Credit cards

[electricguy61]

For those of you that accept credit cards: do you offer a cash discount, or did you just raise all your rates?

 

[HackElectric]

Originally I charged the fee to the customer. But then I switched and just raised my rates across the board and now I don't have to deal with calculating and then adding the fee on and changing the invoices to show it.

The way I raised my rate was I assumed that about 1/3 of my sales would be with a credit card. The fee is 2.75% which I rounded up to 3%. So I figured I would raise my rates by 1% to cover the fees. In reality, I don't do 1/3 credit cards, probably less than 1/5, so I am still ahead of the game.

But I have to admit, when doing a larger job like a service change and the customer pulls out a credit card instead of a check, I still feel like I am loosing $80

FWIW, I use Square and I am very happy with them. I'm not sure if it's available to the general public yet, but I am a beta tester for their new Invoice option. What you do is you go to their website and fill out a small form with the customers e-mail address and the price of the job. Square then e-mails the customer with the invoice and a link to their secure server in which the customer can pay with their credit card. IMO, this is better than the customer reading their CC number to you over the phone, something that I think a lot of people don't like to do. And unlike manually keying in their number which costs 3.5% + 15cents fee, Square Invoice uses the lower 2.75% fee.

 

[PetrosA]

Well, this is timely... I just had a customer get frustrated with me because he wanted to pay his bill with a credit card instead of having his bank send me a check. I explained to him that I am able to accept cards via paypal but that there would be a 2% convenience fee involved (They charge 2.9% plus it takes a long time to get the funds, so I don't get any advantage from accepting cards at all).

Anyway, he didn't like the 2% convenience fee involved because his card only gives him 1% cash back plus miles, so he felt he was paying too much for the convenience. He complained that everyone else accepts cards and no one charges a convenience fee. I explained to him (very patiently) that he is, in fact, paying the fee because it's built into everyone else's prices. I explained that over the last five years he is the second customer to ask to pay by credit card and that it doesn't make financial sense for me or my customers to set up the whole card thing with my bank ($100 setup fee plus $10/month plus 2.5% per transaction) because those costs would have to get added to my prices. He seemed a little surprised by that.

Really? People don't know that it costs businesses money to accept cards and they pack their prices to cover that? We really need to teach kids this stuff.

 

[HackElectric]

Unfortunately, people don't understand that. They see that it's the same price, cash or card, so they assume credit cards are free.

They don't realize that accepting credit cards costs money and everyone is paying extra. So when a customer pays with cash, they are subsidizing the customers who pay with a credit card.

 

[Fulthrotl]

Well, this is timely... I just had a customer get frustrated with me because he wanted to pay his bill with a credit card instead of having his bank send me a check. I explained to him that I am able to accept cards via paypal but that there would be a 2% convenience fee involved (They charge 2.9% plus it takes a long time to get the funds, so I don't get any advantage from accepting cards at all).

Anyway, he didn't like the 2% convenience fee involved because his card only gives him 1% cash back plus miles, so he felt he was paying too much for the convenience. He complained that everyone else accepts cards and no one charges a convenience fee. I explained to him (very patiently) that he is, in fact, paying the fee because it's built into everyone else's prices. I explained that over the last five years he is the second customer to ask to pay by credit card and that it doesn't make financial sense for me or my customers to set up the whole card thing with my bank ($100 setup fee plus $10/month plus 2.5% per transaction) because those costs would have to get added to my prices. He seemed a little surprised by that.

Really? People don't know that it costs businesses money to accept cards and they pack their prices to cover that? We really need to teach kids this stuff.

nobody likes to get dinged a finance fee.

so, i just add $100 to everyones bill. that seems to work ok.

 

[PetrosA]

... i just add $100 to everyones bill. that seems to work ok.

Now THAT's a business model I like

 

[RLyons]

Well, this is timely... I just had a customer get frustrated with me because he wanted to pay his bill with a credit card instead of having his bank send me a check. I explained to him that I am able to accept cards via paypal but that there would be a 2% convenience fee involved (They charge 2.9% plus it takes a long time to get the funds, so I don't get any advantage from accepting cards at all).

