Full Version: Accepting Credit cards
From: Ken D. (KDEVORY) [#1]
19 Oct 2004
To: ALL
In setting up the merchant services account I consider Visa and MasterCard to be no-brainer must-haves. How important are Discover and American Express?
Do you have many customers who don't carry a Visa/MasterCard?
American Express is saying since I'm home based, if a customer denys a purchase I'll get a charge back. No notification, no appeal. (I don't like how they do business.) Does our industry see many chargebacks?
From: Sei (SEIMA) [#2]
19 Oct 2004
To: Ken D. (KDEVORY) [#1] 20 Oct 2004
Not the sort of things you want AMEX owners to know. Especially the dishonest ones...
You'll always have people who are going to try to screw you, and it sounds like AMEX is giving them the perfect avenue to do so.
Mastercard and Visa are going to cover probably 90% of the population. Especially now that bank cards often double as Visa cards. American Express will often set up business relationships and offer special perks. I know the University of Virginia opperates totally on AMEX and purchase orders. You might alienate some business customers if you don't take AMEX, but at the same time it doesn't sound like they are very accomodating to small business owners.
As for Discover... who uses Discover anyway? Double the interest rate of my Visa, and other cards these days come with much better perks than Discover's pissant little 1% cash back bonus award. But depending on what it will take to accept them, it might not hurt.
Sei
From: scroller (JEFF) [#3]
19 Oct 2004
To: Ken D. (KDEVORY) [#1] 20 Oct 2004
We take Visa, MasterCard, Discover, and American Express and run them all through Costco. We are in the craft industry and do between 40-60 % on charge cards. I have not actually kept track but I think about 30-40% of the usage is debit cards. We recieve very few checks anymore. I'd have to say if I were to do it again I would not take Discover or Amex. They cost us several % more than Visa and MasterCard and I have found that most people that have a Discover or Amex also have a Visa or MasterCard. Most of the time they already have another card out when they see that we take Discover or American Express and then decide to use these because they receive more points, cashback or other benefits from Discover or Amex. I don't bother to explain to them that the benifits are at least to some extent due to the fact that they charge us more to do business with them. Also when batching with Visa and MC we get our money in our bank account the next day. Discover usually takes 2 days and Amex usually takes 3. They also take their percentage out first before we recieve our money and Visa and MC take their fees out monthly. Also because we do shows where we can't always get out with our radio transmission and Discover only allows us I believe 3 hand keyed sales a month before they start charging us an extra $1.00 transaction fee in addition to the regular hand keyed versus swiped fee. In fact as I write this I can't think of why in the world I still take Discover and Amex. As far as chargebacks I don't know about the engraving industry but we have never had a chargeback in the 10 years that we have been in business (knock on wood). Hope this helps somewhat. Jeff.
From: sunny (SUNSHINE5555) [#4]
19 Oct 2004
To: Ken D. (KDEVORY) [#1] 20 Oct 2004
Well, my experience is a bit different. Amex never told me anything about being homebased and automatic chargebacks if the customer protests. I just started taking Amex because I had so many customers that use it for their businesses. I was told that I qualify for a program where I am charged only $5 per month until I send over $3,000/month through and then it is still less than I currently pay for MC/Visa.
Yes I do take Discover as well, but it is so seldom that I too wonder why I take it, since it is rolled into my processing fees, it doesn't cost me any more to take it or not take it.
MC/Visa is over 90% of my credit card business and I am looking for a new processor because of the recent increases that I was told were by MC/Visa (and I found out that other companies are charging as much as mine).
Unlike Jeff, my processor takes out part of the processing charge on MC/visa at deposit time and the rest monthly and Discover and Amex charge me monthly.
From: scroller (JEFF) [#5]
19 Oct 2004
To: sunny (SUNSHINE5555) [#4] 19 Oct 2004
I guess it depends on the processer you use what deals they will make with you. Wow $5.00 a month up to $3,000 per month is a great rate. Am I to understand that there is no transaction fee and no discount percentage? My discount percentage for Visa and MC is 1.65% with a $.20 transaction fee. With Amex my discount percentage is over 3% and Discover is somewhere between 2-3%. Jeff.
