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Taking Credit Cards ???

hr Member Posts: 6,106
"will you be paying with cash, check, or credit card today"? That handles a lot of issues in the field.

Certainly some of your customers will have charge accounts. property managment companies for example.

I've found customers seem to spend more when they can fianance with the plastic.

Savy caard users get airline miles and other perks. I do when I use my credit card.

Make it easy for your customer to do business with you.

I suspect many customers shop the yellow pages for ONLY contractors that take plastic. You probably are missing out on a lot of "up to bats" if you don't accept credit cards.

hot rod

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  • ScottMP
    ScottMP Member Posts: 5,884
    We are setting ourselves up to

    take Credit cards for payment.

    Any of you that have done that have any advice ?

    We were going to just take Visa/Mastercard, but have know been called by American Express and Discover. Dosn't A.E. charge a little more ? I thought I heard that they don't pay as fast ?

    Any help would be appreciated.


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  • Ken_40
    Ken_40 Member Posts: 1,320
    I am surprised...

    Considering we work on roughly 10 to 15% net profit, that you would so willingly give up ~2-4% of the gross (roughly 20% of net profit) to be able to handle folks who have no cash, cannot write a check or simply want air miles at your expense.

    The 2-4% "fee" is just the beginning. The cost of the transponder, loss of signal in rural areas and hassles of state laws regarding 72-hour cancellation "privelages," third party delays and hidden fees and equipment and having a tech play accountant and office staffer - while 10 snake outs and no heat calls are backing up the office...

    By what measure is taking plastic a positive business practice? If you were Macy's, I'd understand.

    I'd re-think the premise. Or perhaps I just don't understand it.
  • John Starcher_4
    John Starcher_4 Member Posts: 794
    Nice to hear the \"curmudgeon's perspective, Ken!\"


    Seriously, though, your points are all very valid. My personal feelings on this is that credit cards are a reality, a way of life, and are here to stay. If you can get all of your customers to pay with cash or check, then more power to you!!!!

    Realistically, though, as we move ever closer to being a cashless society, where all monetary transactions occur electronically, those who are not equipped to handle this are going to suffer.

    Fees? You betcha. Upfront costs? Absolutely!

    Solution? Build these into your overhead cost, and apply them across the board. If someone DOES wish to pay you in cash (an occurrance that will become close to extinct as time goes on), then offer them a discount.

    My $.02

  • Dave Ewald
    Dave Ewald Member Posts: 36
    Are Cash Discounts Allowed?

    I've read that credit card companies do not allow you to charge more to customers for using the card, but I think there may be a big loophole in that you can give a discount for cash (or checks, or gold coins, whatever). Are such discounts actually allowed under agreements with the credit card companies?
  • John Starcher_4
    John Starcher_4 Member Posts: 794
    The credit card companies.....

    ....have no jurisdiction over any transactions you enter into which do not involve them.

    You are correct that the agreement you sign w/ the CC company prohibits you from charging a separate "fee" on top of the purchase price. This same agreement prohibits "minimum purchase amounts" required for CC sales.

    If you wish to offer a client a discount for paying cash (see my post above), then go for it!

  • Al Gregory
    Al Gregory Member Posts: 260

    We started taking them a cpl years ago. We used to take them many years ago but the paper work was to much and not many people used them. Here is just a short story

    I put a boiler last winter for a regular customer. The bill was around 4k. To my suprise the old lady handed me a credit card. I wasnt happy because I knew 4% was no gone. I ran the card and it came back approved. I gave her a reciept and left. The next day I got a call from the CC company saying they had to put a hold on the funds for that transaction. They said the lady never spent that much on a card before and they had to investagate for fraud. It could take up to two weeks to get the money put in y acct. I was freaking out, they told me once the machine said it was approved the money was mine. So now Im out 4% for using it and I couldnt discount the boiler because my money was being held up. Now I tell people before I put the boiler in I want a bank check. I wont take a CC for anythong over 300 anymore. Plus the customer can try to charge back the transaction up to 6 months later and the card company will put a hold on the funds in your bank acct. Funny how this stuff never gets talked about when they are trying to get you to use their service.
  • Paul Pollets
    Paul Pollets Member Posts: 3,642

    We've taken MC and Visa cards since '97. We allow service work to be charged without a fee.