Apparently he has never been to the gas station that displays "cash only price".

My boss puts a limit of $1000 on credit card use because of the what he says is %5.
All CC transactions have to be called in as I am still waiting for a swiper. I was told by my boss that a "special" encrypted swiper (to avoid identity theft lawsuit) is required and it comes with a yearly and per swipe fee.

Don't no if what I'm being told is true but I sure do feel stupid still writing bills by hand and not being able to swipe cc's

 

[PetrosA]

Apparently he has never been to the gas station that displays "cash only price".

My boss puts a limit of $1000 on credit card use because of the what he says is %5.
All CC transactions have to be called in as I am still waiting for a swiper. I was told by my boss that a "special" encrypted swiper (to avoid identity theft lawsuit) is required and it comes with a yearly and per swipe fee.

Don't no if what I'm being told is true but I sure do feel stupid still writing bills by hand and not being able to swipe cc's

My bank told me that for a non-card reader system where I have to manually enter info each time there is a setup fee of $100, a $10 per month fee, a per transaction fee plus a percentage of each transaction. That's $220 for the first year before I even accept my first credit card. For a mobile card reader, you also have to count in the data plan required, plus whatever cost to purchase, lease or rent the card reader. I don't know if there are extra costs for encryption for the card reader or software on your phone or tablet for that, or maybe your boss looked at the high-end systems where you have a dedicated reader with a dedicated cell line or data line. I've also heard about cash bonds that would cover customer disputes and refunds, chargebacks etc. and if you work for a risky clientele, it could be a sizable amount.

 

[kwired]

nobody likes to get dinged a finance fee.

so, i just add $100 to everyones bill. that seems to work ok.

Even a bill for a $50 part and nothing else on the bill?:blink:

 

[Fulthrotl]

Even a bill for a $50 part and nothing else on the bill?:blink:

dude... there *are* no $50 parts.

i have attempted to sell ONE $50 part with nothing on the bill except the part.
it was an adapter to allow someone to plug in a 20 amp cord cap into a 15 amp receptacle.

it was sold to a fortune 500 law firm, in newport beach. it was in the "no bid zone"
and i ignored the location, and dropped off the part on the way to another "real" job.

it's been a year and a half, and they still haven't paid me the $50... i just leave it
on monthly billing and send it every month... it's sorta like a hobby by now.

and it makes me grateful, for that is the total uncollectable bills i've had in the last 8
years..... $50.

http://www.orrick.com/Pages/default.aspx

"Founded in San Francisco a century and a half ago, Orrick today is named by Law360as one of the ?Global 20? leading firms. "

 

[kwired]

dude... there *are* no $50 parts.

Sorry, I think.

I often sell people light bulbs, or other simple maintenance type supplies and have no labor, just the items purchased.

Also because I am somewhat in the boonies, I may have items someone needs but there is no big box store within reasonable distance and will sell items to them. Farmers wanting 600 volt fuses for their irrigation equipment... pretty common and nobody in the area except other electricians or maybe irrigation equipment dealers/service business are going to have them.

 

[jrannis]

Well, this is timely... I just had a customer get frustrated with me because he wanted to pay his bill with a credit card instead of having his bank send me a check. I explained to him that I am able to accept cards via paypal but that there would be a 2% convenience fee involved (They charge 2.9% plus it takes a long time to get the funds, so I don't get any advantage from accepting cards at all).

Anyway, he didn't like the 2% convenience fee involved because his card only gives him 1% cash back plus miles, so he felt he was paying too much for the convenience. He complained that everyone else accepts cards and no one charges a convenience fee. I explained to him (very patiently) that he is, in fact, paying the fee because it's built into everyone else's prices. I explained that over the last five years he is the second customer to ask to pay by credit card and that it doesn't make financial sense for me or my customers to set up the whole card thing with my bank ($100 setup fee plus $10/month plus 2.5% per transaction) because those costs would have to get added to my prices. He seemed a little surprised by that.

