I own a small Trim Carpentry Business out of Chicago and I recently took advantage of a banking service which allows me to take credit card payments. I thought this would be a good way to stand out competitively against other contractors.
Does this sound like a good plan, or is my mind in the clouds on this one? Anyone have any stories or experiences with credit cards that would help me understand what I’ve gotten myself into?
-Craig
TrimLogic Inc.
http://trimlogicdirect.com
Edited 11/17/2009 4:38 pm ET by TrimLogic
Replies
Is it a free service or does the bank get their cut? I don't think you can up-charge the 3 percent or so the bank usually gets from a credit card transaction. I use Pay-Pal and I charge a 3.5 percent computer convenience fee to re-coup the money I pay to Pay-Pal to process the charge.
Constructing in metric...
every inch of the way.
I actually use an "online terminal" in which I have an account and run my credit purchases through that. The company charges me $20 per month for the hosting of this online terminal, and the card companies charge me the additional 2%-3% according to their rates. The company is called Moneris Solutions http://moneris.com
The merchant account will cost you $30-$50 a month, whether you process any charges or not. The card companies get a 2% to 4% cut of the billings on top of that.Some other advice:1) Never pay a set-up fee - that's for noobs & suckers
2) Don't let them sell or lease you a swipe terminal.
It's not worth it for a few transactions a week. You can
use an online terminal from any PC or smartphone.
3) Some processors are now asking for reserves, money
they withhold after the sale. Ask about this.
4) Never store any customer card numbers in paper files or on PCs.
If they can blame you for lost card info, there is a big
fee/fine. The easiest way to avoid that is to never
store the information on anything you own.
I took credit cards for years in a previous business. In general there's very little downside other than the couple percent. Whether it's likely to be an advantage to you is hard to say, it's entirely a matter of the type of work and clientele you deal with. Depending on how your account is structured you may have to buy a credit card terminal which can be pricey but they are available used on Ebay, just check with your processor about what models they support in terms of programming with your merchant number etc... good luck.
PaulB
http://www.finecontracting.com
In general there's very little downside other than the couple percent.
One huge downside is that the Fair Credit Billing Act gives the cardholder the right to refuse payment of any charge, under the "special rule for credit card purchases". The agreement you sign to accept credit cards usually requires you to agree to accept the bank's determination in disputes.
So the risk is that you are giving up your legal recourse to place liens, sue, etc. to collect payment.
"One huge downside is that the Fair Credit Billing Act gives the cardholder the right to refuse payment of any charge, under the "special rule for credit card purchases". The agreement you sign to accept credit cards usually requires you to agree to accept the bank's determination in disputes."This is a great point!! In some ways, we are giving our clients the opportunity to refuse to pay us. I do indeed recall reading this fine print when I decided to accept credit card payments. It sort of puts us at a disadvantage, being that we can do virtually nothing in the case that a disgruntled client wants there money back somewhere down the road.I wonder if in fact we are giving up ALL our rights as far as placing liens goes . . . that would be a terrible thing and would sway me from giving people the option to pay with credit!
In some ways, we are giving our clients the opportunity to refuse to pay us. I do indeed recall reading this fine print when I decided to accept credit card payments.
The greater issue may be whether you are also giving up your rights to file liens or otherwise attempt to collect from the client. My opinion is that you are, at least in my state, but that is a legal question I don't feel qualified to answer.
I own a retail store and accept cards but do not consider myself an expert in any way. And in the last 10 years plastic cards usage has gone from say 10% usage to over 80% usage. So people find it very easy and convenient way to pay and you the business are paying for them to use their card.
You will be taking a discount on every invoice you run on a card, some more than others, ( VISA & Mastercard are best, Discover & Amex are worst, with differences even among themselves) as well as pay a small transaction fee.
In my mind this fee and discount will average about 3% off the invoice.
You have two options either 1) accept/eat the discount at the sale and move on 2) raise your rates the 3% to cover the gouged sale. ( You cannot call it a processing fee)
Why do merchants accept this you may ask?
