Accepting Credit Cards
Do any of you accept CC’s as a form of payment. We seem to get a few requests a month and I’m wondering if it would be worthwhile in terms of selling more jobs because we do offer it as a payment option.
Currently we’re not set up for it. I’m going to be looking into available options but I’ve been warned by a few people to be cautious and shop around the services for different rate levels.
Does anyone here have any particular experience with this, good or bad?
I would look into a service like paypal or equivalent.
and look into how disputes are handled
bobl Volo, non valeo
Baloney detecter WFR
don't know if Costco is near you but I've thought of maybe doing same thing & they offer it
they have a grand rep in all their endeavors
There is a Costco not to far away from here, do you have any details on what services they offer?
Don't use paypal. I've heard too many horror stories about money being stuck for a long time because of paypal. Talk to your bank, as most of them have a merchant program that they will manage for you.
A couple of years ago we tried it. Advertised it and everything but had no requests. In the 7 years I have been in business I have had 3 requests, I lost on job because of it the other 2 just wanted the airline miles. If I had a couple requests a month I think I would do it again but currently we aren't considering it. DanT
The main reason the boss is hesitant, and I happen to agree, is the loss of 3% or so on the sale to a processing company.
I suppose we could simply say if you pay with a CC you must pay the extra % but I don't know how well that would go over.
On the other hand we have had several request, probably 1-2 a month or so. I know we've lost a few jobs because of it, but those are mainly small jobs 1-5K ish where the people didn't have cash on hand and to be honest, not usually jobs we really wanted.
We get several request from people wanting the points or miles or what ever their card of choice offers however it's usually not a deal breaker in those cases.
I had a customer ask today about it and she seemed shocked and appalled we didn't take plastic.
I think it does depend on your clientele and the type of work you do. I know of several contractors (all remodelers) around here who recently started to accept credit cards, mainly because an increasing number of their clients want the miles.********************************************************
"It is what we learn after we think we know it all, that counts."
John Wooden 1910-
"I suppose we could simply say if you pay with a CC you must pay the extra % but I don't know how well that would go over."MT started taking CC for taxes and this is exactly how they do it, charge the percentage in addition to the base price. I don't know if the CC companies had to change their policy, but they used to have language in their contract that a retailer couldn't do that. That's why you saw discounts for cash at the gas pumps instead of added percentage for credit.
"MT started taking CC for taxes and this is exactly how they do it, charge the percentage in addition to the base price. I don't know if the CC companies had to change their policy, but they used to have language in their contract that a retailer couldn't do that. That's why you saw discounts for cash at the gas pumps instead of added percentage for credit."Typically those are treated as merchant sales.Rather they are cash advances.
I don't understand, Bill. What are "those" and "they" in your post?
Those - charges for taxes and license fees.They - goverment.
I took CC for about 20 years when i did art fairs. I had three SNAFUs with customers per se (one my fault where i accidentally overcharged), but i can tell you that the banks alwaysalwayswalways take the customer's side w/o asking your input at all. If a customer complains to the CC comany, the first you may know of it is a charge-back on your statement weeks later. At least once a check clears, they can't take it back.
The biggest hassles i had with my service was from being sold by one bank to another several times (they don't consult you before they do it), having postings with authorization numbers not credited to my account, and arbitraty limits set by banks on per-ticket amounts such that the card is refused even though the credit limit is not reached. The banks will never tell you WHY a card is refused.
I once worked out a deal with some repeat customers in Denmark where i charged their account $100 every 24 hours until the total was reached...not exactly kosher, but the only way we could get circumnavigate their bank. A gov't bureaucrat ain't nuthin' compared to the CC companies' buffoons.
You'll also pay about 3% of a sale to fees, more if you don't have POS capabilities and the "phone purchase" means higher fees. Will you add this on to your price? Hidden or not? Also, setting up for MC/Visa is different from Discover is different from AMEX. A tip: if you do buy the terminals, what the bank charges $250 for can be purchased on ebay for $40. That said, when i got out of the business three years ago, i was hearing very good things about the CC service provided by Costco.
