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"Checkout fee" for using CreditCards

Discussion in 'Picture Framing Business Issues' started by Rick Bergeron - CPF, Jul 14, 2012.

  1. Rick Bergeron - CPF

    Rick Bergeron - CPF SGF, Supreme Grumble Framer

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  2. DVieau2

    DVieau2 PFG, Picture Framing God

    >>>“As an ecommerce business who has to rely on credit cards, this historic settlement and the reforms it brings will provide both immediate and lasting benefits for small merchants,” states Mitch Goldstone, President & CEO of ScanMyPhotos.com, a division of Photos Etc. Corporation.<<<

    FYI: Mitch Goldstone has a photo business in California and for years has been blogging and bring legal action against the Credit card processing companies.

    Mitch is a member of PMA

  3. Ylva

    Ylva SPFG, Supreme Picture Framing God

    Interesting read.....not sure if I would change the way of running my business though.....offer discount for cash? Checks? I would still have to take the time to deposit it into the bank every day. No matter how the customer pays, a business owner has an expense. Either directly from the cc processor or the time it takes to deposit. Unless you consider time to be free....
  4. Kirstie

    Kirstie PFG, Picture Framing God

  5. Bill Henry-

    Bill Henry- SPFG, Supreme Picture Framing God

    In some ways this put us, as merchants, in an awkward position. If we jack up the retail price and add a swipe fee (where other merchants in our area don’t), we will be seen as skinflints trying to gouge the customer.

    If we “discount” a non-swipe fee for cash and check purchases, not only are we taking money out of our pockets but we’re letting the credit card customers know that we’re not so keen on taking their cards.

    We’ll have to wait and see, but as things stand now, I don’t think I’m likely to either add or subtract these swipe fees.
  6. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    One major benefit of all of this is to open the eyes of consumers. More and more people are using checks because they are becoming aware that "Free Rewards" are not free. In a frame shop those rewards could easily cost $5-$10 for every dollar returned. I am regularly offered huge discounts from vendors based on the fact that I don't use a card for payment. Stores add additional amounts into the price of merchandise based on the percentage of credit card usage. Credit card fees are truly a part of material costs so if a store is not marking those fees up they are doomed. Many people claim they use a pass through cost but then they look at overhead costs coming from profit dollars. Breaking even is bad business.
  7. pwalters

    pwalters SGF, Supreme Grumble Framer

    I just don't see this happening. I don't see my customers (yours may be totally different) even considering this. They like their rewards. They don't associate my having to charge more as a penalty. They just don't seem to be that aware and this is a very educated consumer. They don't care. I equate it to the BB's markup/discount pricing strategy. Folks keep trucking along because they don't care enough to stop and really analyze things.
  8. josephforthill

    josephforthill MGF, Master Grumble Framer

    One benefit to the discount for cash is that is a graceful way of offering something off, without "marking down" your work, and it appears reasonable to the customer.
  9. Rhonda in MT

    Rhonda in MT MGF, Master Grumble Framer

    Considering most of my customers use a card of some sort, I'd be better off just raising prices across the board. Wait, I already price things taking all my costs into account.
  10. Ylva

    Ylva SPFG, Supreme Picture Framing God

    I don't know, I would be afraid to offend my customers who pay with credit card...their money is not good enough for me?

    If someone pays cash and not ask for the discount...would you still give it?

    Advertise it, get discount for cash would certainly insult most of my credit card paying customers. Even when explaining the extra costs of accepting cc.

    As for educating my customers..well.....I am a customer too and not willing to give up my credit cards and go back to a cash and check system. I like the convenience. I like not carrying a bundle of cash around. Sure I am aware that I pay for the rewards indirectly.

    Would I pay cash if offered a discount? hmmm. Sometimes, but it would be more likely that I put items back when I pay with a cc and not have enough cash on me and think that 'maybe I will get it next time'. Only I will forget.....