If I were asked to rank my preferred method of payment it would be as follows:
1) cold hard cash
2) credit cards
3) checks
4) terms
The reason I rank a card above checks is that I have never had a completed card transaction denied when I have a signed receipt from the customer! And have only had a few even question it.
I get about 15 returned checks a month with all the fees and hassle of that. (unsolicited advice: retain a check collection agency for all your bad checks!)
The last reason I accept cards (notice I said "accept" not "prefer") cards is If I am ever robbed or my nightly deposit was misplaced? I would still have my account credited for the cards whereas cash and checks can and do come up missing. Remember 80% of my business is in cards now. It would hurt, but not put me out of business.
You can get a brand new card terminal for about $100. Note in order to realize the above benefits, you'd have to run the card then not later to see if it is accepted.
Now how cards would relate to your business, I have no idea...
Edited 11/17/2009 9:38 am by CRF
I don't know what the current systems are,
however- if I had a retail establishemnt- I would definitely take credit cards- they are pretty ideal for a retail business-say selling 50 pairs of running shoes a day.
for a contractor?- well it didn't work out to well for me
when I FIRST accepted cards- I could run the card through that little carbon paper stamper thing-and then simply turn in the slip to my bank- from my perspective it was as easy as taking a check- but the bank soon eliminated that- and instituted a program where I had to phone in every charge, punch in a zillion numbers on my cel phone- it was just a giant hassle- and once a customer ended up being double charged for the same roof
SO- I stopped taking credit cards
If I had a retail establishment- sheer repition would make the process go smoothly- but I only accepted a charge 2-3 times a year-so it was always unfamiliar- and a screwup.
If a simple system- like the carbon slip system became available again- I would probably go back to accepting credit cards- because i do get asked about them several times a year.
stephen
Carbon slips are still available. That is what my BC processor gave me for a backup system if the online system crashes.
consider talking to a lawyer who specializes in commecial transactions.
In almost all cases the only issue is whether paying the fees is worth it to you.
In some cases, the somewhat intricate banking/commercial rules can have significant impact.
FWIW, a large home inspection company I know of had a distinct decrease in outstanding collectibles (from returned checks) after it starting accepting CCs
"Man's capacity for justice makes democracy possible, but man's inclination to injustice makes democracy necessary."
Reinhold Neihburh: 'The Children of Light and the Children of Darkness'
http://rjw-progressive.blogspot.com/
I just got my wife set up with ProPay, a little card reader about the size of a cell phone. You swipe the card, write down a little information about the transaction, and your money is credited to your bank account in about 72 hours.
This deal was pretty good - the reader was about $100, the monthly fee is $4.95, and their fee for transactions seems to be about 1.5%
It's all USB powered, rechargeable, portable. epay.ProPay.com for more info.
Greg
There are two issues to address: Whenter to accept, and how to process, the cards.
The first is: Should you be able to accept credit cards and debit cards? Absolutely, if you're dealing with the general public. There are a few reasons for this, in both your favor and the customer's favor. The biggest ones are the ability to 'run the card' before you start the job, and the fact that it is the bank, and not you, who is doing the lending to the customer.
Remember, the easier the sale, the more likely the sale. A person is more likely to get a project done if they have the ability to spread payments out over time. This also makes it much easier to absorb unexpected expenses.
Now, as for processing cards .... there is an army of sales reps out there hawking their card processing services. There is absolutely no reason for you to use your own bank. The question then becomes: whose service to choose?
Well, the easiest way to find a reasonable card service is to ask several no-name convenience stores ("Hindu Marts" whose service they use. If you find two or three using the same service, you can be sure it's a decent operation. Whether their plan suits the far fewer transactions you will have is another issue.
I do remods and a small amount of new construction. Over the years, I have had very few clients ask to pay by credit card, and usually it's someone whose primary residence is in another city, and they want to use the CC to get the deposit to me immediately so I can get going on their job when timing is tight. Otherwise, I just tell them to mail me a check, and then I wait till it clears before I start spending it.