From: sunny (SUNSHINE5555) [#6]
19 Oct 2004
To: scroller (JEFF) [#5] 19 Oct 2004
From: Engravin' Dave (DATAKES) [#7]
20 Oct 2004
To: ALL
All,
I like to take my monthly statement and do a "legitimate" percentage check. Divide your total credit card sales into your total credit card processing expenses. It will amaze you what percentage rate you are really paying with all of the fees and higher rates for corporate cards and hand-keyed entries.
I also like to take my total sales (not just credit card sales) for the month and divide it into the credit card expenses. This number helps me stay on top of customer credit card usage trends. With an increase in debit card usage, this percentage is continuing to climb.
EDITED: 20 Oct 2004 by DATAKES
From: sunny (SUNSHINE5555) [#8]
20 Oct 2004
To: Engravin' Dave (DATAKES) [#7] 20 Oct 2004
David, I agree. My "real" percentage is just over 5% and climbing.
At shows I am running into more vendors that are surcharging for the use of credit cards. We are going to have to raise our prices after the first of the year and that doesn't make me real happy.
From: Engravin' Dave (DATAKES) [#9]
20 Oct 2004
To: sunny (SUNSHINE5555) [#8] 20 Oct 2004
Rebecca,
Don't ever do the surcharge thing. It makes your business appear cheap and petty!!!!! That is one of the reasons I track my processing expense as it relates to overall sales. I will use it as an indicator of when I need to raise my prices across the board.
I refuse to do business with vendors who charge a fee for paying an invoice with a credit card. Just like most merchants, they should simply build that cost into their across-the-board pricing structure.
From: Harvey only (HARVEY-ONLY) [#10]
20 Oct 2004
To: sunny (SUNSHINE5555) [#8] 20 Oct 2004
In the US a surcharge on credit cards is illegal. The banking industry pushed that law through years ago. But a cash discount was overlooked. Remember cash discounts at gas stations.
Unless the laws have changed it is still illegal for a surcharge.
From: John (ICTJOHN) [#11]
20 Oct 2004
To: Harvey only (HARVEY-ONLY) [#10] 20 Oct 2004
Harvey is correct, I just got a reminder of the Do's and Don'ts's from Visa and it still mentions that it is "against merchant agreements" to add a fee to accept a credit card.
On a similar note, you will also find you will pay a higher percentage rate when you take a "Business" or "Government" card. MasterCard & Visa both do it. That is their way of re-couping their money on the business & government cards they issue that do not pay annual fees with lower interest rates. On a lot of the Business cards, you can't tell it is a business card so you don't know when you will get hit with the higher rates until your statement comes.
and...
on a different note. I was just told by my credit card company that I must have my balance paid in full for 2 consecutive months in order to not get hit with a interest charge. I have not heard of this. Usually if you paid the balance in full, you were not charged interest. Have anyone else ran across this yet? or am I still livin' in the good ol days?
OK, Ok! John will step down from the soapbox now and wait for the next rant.
From: Engravin' Dave (DATAKES) [#12]
20 Oct 2004
To: John (ICTJOHN) [#11] 20 Oct 2004
John,
I have never heard about the 2-consecutive month policy. It may be a new angle to get into our pockets.
The credit card game is exactly that, a game, to me. I have always searched out the companies that have the best Visa or Mastercard cash rebate deals. I try to charge every invoice and purchase that I can. I pay my bill off each month so that I don't have any interest or expenses associated with its use. At the end of a year I generally end up with a pretty respectable rebate.
What I have found is that the companies don't like it when you earn a respectable rebate and they don't make a cent off of you. In every single case, my card provider adjusted the program in the second year to where the rebate would drop dramatically. That is when I say goodbye and switch to the next provider with the latest and greatest cash incentives.
EDITED: 20 Oct 2004 by DATAKES
From: sunny (SUNSHINE5555) [#13]
20 Oct 2004
To: Engravin' Dave (DATAKES) [#9] 20 Oct 2004
David, I agree with you that I build it into the cost of doing business. I have no intentions of surcharging. Some of my wholesale vendors upcharge for me using a credit card and I don't buy from them unless it is absolutely necessary.