    Large projects are charged a 3% handling fee, if the owner or GC wants to charge (usually for air miles)for progress payments. One client charged $75K on his card for the entire project..

    If you don't charge a fee for charges over $1000., expect to see the fees charged by the CC companies affect the bottom line. BTW, Some states do not allow any other fees to attached to the use of credit card purchases.

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  • Just do it!

    I was stunned by the total dollar amount charged after just a few months. You get your money quite rapidly and your sales increase, which is contrary to what I thought we'd see, but folks tend to spend freely with plastic!

    We can't tack on any fees in PA.

    It initially gripped me to give away 1.5%, but consider this: money in the bank earns interest; money in your customers' pockets costs you money.

    Your local banks can get you better rates than others handling the credit thing. If your customer comes in and you can swipe the card, you can get a better percentage on that transaction. We can call in the "key" numbers on the back of the credit card to keep an extra 1/2%.

    Just another way to make it easier for your customers to do business with you - hassle free shoping.

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  • Ken_40
    Ken_40 Member Posts: 1,320
    All three biggies,

    Visa, Mastercard and American Express, clearly state (in the very fine print)you may NOT add the clearing fees to a card user. By doing so, you are subject to the cancellation of use, fines and prosecution.

    After 30+ years in this biz, I have NEVER lost a customer because of our refusal to allow a credit card purchase. Jobs ran from well under $100 to a quarter-million.

    The only regret I have about NOT taking CC's is a great account we have called The United States Coast Guard. Up to a 3 or 4,000 dollar limit, they prefer to pay us on the spot - rather than go throgh the U.S. Treasury Department bill-pay system. We wait ten days for our money - rather than give up the 2 - 4% "transaction fee."
  • ScottMP
    ScottMP Member Posts: 5,884
    Thanks Guys

    Thats why I came to the wall, diversity.

    Dave, I should have known you'd allready be doing this. I agree with what you said and thats why I have gone ahead with this. Not my cup of tea, but we are in a plastic age, people are quicker to take out the plastic then cash. My wife takes her's out like a gun slinger. If its easier to do then customers won't hesitate as long. Also, by the time I get the bill typed up and out the door and in the mail and delivered to the house and they sit down and write the check ........ it could be in my account.

    Ken, things change and the way customers deal with their bills change also. If they find it easier than I should assist them. If plastic is thier prefered mode of payment then we need to get on the wagon.

    I can remember when I started as an apprentice ( low these many years ago ) when a customer would call and the office would write it down on a sheet. Every day we would go thru the sheet and call. If someone was home we went and did the job. Some leaky faucets went a week or so.

    Now a days, if I called a customer four days later theyed laugh. " I got that done two days ago ". I've called customers the NEXT day and been told they got someone else. Not a regular customer, but new one. Service is different these days.

    Thanks for the input and I'll let you know how we do.

    I suspect we won't go out of business.


    PS: I am looking forward to using this for freeze ups ! Maybe now I won't wait untill July to get payed.

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  • and

    I don't need to tell you how we handled the "loss" of that 1.5%. That's no different than adjusting to an increase in any other part of your overhead.

    You can also pre-qualify customers and put a lock on the total amount that'll be charged.

    Emergency heating system replacement? No problem mate!

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  • Xc8p2dC_2
    Xc8p2dC_2 Member Posts: 150

    15 years small business owner here and taken CC's for most of the time, If you clearly state, as a policy, the price quoted is a cash/check price, you can inturn charge fee's for CC usage...

    The customer must be forwarnded that this is your policy, either in writing, on an invoice or in your office or on a website, prior to the transaction

    What you can't do on an invoice is have the total of say $3000, then add a say $90 CC fee, but as long as the invoice reads $3090 and policy is followed your within the guidelines

    There are some new machines and companies that can reduce you per charge fee's, One of them being Debit cards..
    If set up properly, you could only be charged a .65cent per transaction fee instead of the 2-3% fee when using a debit card

    Good luck
  • Paul Rohrs_4
    Paul Rohrs_4 Member Posts: 466


    Very timely discussion. I have been researching the subject and if it would be practicle for my business. My accounts receivables are in good shape and only have 1 delinquent account (Frat House). If I had more delinquent receivables, I would consider it more strongly as a payment option. Everything else mentioned here is valid, but I can't justify losing the extra gross profit right now in that my customers aren't "demanding" this payment option. Good luck in your business decision.