The other time people ask to use credit cards is so they can accumulate 'Air Miles' points.
In any case, paying me by CC is a loser for the client because I charge them the 3.5% Pay Pal commission. But that's their business; if they insist, I'll do it that way.
It's not necessary to take credit cards so you can sell clients who don't have the dough for what they wanna buy. If it's just a question of paying with the bank's money, most credit card accounts allow the CC holder to write checks on the account. The only downside is that those checks are treated as cash advances and so interest starts from the day the payee deposits the check.
Dinosaur
How now, Mighty Sauron, that thou art not brought
low by this? For thine evil pales before that which
foolish men call Justice....
I think you have a good point when it comes to the frequency of CC usage. It is few and far between where people are wanting to pay with their credit card, and when it does in fact happen it tends to be to avoid delays in the project. It is much easier for the client to give their Card details to me over the phone than it is to write and mail a check.Maybe I will implement a processing fee as well to cover the costs of what could be a very high 2%-3% deduction (especially if the customer is charging many thousands of dollars at a time!)Thanks for the time and energy of everyone who has posted thus far!
You might want to investigate what arrangements your bank offers / requires for your clients to be able to pay you electronically from one of their bank accounts. That way they can use their line of credit or a cash account as they please, and you get your money instantly. Not sure who pays the bank fees on those transfers, but I suspect it's the payee (you). When I pay bills on line, I don't pay my bank a cent to do so other than my monthly fee.
Lots of different options out there these days....
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
there is a further downside to taking a check from a customer that is really a "cash advance" the checks the credit card company sends the customer-usually have a time limmit-for example "2.99% if this check posts by 4-1-10, not valid after 4-1-10" it won't be printed on the check-but on a stub next to the check which you are never going to see. this happened to me in the spring- customer gave me one of these checks--------first off it's a pain in the but because my bank put a hold on it for 10 days-and THEN bounced the check( the check was for almost $10,000 the end result was-the customer had used the check past it's expiration date-you,the contractor are NEVER going to know they have done this-untill the check bounces. in the end- I eventually got paid-but it was a major pain in the rear. THAT customer-went on to be a major pain in the rear over THREE other issues( especially the wife)-and then eventually kind of half heartedly apologised and admiddted maybe they were in the wrong after all.stephen
Steve, I've never seen that on the CC checks my bank sends me--and certainly not on the ones that go with my LOC--but it's interesting to know about anyway.
Even so, I don't see how that presents a new or additional problem; any check other than a certified check can bounce. 95% of my clients pay by check, and I don't even need to know if it's a cash-account check or a CC or LOC check. It doesn't matter: I don't spend that money until the check clears.
Over the last 15 years, I've only had two checks bounce, now that I think about it. Guess I've been pretty lucky.
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
most people aren't KNOWINGLY going to bounce a check on you
However there is a difference between accepting a personal check from someone,locally- the check should clear in a day or so.
the credit card checks- are invariably out of state checks( typically delaware)-and so there is immediately a 10 day hold placed on them-
and when the check is "expired"-unbeknown to the customer-
well trust me- it turns into a clusterf!@# in a hurry!
stephen
One reason that it could go sour is because they might not have room on their credit line anymore.
I think they might be tapped out-because they paid the deposit from one line of credit-and the balance from another line!at any rate- I got my money
stephen
Ah; it's a bit different here. CC checks are drawn on the bank that issues the credit card. The only time I get a long hold put on checks is when it's a foreign check. Any check drawn on a Canadian bank has to clear within 5 days, IIRC.
The quickest solution is probably e-mail money transfers. Pay pal transfers credit card payments immediately to the payee's Paypal account--so you know the payment has gone through--but they hold it for 3-7 days before transferring it to the payee's actual bank account.
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
any check other than a certified check can bounce.
Certified checks can bounce now, too - and it often takes 30 to 90 days before they bounce.