Really? People don't know that it costs businesses money to accept cards and they pack their prices to cover that? We really need to teach kids this stuff.

We use square. It's very easy and the small amount they charge has no noticeable impact on the margins I get.
No setup fee, no minimum fee. I use it about once every two months.
If I use it on a regular basis, maybe it would be a concern, I had a cc account a couple of years ago and the fees were a killer each month plus when I used it, they clobbered me with fees. I could never anticipate what they would charge.
Square has none of that.

 

[mgookin]

The timing of this thread is interesting.

For about a year and a half we had a merchant account. When we first opened it we went with a company we found online. They had told us about their fees which we were willing to pay. When I audited the charges a few months later I discovered they had lied (not a surprise) and the fees being paid were not only outrageous, but exceeded the total cash volume we did in credit card sales. I had my business manager call that company and they said "oh you need the this and that through x and y..." and suddenly we were with another company which they flipped our account to. Three months later those bills were not what was represented so we called again. They whacked us for a $300 fee saying we are supposed to be paying monthly minimums at both companies for a "finders fee" or something like that. We closed both accounts.

We just don't do credit card volume. Our primary customer is a unit of government or Fortune 500 company and we accept purchase orders from them. Any time someone wants to purchase on a credit card it's usually for one sample or a small order.

At a trade show last week one customer wanted to purchase one outdoor light control (which we manufacture). I told the guy to just take it and give me his name & phone number and I'll call him to arrange payment. He's local and I have his business card and the transaction is only $35. I figured I'd look into merchant accounts again. We did plenty of other sales and those people had checks on them.

So yesterday I spent 2+ hours looking through PayPal and other companies. After reading PayPal's terms of service, I don't understand why anyone would agree to those terms. So I googled "Who would ever agree to PayPal's terms of service" and the results were shocking. Don't sign up for PayPal. They must prey on the naive, elderly, disabled, or a combination of all.

A few weeks ago I was at my friend's restaurant. I asked about his merchant account. I told him I wanted to look through his statements because I know it's easy to get taken advantage of in the industry. He is with Heartland Payment Systems. On his statement he pays Heartland <1% ($130 on $13,650 in charges) and then it lists fees to Visa, MC, Amex, etc. Fees in aggregate are <3% keeping in mind his restaurant delivers food which means phone orders which means manually keying credit cards (that is a higher rate than a swipe). So I'll be checking into Heartland later today after they open. Normally I'd never do business with a company who does not publish rates but I already have one up on them from looking at my friend's statements.

It sounds like we're all in the same boat on this. Credit card transactions are not common in our businesses and we don't want to pay monthly minimums for something we very well may not even use that month, and then give up percentages of gross revenue to some credit card processing company or bank if and when we do use the service. Very logical.

Interestingly all these companies are doing is having a computer system with a blip in and a blip out. They are raking in big money for doing pretty much nothing.

So let's keep this going. If anyone finds low (or no) montly minimums and fair rates for processing payments, please post it here.

PS: Shouldn't this be under Business Management?

 

[HackElectric]

mgookin, it's been mentioned already, Square.

No setup or subscription fees. No equipment fees. You order as many card readers as you want. You pop the card reader on your phone or tablet and swipe the customer's credit card thru, that's it. The fee is 2.75% no matter what type of card they have (Visa, AMEX, Rewards, cards, etc. are all the same).

You also have the option of manually keying in the credit card number, for example, if the customer is giving you the number over the phone. Since this is less secure, they charge 3.5% plus 15 cents for this type of transaction.

A new option that Square will be debuting soon is what I spoke about in an earlier post, Square Invoicing. This will allow you to e-mail an invoice and have the customer click a link and pay online, this way is safer than manually keying in the number and the fee is only 2.75%. The only stipulation is you have 5 free invoices you can send a month. If you are going to send more, they have a monthly fee of $20 for unlimited invoices.