    Sure, there will be ATMS available....but would I be willing to pay a fee when it's not my bank and get cash in order to get the cash discount?

    I think this creates too much confusion. As stated before, it is very unlikely that I will change the way I handle payments now and I can see how it would aggrevate my customers, as it would me.
  11. Kirstie

    Kirstie PFG, Picture Framing God

    Bingo. Rhonda has the answer. I would not presume to suggest how my customers should pay. We want to be as convenient as we can. My prices will cover whatever they choose. I can't imagine someone going to the bank or carrying checks to save $2-3 on a purchase when they have the convenience of carrying credit cards and earning rewards or using debit. If a business, say a grocery store, routinely offered me a discount for carrying cash or checks or more likely, tacked on a premium for credit card use, I would probably just change where I shopped.
  12. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    I already get a large number of customers asking for a cash discount. Most of them hope to avoid sales taxes but I explain that is a crime and it shuts them up. I'll charge extra for credit cards and have been warning them for a long time now. A large number of my customers would prefer to use a check but forget that I take them since so many people frown on checks. I always pay my suppliers with checks to keep their costs low and help them out. Credit card companies have turned people into points junkies no matter the cost. Some people get airlines tickets but I prefer the thousands in savings that are offered to me throughout the year.
  13. josephforthill

    josephforthill MGF, Master Grumble Framer

    The reason I would consider this is not as an incentive, but as a response to "can you do better/give a discount etc. questions from customers. If someone asks for a discount, and doesn't have to do anything to "earn it", they won't respect the pricing structure at all - and just assume there is "fat" in there.

    I probably see more of this, coming from the antiques world. While I would prefer consistent, rational pricing (and having just come from the supermarket where you find out the deal with the coupon is actually more expensive), I know that is not likely to happen.
  14. Rick Bergeron - CPF

    Rick Bergeron - CPF SGF, Supreme Grumble Framer

    Being 100% internet based, there's probably not much more than zero likelihood that we'd go to any form of payment other than PayPal or Credit Card. An interesting statistic for online sales is that 3 years ago, 90% of sales were paid by CC and 10% by PayPal. Today, it is nearly 50%/50% and PayPal is not regulated by the CC statutes because of loopholes.

    Our credit card processing account is pass-through instead of tier level based. It has nothing to do with how we incorporate our CC fees into our prices. It does have to do with minimizing CC fees by eliminating the 2 or 3 fixed Tier level percentages which combine the 30 plus different rates for rewards cards to their advantage.

    Similar to Jeff, we have one vendor who calls us after we place an internet order and says "If you send a check via mail, I will discount your order by 5% after applying your commercial discount"
  15. Rick Bergeron - CPF

    Rick Bergeron - CPF SGF, Supreme Grumble Framer

  16. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

  17. FramerDave

    FramerDave PFG, Picture Framing God

    One more time: Make it easy for people to give you their money.
  18. Rick Bergeron - CPF

    Rick Bergeron - CPF SGF, Supreme Grumble Framer

    I wish that I was paying that amount in CC fees. If you assume their average rate was 3%, do the math. I'd love to have that amount in annual sales.

    Looking at their statement, 30 cents nowdays is a pretty high "Per swipe" charge.
  19. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    At those levels the $30,000-$50,000 monthly rents would still make you nervous.
  20. Stray Feathers

    Stray Feathers CGF, Certified Grumble Framer

    This is my second run at retail, and things have changed. It concerns me that by building card fees into our retail prices we may be doing a disservice to some loyal customers who pay by cash, cheque or debit card (which in our area costs us a lot less than credit cards.) They are subsidizing customers who use high-fee payment methods. There are some things you buy (postage, airline and ferry tickets are three I can think of here) where there are often surcharges for fuel etc. Those are business costs being passed on to the consumer, just as credit card fees could be seen to be. So why not tack them on to the bill? It gets worse with the higher fee cards to support those who want rewards. Businesses that deal almost exclusively with credit cards probably don't have to worry as much.
  21. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    Yes when vendors offer discounts for checks but retailers pass those up to use points cards. So a 5% missed discount then get doubled or more and we also add in our 3% as a cost and double it or more. It can easily add 20% or more to a retail price because everybody wants that 1% and only the banks win.
  22. David N Waldmann