There are no "certified checks" now due to check fraud - they are "official checks", and the banks can bounce them and pull back the funds up to 90 to 180 days after you have cashed them.
DAMHIKT :-(
Certified checks can bounce now, too - and it often takes 30 to 90 days before they bounce.
There are no "certified checks" now due to check fraud - they are "official checks", and the banks can bounce them and pull back the funds up to 90 to 180 days after you have cashed them.
Again, I don't know if that's true here, but it is definitely a scary concept.
Makes you wonder about how to pay the balance on your new car before you pick it up. Always in the past dealers required a certified cheque for that. I can't see 'em accepting something that could bounce 3 months later after the buyer had shipped the car to Honduras with a new paint job and serial numbers....
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
In any case, paying me by CC is a loser for the client because I charge them the 3.5% Pay Pal commission.
It's actually illegal to charge a premium for credit cards, under the federal Fair Credit Billing Act. Fines are pretty stiff, as I recall. It's OK to offer a cash discount, though.
It's actually illegal to charge a premium for credit cards, under the federal Fair Credit Billing Act. Fines are pretty stiff, as I recall.
Dunno if that's true up here, but I am not charging a premium for CC payment, I am simply re-billing to the client the commission a processor charges to my account. No difference the way I look at it than rebilling sales taxes I pay on materials to the client for whom I buy them.
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
Dunno if that's true up here, but I am not charging a premium for CC payment, I am simply re-billing to the client the commission a processor charges to my account.
In the US, that would be illegal - the FCBA does not allow any premium to be charged for use of a credit card.
I understood that; however I am not charging anyone for the use of a credit card. I am charging them to make a payment to my Paypal account. It doesn't matter if they make that payment with a credit card, a debit card, or a bag of gold nuggets. Paypal charges me to process the payment to my account; I back-charge the client whatever that amounts to.
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
Paypal charges me to process the payment to my account; I back-charge the client whatever that amounts to.
Hmm, I'll have to reread my Paypal agreement - I thought Paypay prohibited charging the processing fees to the customer, but maybe that is just Ebay.
Well, if PayPal is not going to allow me to charge off that 3% to the client (by advance agreement with him, of course) who's in a tearing-arsed hurry to send me dough, they just gonna have to learn to live without it. Hope they won't go bankrupt
Besides, I am not selling through the E-bay site; I'm just using their PayPal money transfer service. Paypal is not guaranteeing that I am going to deliver the goods; all they promise to do is deliver the money. That being the case, I can't see how they could have any interest in the matter.
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
Well, if PayPal is not going to allow me to charge off that 3% to the client (by advance agreement with him, of course) who's in a tearing-arsed hurry to send me dough, they just gonna have to learn to live without it.
Depends on how the agreement is written. However, PayPal has achieved some notoriety by closing accounts and confiscating funds, pulling back prior payments (any payor can recall a check or ACH transfer for 90 days after issue), etc. So, if that is a violation of their terms (which I have not yet double-checked to confirm), the risk could be huge.
Say you remodel someone's kitchen, cost is $20K, paid through PayPal. You pass along a 3% fee and charge the client $20.6K. PayPal then finds out you did this. Typical response for PayPal, based on complaints posted on the web but not my personal experience, is that PayPal closes your account, pulls back the $20.6K payment, and maybe sues you for the contract violation. Even if you go to court, you will likely lose, because you authorized them to do this in your agreement with them.
I personally am not comfortable using PayPal for transactions over $100 when I am the recipient of the funds. I'll pay more than that through them, because as a buyer I have both the credit card protections and PayPal's protections. It's a great deal for the buyer, not so much for the seller.
The way around the paypal clawback is to have a seperate account for paypall that you empty into your regular account. When it comes time for the clawback, can't take what isn't there!>G<
When it comes time for the clawback, can't take what isn't there!
In some cases, they place holds on the account and you cannot withdraw the money until the 60 day disput window passes. Not sure when and how, just have heard people complaining about that.
