Credit Card and Check Processing

[Brent Deines]

I just got a Costco flyer and noticed that they are offering 1.64% + $.20 per transaction for credit card processing, but what really caught my eye is that they are offering a keypad/swipe terminal for free...kind of. The catch is that you have to pay the $319 up front but after 12 months of service they will issue you a rebate for the same amount. The add also says that this terminal now also processes check and gift cards. From the photo it appears to be a nice compact size, but it doesn't mention if there is a wireless version for mobile use.

It's a pretty good deal if it is a terminal you can use and you are confident that you will use their service for 12 months or longer.

[theglasstech]

Ok Brent where to start? I actually use to be a merchant consultant (the guy who sells you on setting up your merchant account and except credit cards). What you read sounds all fine and dandy on paper, but here are the facts of merchant accounts.

First of all each processing company buys the right to process visa mastercard and discover card. When I left the business the rate the companies were buying these rights was about 1.68%. With that being said the 1.64% you saw was what they call a network rate. If you look on the back of any card you will see that it says cirrus, star, nyce, interlink, or one of many others. There are 29 different networks and when you see a rate offered this low it means that it only applies to cards processed in their network( the most any one company has is seven). Then when you process a card outside of that network the rate would increase to about 2.89% or so. Try to find a processing company that has a flat rate on all networks probably about 1.99% or so and you come out alot cheaper.I know Ameribanc is one.

Second many of companies will give away a processor for free with no upfront cost. Instead of paying 319 and hoping to get reimbursed. However all of these companies that I am aware of still charge a minimum of about 25 dollars a month. That way they asure that they recieve their money back on the machine. 25 dollars a month in processing is about 1500 dollars a month in sales so even if you only do one transaction it will still cost you that minimum each month.

Third the machine you saw would not do wireless. However you can get one of those for free also from ameribanc and some others as well. The thing with the wireless unit is you have to pay the wireless service every month to use it. I cant remember for sure but I think it was around 45 dollars a month. So if you were doing wireless you could get set up to process with no upfront cost, but you would be charged 45 for the wireless and 25 for the minimum. So if you only did one or two or none a month you would go in the hole real fast at about 70 a month.

With that being said I will probably add it to my payment options real soon, but when I do I will get a regular unit not a wireless. I will then call in my credit cards back to my wife at the office to key in and process (which is a higher rate once again for not swiping the card). But it would do away with the 45 a month for wireless. Probably about 2.89% and 0.20 a transaction.

I hope this helps alot of you who have or are thinking of adding credit card processing to your arsenol. I know it can be confusing and there is still alot more to it but I tried to explain the best I could with just the highlights.

[Brent Deines]

All very good points, but I've been processing credit cards for about 23 years now, and have dozens of merchant consultants contact me every year, all promising they can beat the deal we currently have. So far when it comes right down to it I have not found one that beats Costco when you compare apples to apples, but that does not mean there are not some better ones out there. Yes they all use the same few companies to process the transactions, but that does not mean all the rates are the same. For some people it may make more sense to pay a monthly fee, which is basically the same as leasing a machine (Costco also has that option available), but for me waiting 6 months for a rebate is no big deal if I can eliminate any monthly fees. The net is what I look at. That said, we don't use Costco because we run everything through QuickBooks and although Costco offers a slightly lower rate the extra step is not worth it for the number of cards we run every day, especially since we cannot swipe the card for most transactions.

I have had customers tell me that they can now do their processing through their phones these days, but I have not tried that myself as it really isn't necessary for our current business model. It's getting easier and easier for the mobile technician to accept credit cards these days, and more and more people pay for everything by credit card. Ten years ago a very small percentage of our customers paid by credit card, but now the vast majority of our customers choose that method of payment. There is a cost associated with accepting credit cards, but for me it's all about making it as convenient as possible for the customer to pay for our products and services.

Please don't misunderstand, I have no dog in this fight and I don't necessarily think all windshield repair technicians should accept credit cards. That is a decision based on your own personal business model and customer base. I also don't use Costco's merchant services and I don't get anything for mentioning their services. I just thought their current deal was worth mentioning. Regardless of who you choose for your merchant services be sure you look at the plans carefully based on the number of credit card transactions you expect to run each month.