I started about a year ago with Visa/MC. I just added Amex yesterday. I average about $3-4K a month. Numerous times, I'm sure it's gotten me paid today when I might have otherwise had to wait on somebody's cash flow situation to clear up.
Mine's set up thru Quickbooks and it's pretty painless to use. Costs $20/month plus 3%, I believe. I figure that's cheap enough considering the times I've had to chase checks and gotten bad checks.
"Let's go to Memphis in the meantime, baby" - John Hiatt.
I have cc capabilities in order to do work at Camp Lejuene. Have mine through BB&T. They charge $20.00 a month and 3.1% of sales price. Have never had any problems with them.
Mine is all done on the phone.
My complaint is you can never get the 3% back, if you add the 3% to the cost then the bank gets even more. Good thing is that the money is in the bank the day after I make the call. Have not used it with any other customers.
Have been thinking about advertising the fact that I can take cc's. Just can't decide if it is worth the 3% loss.
We opened a merchant account when we were shipping a lot ($30K to $40K per month) of telephone systems out of state. We never had a problem then (We continue to have a 0% chargeback level), but now, because our volume is very low (some months we don't do any transactions) and our ticket size tends to be high ($3,000.00 or more), we have been having issues with our processor.
Despite our perfect record, and the fact that we pay our processor about $60.00/month in various fees and minimum discounts, if I run a $3K or more phone system through, it's a crap shoot whether or not their 'fraud' department will flag the transaction and hold the money until I provide additional documentation. Usually this means faxing the invoice with all of the customer's information to the processor. I don't know what this proves, but it generally results in them releasing my money.
I definitely agree with the poster who recommends avoiding Paypal. Paypal is definitely not geared to handling large transactions, and although I did use Paypal for a brief time with no problems, the horror stories convinced me to drop them.
BTW, I like to call American Express 'honest thieves'. While on the face they charge the highest discount rates, they won't surprise you with 'non-qualified' transactions like Visa or Mastercard, and they have never held my proceeds, even though my volume is now low, while my ticket sizes remain high.
I am currently considering accepting only American Express, processing directly with them, and elminating most of the monthly fees and crappy service of our credit card processor.
what are "non-qaulified" transactions.
I wish I knew for sure. Non-qualifying transactions are identified as a separate line-item on my monthly merchant statement. The processor explains that transactions using a 'corporate card' do not qualify for the standard discount rate. IIRC, non-qualifying transactions have a discount surcharge of 1.2 percent. It seems that lately, more transactions do not qualify for the standard discount. The part that irks me is that I can't tell whether or not transactions are non-qualifying when I accept the card from the customer. I suspect that the merchant is also expected to pick up the tab for certain credit-card perks such as rebates and flyer miles.
I don't do enough volume these days to spend a lot of time worrying about the non-qualifying transactions, but I can tell you that American Express has never surcharged me for anything above the published discount rates. This is how they've earned my rating as 'honest thieves'...:)
IMO, the time is ripe for a Paypal-like (but not Paypal) system that offers a no-nonsense, no-frills method of payment, offering the consumer monthly payments with a reasonable interest rate. Credit card companies have become way to powerful, charging exorbitant interest rates to the consumer, and extorting outrageous fees from the merchant. Wishful thinking, I guess...
BTW, I firmly believe in a free market, but I think that that the credit card companies desparately deserve open competition.
Edited 9/19/2006 8:11 pm ET by bobguindon
The 3% charge is one of the main determine I and my boss have. Our true net profit is usually around 10% why should we give 1/3 of that away simply so someone else can have their airline miles?
It may sound a little harsh though I'm having problems rationalizing it away.
I'm still struggling to determine if accepting them would increase sales enough to justify it. If we could obtain a higher volume of jobs we would otherwise not sign I can almost come to term with it.
If on the other hand it is only going to convenience and benefit customers we would otherwise have I can't justify it.
Well I spoke with a Rep from the company our bank works with today. The quotes I received were actually less then I expected and break down as follows.
1.75% for MC & Visa "Consumer Cards" & 1.85% for "rewards" cards if we swipe the card. The rates go up to 2.25% & 2.35% respectively if we punch in numbers opposed to swiping.