In addition, unless you take the money in cash and do not deposit it in another bank, they can pull back the funds after you withdraw them - ACH transfers can be reversed and checks pulled back for at least 90 days.
Had a case once where a company declared bankruptcy. The bankruptcy judge pulled back every check they had paid for the previous 6 months. I think the 6 months is only in cases of bankruptcy, though.
Edited 11/19/2009 7:07 pm ET by woodturner9
In addition, unless you take the money in cash and do not deposit it in another bank, they can pull back the funds after you withdraw them - ACH transfers can be reversed and checks pulled back for at least 90 days.>>>>>>>>>>>>>>>>>>
Cash is my friend.
I would like them to try to reverse a treansfer to another bank. That would be a good one.
Had a case once where a company declared bankruptcy. The bankruptcy judge pulled back every check they had paid for the previous 6 months. I think the 6 months is only in cases of bankruptcy, though.>>>>>>>>>>>>>>>
Actually the gov has used the power before. It is called a clawback. As far as BK, that could happen but I personally have never heard of.
The new banking laws passed several years ago eliminated a lot of consumer rights. Checks can clear without signatures, paper originals are no longer needed, and here's a good one -- banks can limit withdrawals to any amount they deem "reasonable". If you walk into the bank and tell them you are closing your account, they can legally give you a partial payment of the funds in the account, and then take up to 30 days to settle the rest. Want cash? Banks can give you a check in lieu of cash and if you don't like it, too bad. And if things get ugly enough in the economy, you might have to go to a Federal Reserve bank to cash that check. The nearest one for me is in Denver, 250 miles away.The wife and I used to keep most of our funds at one bank because it was easier to deal with the paperwork. Now we spread the money among several institutions so that if one gets into trouble or pulls some weird stunt, we aren't at their mercy.
Paypal is authorised to make deposits to one specific bank account, and to make deposits only. I never authorised them to take money out of my account under any circumstances whatsoever. They tried to flim-flam me into doing so by encouraging me to become 'verified'...but when I saw the snake hiding in the small print, I declined.
If my bank were stupid enough to allow them to take one red cent outta my account, it'd be a very expensive mistake on their part as they would be liable to me for the entire amount... and they--not me--would have to go fight it out with Paypal to get reimbursed.
But I do like Frammer's idea; avoiding a problem is better than having to correct it.
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
Paypal is authorised to make deposits to one specific bank account, and to make deposits only. I never authorised them to take money out of my account under any circumstances whatsoever.
I can't speak to contracts and agreements in Canada, but in the US, authorizing ACH transfers also authorizes withdrawals. If they are depositing money into your account, they have the right to withdraw it, whether or not you specifically and explicitly authorized that, at least in the US. I believe that is inherent in accepting ACH transfers internationally, but I am not certain.
If my bank were stupid enough to allow them to take one red cent outta my account, it'd be a very expensive mistake on their part as they would be liable to me for the entire amount
Again, that is likely not the case. All it takes for a bank, Paypal, or any entity to take money out of your account is an indemnification agreement. Essentially any bank will release funds back to the entity that deposited those funds, provided that entity indemnifies them. Once it is done, it is very difficult to impossible to get those funds back. It's legal and the "victim" has essentially no legal recourse.
Sadly, I learned this through personal experience. A major worldwide bank made an error when I closed my account. More accurately, the teller was stealing money. I closed my account, but the teller ran the debit twice. The bank claimed I received the account balance twice and pulled back the certified check I had deposited in another bank. I have been fighting this legally for two years, up to and including the FDIC and the fed. Bottom line, I have little legal recourse. Bank says it was an error, and it's pretty much what the bank says that is accepted as the final word.
So, I used to think like you do, but learned through this experience that I was wrong.
Here's a big downside. Now I know everybody here does great work and NEVER has a dispute with a customer ;-}
So it shouldn't bother you that your job can be completed and paid for, and if the customer has some sort of beef (remember-that NEVER happens, right?) they have something like 60 days to contest the charges. CC company then holds the entire charge back from your account until the incident is investigated. Then you are at their mercy to find in your favor.