 

[jrannis]

mgookin, it's been mentioned already, Square.

No setup or subscription fees. No equipment fees. You order as many card readers as you want. You pop the card reader on your phone or tablet and swipe the customer's credit card thru, that's it. The fee is 2.75% no matter what type of card they have (Visa, AMEX, Rewards, cards, etc. are all the same).

You also have the option of manually keying in the credit card number, for example, if the customer is giving you the number over the phone. Since this is less secure, they charge 3.5% plus 15 cents for this type of transaction.

A new option that Square will be debuting soon is what I spoke about in an earlier post, Square Invoicing. This will allow you to e-mail an invoice and have the customer click a link and pay online, this way is safer than manually keying in the number and the fee is only 2.75%. The only stipulation is you have 5 free invoices you can send a month. If you are going to send more, they have a monthly fee of $20 for unlimited invoices.

https://squareup.com/pricing

 

[mgookin]

WOW!
Thanks!
:happyyes::happyyes:​

 

[Fulthrotl]

Sorry, I think.
I often sell people light bulbs, or other simple maintenance type supplies and have no labor, just the items purchased.

and i was just being a smartass....:ashamed1:

no, obviously i don't put a zorch fee on everything,
even i'm not that big an asshole....

but there is a markup on material that i provide, and that
has a margin to cover expenses like transaction fees.

for the small amount of CC stuff that i do, i have a paypal
link embedded on my invoices. i also have squareup, and
i've only used it twice in three years.

the paypal link i think has been used three times in two
years.... i did a days work for an ad agency over by LAX,
and emailed the office manager an invoice as soon as the
work was done, and before i had my tools in the van, i
got a confirmation from paypal, saying i'd been paid.

it doesn't get much better than that, imho.

 

[HackElectric]

One thing that I've really found useful with CC's is getting a deposit.

Often I will go out and give the customer an estimate, then a few days later get a call from them telling me to go ahead and do the work. When it's a bigger job like a service upgrade I require a deposit, the way I used to do it was to either setup a time to go back to their house to pickup a check or ask them to mail it to me. Now I just tell them over the phone that I could accept their deposit by credit card and 9 times out of 10 they go for it. Now with Square Invoicing, I send them the e-mail invoice, they pay on the secure website, and everyone is happy.

Another thing I do is I mention the fact that I accept credit cards while selling the work. People use credit cards as loans to buy things they don't have the cash for all the time, why should electrical work be any different? A customer might be more willing to add a few more hihats, a surge suppressor, or a generator connection if they know they don't have to pay right away

 

[Fulthrotl]

So yesterday I spent 2+ hours looking through PayPal and other companies. After reading PayPal's terms of service, I don't understand why anyone would agree to those terms. So I googled "Who would ever agree to PayPal's terms of service" and the results were shocking. Don't sign up for PayPal. They must prey on the naive, elderly, disabled, or a combination of all.

i had to go peek....

that was quite the "hatepal" site google found.....
i mean, they are a financial institution, but spawn
of the devil? well, maybe....

i'm a bit perplexed, to be honest. i really only use
paypal to pay for stuff online, not as a merchant
account or to sell stuff with... and my experience
with paypal has been ok... actually, it's been good.

however, it's linked to a CC that is only used for
online purchases, and it's not a pipe into my checking
account.

the paypal 6 months no interest on purchases is my
default, and i zero the account weekly, in any event.

that has proven interesting.... take a credit card you
use for common daily purposes, and zero the balance
weekly, not monthly.... after a few months of this, the
banks come with a feeding frenzy of preapproved cards.

it's worse than a tanker truck spill of high fructose corn
syrup at a fruit fly festival.

 

[mgookin]

I've signed up for Square. Pretty simple. Thanks!

Question: I now see they don't allow you to enter a credit card via a pc (only stupidphones). So what's the answer to that? Do I have to build an online store and run the transaction through that?