    Edit: Do you think you are losing business by not offering this payment option?

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  • joel_19
    joel_19 Member Posts: 931

    Hi Scott,
    We have taken them for several years and it immediatly increased our bottom line. I'd much rather have cash now than wait for it. It's a very effective sales tool.

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  • increase or loss of business issue

    Can offering credit cards cause you to lose business?

    Will offering credit cards increase business?

    We asked ourselves those questions. The first one was easy - no. The second one stumped me as I couldn't really assess any tangible evidence to give me a solid "yes". So, we languished for years on the undecided pile. Occasionally, we'd get a weak request for credit cards, but nothing to indicate we were losing business by doing what we'd always done. I'd heard all the arguments about getting money faster than what we were doing, but the status quo was working too well.

    Then one day (in my spare time - yeah, right), I crunched the numbers if we collected just 10% of our invoices and cut off the 30 to 45 day delay. If nothing else, the interest earned in a year's time would pay for the card reader and fees to set up the deal, so I figured there was not much to lose. In the first week, we ran more than 45K through the rascal! Realizing we'd unleashed a new sales tool, I adjusted our charges to accomodate this new overhead and began promoting the issue of our accepting credit cards. My secretary discovered we could reduce the bank-fee on each transaction if the customer gave us the three-digit code on the back of the card, which can be punched in on the key-pad.

    There's not a week that goes by without our having numerous credit purchases. It's one of those D'OH moments when I stop to think about the years we hesitated to make the move. Kind of like the time I pronounced we'd never have a fax machine or computers because they were a waste of valuable time. If only I'd not said that in front of the whole crew!

    Adjust your margins. That's what retailers do.

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  • Troy_3
    Troy_3 Member Posts: 479

    We have had one occasion that we got scamed. The homeowner tossed out installing contractor. Asked us to finish. I was already wondering why contractor A was gone. I assumed he was over his head. I agreed only if we were paid up front. No problem loser HoMo says and gives me his CC. We finish, he cancels transaction and CC company says the dispute may take up to six months. I offer to fix whatever issues he isn't happy with and the deadbeat says you won't ever get me to pay. Now we have to go to smallclaims because CC won't get involved. Be careful.
  • joel_19
    joel_19 Member Posts: 931
    Even better H.R.!

    H.R. is correct on how to book the call . We have now taken it 1 step further.

    On P.M.A.'s our CSR will ask for the credit card numbers upfront and run them for P.M.A.s before our tecs even go . We give H.O.'s a 5$ discount for this which they love (miles and a discount!). Now we don't have to worry about the H.O not being home when the work is finished or guys forgetting to collect.

    True they could cancel that, but it hasn't happened and even if it did so what? Those same people would do it with a check as well.

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  • Geo_20
    Geo_20 Member Posts: 1
    Credit cards

    It was about 2 or 3 years ago I mentioned the neet little device called the nexswipe in this forum,worked only with nextel phone and you could swipe the card right in front of the customer via your phone,well the nextel service is gone(back to verizon) but I still kept the merchant account and was the best thing I ever did.Most of my customers have no problem with me keeping there number on file and I've never had to wait longer than 3 days for the funs to appear in my bank account less 1.6%.I love being able to collect a deposit for a job or collect from a customer that lives out of state.and don't forget the bank cards "Debit" work too!.It takes about 2 weeks for my bank to mail me a letter with a bad check inside,seconds at my online merchant account.
  • Bernie Riddle_2
    Bernie Riddle_2 Member Posts: 178
    credit cards

    Hey they are great, everybody has them. We take visa,mc,ae and discover. We are close to college town ( clemson )do a lot of work in town house apts, ect. Most kids parents buy them for investment something go wrong they need it fixed. Mom and dad 1000 miles away, bam slide the card in the machine and u got your money the next day. Alot of big business's have gone to credit card payment. I would much rather take a card for $25,000.00 than draw down on my line of credit. Just my 2 cents from kudzo corner.

    Peace Be With You

    David C. Broome

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