It's something to consider.
John Svenson, builder, remodeler, NE Ohio
Edited 11/17/2009 9:47 pm ET by Svenny
Thanks for pointing that out Svenny.For the record, we do take cc but we cover the costs in our proposal.
I would not call that a 'downside.'
First, it's more than balanced by the assurance that you'll get paid by the other jobs. After all, it's the card issuer that's taking the risk they won't get paid at all. I'd rather take my chances with MegaBank than an IOU from Justy Customer.
Checks can bounce, cash has it's own problems - but you know what taking cards really says? It says to the customer "I'm a real business." If you're dealing with the general public, that's an important message to get out.
Just out of curiosity, what 'problems of its own' does cash have?
The only one I can think of would be counterfeit bills.
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
Cash carries with it the burden of carrying change, the risk of loss, and the difficulty of satisfying the taxman at audit time.
Now why would a tax collector be suspicious of cash? It's legal tender, isn't it? Issued by the govt. he works for, ain't it?
;o)
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
I noticed your wink! For the uninitiated, having a 'cash' business is likely to result in a difficult audit, as the taxman is far more likely to question your accounting. That can result in your being placed in an unwinnable situation.
I am told that there are four things that greatly increase your chances of being audited: a cash business, a job where tipping is common, gambling, and being in Nevada. (Kind of makes tax time fun for cab drivers in Reno).
As for credit card premium fees ... yup, you're right, every cardholder agreement forbids them. Yea, right. Remember that the next time you encounter a place with a minimum charge, or that cancels their fee for larger purchases.
Similar issues arise wherever there is a difference between the 'cash' and 'credit' pricing. That doesn't deter my corner gas station, though.
A few years ago the province passed a law requiring all 'tip' workers (waitresses, taxi drivers, etc.) to report and pay tax on a minimum of 15% tips. Restaurant owners are required to report 15% of the total checks each waitress serves directly to the government on the employee's tax forms each year. If the waitress is bad, or slow, or bristly, she'll wind up paying tax on tips she never got.
Can't swallow that one myself.
OTOH, I was a taxi driver in NYC for about 3 years; got audited on my taxes, too. This was back in the early 70s. Went into the audit with my shoeboxes fulla receipts and paycheck stubs, and the first thing the auditor asked me was about tips.
'Who da ffrock you think you are A-hole' says I. 'You think I got nothin' better to do with my time than to talk to jerk balls like you?'
A short pause ensued during which the auditor looked like he was in need of oxygen. Then he asked me if I understood his question?
'Of course I understood yer friggin' question, you overpaid turd. You think I'm stupid or somethin? I didn't get no tips so I didn't report no tips. You got any more stupid questions? Can I get outta here?'
The auditor was a youngster, about the same age I was at that time. But this was definitely not what his IRS training had led him to expect. He simply couldn't believe his ears so he tried again. 'You didn't get any tips at all?' he said, trying hard to look stern and imply that this was so unheard of as to be incredible.
'I just told ya, didn't I? What, are you deaf as well as stupid? Who the hell gets tips? Some suck-arse weenie who spends his whole night suckin' up to rich aholes sittin in da back seat? Rather cut my throat. It's my friggin' cab, see? You don't like the way I drive it, get the hell out and walk. I tell 'em all.'
The auditor thought about that for a few minutes, then said, 'You know, I think I believe you.'
;0) Kidz, don't try this at home....
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
Remember that the next time you encounter a place with a minimum charge, or that cancels their fee for larger purchases.
The "no minimum charge" provision is in the user agreement with the card processor, not the law. However, banks do enforce that pretty agressively. All it takes is a call from a customer alerting them that a business is setting a minimum for credit cards and the bank will usually cancel their account.
The FCBA does make it illegal to charge any fee for use of a credit card - that is a US federal law.
