myself for retail sales, or even as security on my wholesale accounts, with a blanket authorization on file. In 2004 I wrote off $11k in bad debt. First time ever. I'm not a lender, and I shouldn't take on that function without the legal knowledge that Visa has, or my bank, for that matter. We have to jump through many hoops at the last minute just to lien a property. After reading this thread, I'm going to get back on this.
I accept Visa, Mastercard and Discover, as I have a retail showroom that carries accessories, as well. If you look hard enough, you can save money. I have no monthly fee, no transaction cost, pay about 2% per transaction (over the phone charges are more). In today's market, it is a good idea to accept credit cards.
I'm using Merchant e services. I am paying 1.78% for card-in-hand purchases, a little over 2% for phone orders. No fees whatsoever. I bought my machine. They hit you hard if you rent them. I'm very happy with them.
We have taken Visa/MC for about 5 years. In this area (MD, DC and Northern VA), people live by plastic. We also do a lot of retail for the hard-to-find hardware and some local hobby guys. That little trickle of money adds up by the end of the year. As far as recouping your transaction fees, the rules vary from state to state. Here in MD, you can only charge the cost of the charge incurred by you. This policy must be posted in the sales area and on contracts. This hasn't seemed to slow us up any. We did lose about 4-5 jobs per year before we decided to take the card.