[paulrsf]

Until last April, I owned a retail shop in downtown San Francisco. Like Brent, we processed our credit cards through Intuit Merchant Services because it interfaces directly with QuickBooks Point of Sale. All during this time, we also had a Paypal account which we often used when we sold some of our inventory overstock on eBay.
Paypal has an application that can be used with an iPhone or Blackberry that allows you to accept credit cards where ever you are. This is what we now use to process credit card transactions. You can even email the customer receipt directly to the customer making the whole transaction paperless. Paypal requires that you open a merchant account. The cost of using the mobile application is $4.99 per month for an unlimited number of transactions. Paypal offers several different rates based on volume of monthly sales but they are not discount merchant services providers. What I've found after hearing from dozens of credit card services sales people over the past few years is that they all say they can save you a bundle, many offer free credit card terminals, but in the end what seems like it is going to be a great deal just turns out to be more of the same. If they give you a free terminal, they make up the cost of the terminal some other way.

[Dr.Chipster]

Does anyone have any experience with Propay? And what is the meaning of 2.89% + .30 cents per transaction? Does it mean they charge you 2.89% of the transaction amount plus an additional .30 cents?

[paulrsf]

No experience with Propay, but 2.89% + .30 cents per transaction does mean that they charge you .30 cents additional per transaction. When you figure it out with real time numbers, it adds up:

On a $100 transaction: 2.89% = $2.89 + 0.30 transaction fee = $3.19. That doesn't include the monthly cost (if any) of the service. We pay $30 / month for our Paypal merchant account.

[Dr.Chipster]

From the information on their website Propay has a yearly fee of $59.00 a year. No monthly fee as far as I can tell. I don't have any experience with C.C's so I don't know if that is good deal or not. The only other thing that I feel is a negative is that Propay loads a debit card for you to use your funds they collect and charge you a small fee to have funds wired to your bank account. They do however send you a monthly activity report. Anyhoo, I need to find a solution to accepting credit and debit cards soon. I guess a trip to Costco today would be worthwhile.

[Eco Steam]

I use intuit because I can process transactions right on my cell phone. Rates vary based on the type of card, I.e. Rewards, business, etc...

There are monthly dues, per trans fees, and if I don't process enough in a month, I get charged a fee up to $10 in addition to all other fees.

It's actually a sucky service.....

But I also have a paypal business account that I can process cards with.....

Just got an iPad and there's an app called square, and here's how their fees breakdown:

No monthly fees, no transaction fees, no monthly minimums, no contract, 3.5% and with the free card swiper,, your rates will b 2.5%

Jay

[bpdenverco]

I use a Iphone, you can use a paypal client and credit card transaction's, from a different company . Just look around on Iphone apps store. I pay $25.00 min, for the credit card app. I have to have to do more than $500.00 a month to break even on the Min $25.00 service charge.

[paulrsf]

After much research and some trial and error, I finally found an iPhone app that allows for credit card processing with no hassles and low monthly fees.
First I tried paypal's own app for the iPhone called wCharge. It worked pretty well, but it costs $4.95 per month plus a per transaction fee. You also need a paypal merchant pro account in order to use the app and that comes with a $30/month fee.
Next, I filled out all the necessary info for an app that seemed pretty promising, called "Square". With this app, you need to use a credit card swipper that fits into the headphone jack of the iPhone. I waited weeks until I finally contacted the company (Squareup.com) to find out where the card swiper was. I was told that the company was a little over-zealous in releasing the app as early as they did and that there are several issues. One issue is that they do not have enough of the card swipers. The real issue though is that they are having problems with their underwriter funding so they are in the process of acquiring the necessary funds to allow for an increase in the amount you are allowed to process. Currently, (if you had a card swiper) you would only be able to process a charge of $60.00 So, this obviously led me to the next trial which is the one I finally settled on.
The app I am using is called "Swipe" and it comes from a company called, AppNinjis. It works without a card swiper and it also uses either paypal or several other gateways to process transactions. The app costs 0.99 cents and there are no per transaction fees other than the fees charged by the gateway, (in my case, paypal) and the monthly cost of the Merchant Pro Account.
I don't have any connection to any of these companies what so ever except as an end user so I am not promoting one company over another. This is just informative in case anyone finds it useful.