"you know what taking cards really says? It says to the customer "I'm a real business." If you're dealing with the general public, that's an important message to get out."Can't agree with that at all.In 35 years I've never been questioned if I was a "real" business. Worker's Comp, Liability Insurance, licenses, professional organizations, tell a customer whether a contractor is a "real" business or not. I do a lot of work for a couple of contractors. One does 3+ mil a year in residential work, the other does mostly commercial work, probably does over 10 mil a year. Neither one accepts credit cards. Nobody questions if they are "real"John Svenson, builder, remodeler, NE Ohio
You've answered your own reply.
If you're doing 'a lot of work for a few contrractors,' you're not dealing with the general public. Your model - and nothing wrong there - is based on serving the same few customers.
OTOH, one of those businesses with the full-page ads in the phone book, perhaps with a dozen service trucks roaming town, absolutely must be able to take credit cards. Their own data shows that simply having the credit card logo in the ad makes a difference in the calls they get, and being able to take the card increases the amount they can charge for each job.
Make of it what you will, but those are well established facts; one can hardly open a marketing text without examples of this being shown.
Less obvious is that the way our world is changing, it's getting less convenient to use checks at all. For whatever reasons, the banks want us to do our business electronically - and that means a credit or debit card. Heck, even 'food stamps' and 'unemployment checks' are cards now.
"If you're doing 'a lot of work for a few contrractors,' you're not dealing with the general public."You read a lot into my post that I didn't state. I have always dealt primarily with the general public. For some reason you have taken my term "a lot" and stretched it to mean "you're not dealing with the general public." and "Your model.... is based on serving the same few customers."While my business generally grosses less than $400K per year, Two contractors that I work with have multi-million dollar corporations that don't accept credit cards, yet nobody regards my business or their businesses as any less legitimate.If your business is based on a lot of small jobs then credit cards might make sense to you. But an extra 3% cost on a business based on large projects makes no sense whatsoever.John Svenson, builder, remodeler, NE Ohio
I've taken CC's (Visa, MC, Amex) for 4 years. Has it increased my business? No. It has gotten me paid quicker - especially from clients that live out of town - I have a number of vacation home owners I work for.
I ask at our first meeting how they plan on paying, if the say 'credit card' I add 3-4% to their pricing to cover the costs. I used to just add it to my overhead but if 1 customer charges $30k worth of work (it's happened) it's not fair to spread the those fees among all of my customers.
I use the knucklebuster to swipe the card and get a sig, call it in from the customers driveway. Easy. Once we have an established working relationship they can email me approval to charge the card for future work and I call in the charge from the office. Some months I have 0 CC's, others 5-6, no sense getting an expensive plan for that. My processor charges a base fee of $10/month, CC fees are on top of that.
I have no reason to drop CC's and yet no reason to really hype them either - it's just another way to make it easier for the customer to pay me.
-Norm
Craig,
I was and am still considering accepting credit cards. Especially after one job this past summer.
I bid on painting an entire house for a bank manager and his wife. Nice folks got along great they seemed excited about getting the place spruced up now that the last kid had gone to college.
She called back and said they had decided to do about a quarter of the job and continue it this fall. I began work and she was around for most of the time being a teacher she had the summer off.
We talked about business and I had told her I was looking at taking credit card payments in the future. She said we would have gone for the entire job if we could do it on credit! Did I mention her husband is a bank manager?
We completed the last 3/4 of the job this fall. But did it by paypal. I did buffer in the fee to the cost though.
I wouldn't have expected people still purchase based on space left on a credit limit.
Jon
Russian saying
Haha I guess people are still maxing out there credit cards! The way I see it, I don't want anything standing in the way of spending as much as possible on their home improvement projects. That is why I'm trying to make it as easy as possible in order for them to be encouraged to spend more!I mean, I hope people are being wise with their finances, and I'm not encouraging people to spend what the don't have, but I am going to try to sell them the product that makes them happy and puts money in my pockets!
I would like them to try to reverse a treansfer to another bank. That would be a good one.
Been through that, wasn't fun, was surprised at how little recourse I had.