I thought it was illegal to also discount for cash these days - or they would like for you to believe that it is so.
Between the increase in credit card cost and fuel cost (we do a fair amount of shows), I will be increasing my prices after Christmas.
From: Ken D. (KDEVORY) [#14]
20 Oct 2004
To: John (ICTJOHN) [#11] 20 Oct 2004
John,
The two consecutive month thing is relatively new. But as you can imagine once one company does it, they all start. I think MBNA started doing it earlier this year.
Consumer Reports mentioned it in their last credit card industry overview.
From: Ken D. (KDEVORY) [#15]
20 Oct 2004
To: Ken D. (KDEVORY) [#14] 20 Oct 2004
After thinking about it and reading some of the comments here, I'll accept MasterCard and Visa, but not Discover and American Express. There doesn't appear to be an advantage to accepting Discover. The negatives are higher rates and another bill.
For American Express I also fall under the $5/month category. (Plus a $0.23/ transaction charge for the processing company.) I don't expect to have commercial accounts. It's also a principal thing. I don't like how they treat a "home" business. (And its not even in my apartment. My company is renting a small 1-bedroom apartment from me, in my 3-Family house.) I can always reconsider if I see a market demand.
Someone mentioned they have the Costco merchant services account. They had the lowest rates when I looked. In the end I opted for Intuit's service, due to its integration with QuickBooks. ($.23+2.39% non-swipe rate, $17.95 monthly fee.)
From: John (ICTJOHN) [#16]
20 Oct 2004
To: Ken D. (KDEVORY) [#14] 21 Oct 2004
Ken,
Well this is CapitalOne, so it's like you say, Once one starts it - they ALL will follow
From: Engravin' Dave (DATAKES) [#17]
21 Oct 2004
To: sunny (SUNSHINE5555) [#4] 23 Oct 2004
Rebecca,
I spoke with American Express today and they didn't offer the type of monthly deal that you have locked in. They do have a flat rate program of $5 per month, but if you reach the $5000 milestone in a 12 month period their rate of 2.95% would kick in.
EDITED: 21 Oct 2004 by DATAKES
From: John (ICTJOHN) [#18]
21 Oct 2004
To: Engravin' Dave (DATAKES) [#17] 21 Oct 2004
David,
I send my AmEx transactions through my regular credit card processor, they send it on to AmEx and then I get a deposit into my checking account in about 4 days from AmEx. My regular credit card processor charges me a 15 cent transaction fee at the end of the month and AmEx just takes out their 2.25% at the end of the month. I pay no monthly fees to either company. My Discover transactions are handled the same way. In fact AmEx and Discover each contacted me to set up this program. I don't have but a handful of transactions per year on either one, but it is nice to have it when the customer wants to use it. I just hate to tell my customers NO. I do have a store front, maybe they are adjusting for that. Come to think of it, I did have to send them a picture of my store front to prove it was a retail business. I thought that was a little odd at the time.
From: Ken D. (KDEVORY) [#19]
22 Oct 2004
To: John (ICTJOHN) [#18] 22 Oct 2004
The credit card companies and merchant services accounts differentiate between those who have a store front and will be swiping a physical card and those who don't.
They justify the lower rates by saying there's a lot less fraud when a customer physically hands a card that is then swiped and signed for, vs a phone or Internet transaction.
A phone or Internet transaction, when the security code and billing address are given, falls between the other two for both risk and rates. The security code is on the card, but not imprints, it's used to indicate the card is in the purchasers position. Merchants are legally required to not maintain this number anywhere. The address is additional information not on a card, useful if the card itself is stolen.
From: sunny (SUNSHINE5555) [#20]
23 Oct 2004
To: Engravin' Dave (DATAKES) [#17] 23 Oct 2004
David, that is probably the same program and I was just remembering the numbers differently. I wasn't looking at my notes at the time.
Like John, there are customers I would lose if I didn't offer Amex. We didn't have it last year at the biggest show we do and it did cost us. At the show we just came from, we put through only 4 Amex charges, but one of them was sizeable. At the show we are doing next month, one of our biggest customers will be there and they have been begging us to take Amex, so we will be making them happy.
Right now Discover only costs us if we use it, so I will probably keep it.
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