    David N Waldmann SGF, Supreme Grumble Framer

    You could also argue that design time should be charged per job. After all, why should the person that spent an hour agonizing over this choice or that one pay the same price as the one that says to your first recommendation "yup, looks good"? Unfortunately, just because there may be a certain logic to something does not mean it translates well into reality. How would you like it if you went to get new tires for your car and when you walked in they told you that every 30 seconds until you sigh the papers the price goes up by $1?
  23. DVieau2

    DVieau2 PFG, Picture Framing God

    Here's my sign, 8 1/2 x 11 on the front counter:

    "We will happily accept your Visa, Mastercard, Discover or American Express but we prefer you cash or check"

    It's been there for over two years and I would guess it saves me $100.00 per month. Sometimes it saves me $100.00 per job.

  24. pwalters

    pwalters SGF, Supreme Grumble Framer

    Nice jobs if it can save you this much on one.
  25. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    I had one job that was about $1,000 and the customer used a corporate airline card. It was either American Airlines or U.S. Air but the cost was over 8%. The airline rewards cards are always outrageous.
  26. Rhonda in MT

    Rhonda in MT MGF, Master Grumble Framer

    Well. that didn't take long. Our county commissioners approved an added fee for people paying their taxes with a card. 4%. When you consider we pay close to $20,000 a year in property taxes, I'll be breaking out my check book.
  27. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    Wow they are about the last one in the country. Every government agency I have paid with a card for numerous years has charged a fee with the exception of sales taxes. I have always used a check or cash if paying in person to avoid the fee. Governments, utilities and several others have been allowed to charge the fee for as long as I can remember. Many of them have charged it as a separate charge from what is being paid so 2 charges appear.
  28. David N Waldmann

    David N Waldmann SGF, Supreme Grumble Framer

    That's probably in violation of your merchant agreement.
  29. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    My merchant agreement simply states I can not charge a surcharge for accepting cards. It does not restrict me from giving a discount for cash or checks nor does it disallow me from encouraging any type of payment.
  30. pwalters

    pwalters SGF, Supreme Grumble Framer

    Jeff, does it have any language in there about the merchant "steering" folks away from CC by use of incentive or other apparatus in any way that would impact CC processing? That's how mine reads. Doesn't specifically say I can't but has verbiage similar to this.
  31. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    Haven't read it for a few years but certainly nothing that would be of any concern to me. I used to write and teach a lot of contract law courses and nothing stood out that would make me worry one way or another. The penalty would merely be me having to talk to another one of these D-Bag companies if they no longer wanted my money.
  32. cjmst3k

    cjmst3k SGF, Supreme Grumble Framer

    Airline rewards cards can take an 8% cut out of your sale??

    ...is there no cap on these?

    I was under the impression that the most a fee could be was around 3.5%.
  33. JWB9999999

    JWB9999999 SGF, Supreme Grumble Framer

    Didn't the credit card reforms that went in place last year make it where CC companies could NOT kick you out for offering rebates or discounts to consummers who use other methods of payment, or for adding surcharges to CC payments?
  34. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    The corporate airline rewards cards are much higher than individual but I have no idea what the current rate may be. That processor was also kicked to the curb several years ago. My business customers use checks because I ask the form of payment before quoting prices. They always tell me they will use the form that delivers the best pricing and I tell them their check has no surprises involved. My answer always includes a personal commentary on how the Mafia is proud of the extortion model that the credit card companies have adopted and found acceptance among merchants.
  35. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    Doesn't fully take effect until Oct I believe. I've seen huge numbers of businesses that began it early though. When I went up North for my mother's funeral last year most of the independent businesses had already begun and signs were hung everywhere.
  36. pwalters

    pwalters SGF, Supreme Grumble Framer

    They probably don't know it's not in place yet. I had a conversation with a chocolate store recently where they had a sign up. Turns out they thought it was all a done deal.
  37. David N Waldmann

    David N Waldmann SGF, Supreme Grumble Framer

    Offering a discount for different payment types as (as far as I know) always been allowed. Once the new rules go into effect you will be allowed to charge a fee/surcharge for taking a credit card. I don't see any difference but apparantly someone does.