Discover is about 2.8% and AMEX about 3.5% (Not accepting AMEX)
Deposits are made with in 2 days for MC and Visa, 3-4 for discover and a week for AMEX.
If it is a Corporate or Company/Business card they add a 1/2% to any of the above.
$5 per month service charge and we have to purchase the box at $400.00... we could rent the box but they want $40 per month.
How does that compare to what any of you guys are paying?
We do not accept credit cards but I have seriously considered it twice. In my research, I know of two things that I would do if we did start.
1. Open a bank account solely for the cc deposits. Once the money hits this account, transfer it into your regular checking/working capital account. This way, if there ever is a dispute with that $6k transaction from last week (the customer decides they don't like the paint color THEY picked so they call the cc company) you don't have a $25,000 balance that they can siphon off of. It may seem underhanded, but I don't like knowing that the cc company can take money just as easily as they can give it.
2. If your charges are 3%, raise your prices by 3.09% ( 1/.97 ). Then offer a 3% discount if they pay with cash/check within 5 days. I would not cut my profit margin by 30% unless you think you can increase your volume by at least 50%. If the price increases to cover the fees, you're covered. If the customer pays with cash/check, you're in the exact same position you are now.
It seems the two big draws to taking plastic are increasing volume and decreasing accounts receivable. If you offer a 3% discount, I bet people will think long and hard about giving that up just to get rewards. More than likely, they'll fall over themselves trying to pay you within the discount period (I know I would).
RappahannockINC.com Fredericksburg, VA
I've thought about offering a "cash" discount but not sure it would be worth the explaining why we offered it every time I gave a presentation/proposal. In my opinion it will "confuse" the potential customers or they will simply remember the "higher" number rather then the latter.
We do not compete on price however I don't want to raise the bar and create another obstacle either.
Getting paid usually isn't a problem, I've become pretty in the last year at presenting the bill in person and if needed politely asking for the check. Usually are first progress payment after the down-payment is "Prior to drywall" if I set a precedent there, It's usually not a problem collecting the rest of the payments on the spot because they realize that is what is "expected"
I've been with toying with proposing to the boss that we try to expand more into window replacements in a wider area then we currently service, not an all together exciting endeavor, but possibly a lucrative one in my opinion. I've noticed in ad's and the yellow pages around here most window replacement contractors except CC's. So if we tried to go that direction and increase volume at the same time it might make more sense.
That said I do not want to leave our "core" of full service remodeling, rather looking at way's to increase our volume, but that's a different discussion.
The separate bank account makes a lot of sense and I hadn't thought of it.
For about a year and a half I maintained the ability to accept Credit Cards.
In that period, I believe 2 people paid with a card----and one of those transactions was fouled up.
I cancelled the service and have never regretted it.
Most of my projects are in the $1,000 to $25,000 range. If I owned a shoe store and handled maybe 40 sales at $80 each per day---I might consider differently-------but so far my intentional in-ability to take credit cards has not cost me any sales I wanted.
Do you really want customers who are basing their choice of contractor on the ability to take credit cards?
Nah-----you want customers so commited to having YOU do the job---that if you required payment live chickens, platinum ingots,or 55 gallon drums of crude oil---they would figure out how to pay you.
Best wishes, Stephen
My contractor didn't take CC either, BUT we kinda struck a bargain:
The places he got the materials from DID take CC, so they would call me and I'd give them cc # and they'd send me the invoice/receipt.
IMO, this protects me (the homeowner) because I can verify that the materials ARE paid for (my father has told me horror stories about some of the builders in Colorado where they didn't pay for the materials and the places went after the homeowner and got liens against their houses).
Also, the contractor then doesn't have to "float" any cash or wait 3-7 days for a check to clear to then pay the supplier.
I paid the labor to the contractor in checks.
Here is a good friend of mine who can get you great rates and a free terminal - even a wireless terminal if you need it.
I know Leonard well and I know that he deals honestly with his clients. His company usually beats bank rates by as much as 30% without monthly lease payments or fees. Based in Southern California, but has customers in several states.
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