    Also, note that this is different than stating your preference for payment method. As far as I know you are still not allowed to do that under the terms of your merchant agreement. Just because you offer a discount for paying cash over CC does not mean you prefer one method over the other, and certainly charging a fee does not clearly state a preference. In either case you are simply offering the customer various choices that may (or may not) have an impact on them. But posting a sign that says you prefer one over the other will likely sway the customer one way or the other IN ADDITION to their own personal choice, and that is what the CC companies don't want.
  38. Rick Bergeron - CPF

    Rick Bergeron - CPF SGF, Supreme Grumble Framer

    Paraphrased from our new merchant account. The terms may be new and not retro-active to existing merchant accounts. The doc wouldn't allow me to copy/paste

    1.8 Certain Rules and Requirements

    • [*=1]Minimum CC acceptance cannot exceed $10
      [*=1]Cannot impose a surcharge or fee for accepting a card
      [*=1]Cannot establish special conditions for accepting a card
      [*=1]You MAY provide a discount for a consumer to pay cash, check, etc
      [*=1]You MAY direct customers to a particular brand or type of general purpose card.....
    US merchants may engage in any of the following steering activities​

    • [*=1]Offer a discount or rebate
      [*=1]Offer free or discounted product.....
      [*=1]Offer an incentive, encouragement or benefit...
      [*=1]May express a preference for the use of a particular brand of type of general purpose card...
      [*=1]May promote a particular brand or type of general purpose card...
      [*=1]May communicate to the customer the reasonably estimated cost incurred when a customer uses a particular brand or type of card...
  39. Reesbee

    Reesbee Grumbler

    At our shop we have a note stuck to the back of the screen (within customer view) advising them that when making purchases over a certain threshold by credit card, a surcharge will be applied. Our threshold is quite high, 2,000 dollars. On anything less than that we take the small loss as cost of business.

    We tell customers that we dont bump up the price of art and framing to automatically include an add on fee to cover credit card use. A good percentage of people say they will choose the check or cash option instead.
  40. Rick Bergeron - CPF

    Rick Bergeron - CPF SGF, Supreme Grumble Framer

    That definitely violates every merchant account terms of service in the United States and would get your hand slapped really hard if someone reported you for having that sign up whether you every applied it or not. The rules must different in your country.
  41. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    Car dealers only allow a $1,000 maximum on credit cards.
  42. Grey Owl

    Grey Owl SGF, Supreme Grumble Framer

    I think this varies, depending on the car dealer, and whether it is a car or a repair. When you are doing a repair at the car dealer, the bills are sometimes above that amount and they will certainly take credit cards.

    Janet had a client many years ago that charged a Rolls Royce on their AM, but I doubt that would happen now (unless you were buying it at suggested MSRP)
  43. Rob Markoff

    Rob Markoff PFG, Picture Framing God

    Guess the dealer that took a $3500 credit card deposit on my car didn't get the memo.
  44. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    Desperation will lead to all sorts of rule changes. They may have been worried you didn't have the ability to write a check. I've been seeing a lot of car dealers doing all sorts of desperate things lately like the one here that had been kiting as much as $10 million in checks between 2 banks. Another has been indicted on 3 federal mortgage fraud charges by only one bank facing 30 years in prison and a $1 million dollar fine for each count. Several more banks will be filing charges against him as well. Desperate times lead to desperate measures.
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