Credit card fees.... who's charging them?

tell them the price given is a discount for cash or check. you can have this on the bottom of the invoice. the credit card fees can add up especially for larger jobs and why should you be out money? I think square is almost 3% (been a while since i used it) so for a $300 job it will cost you $12 which is a lot. I dont do enough volume to pay a monthly fee to get a cheaper card swipe fee so thats what i do and it has worked out well.
 
Regular Square is 2.75. Seriously, $8.25 on a $300 job isn't worth the time and hassle savings? Not to mention the negative marketing associated with nickle-and-diming? I'll bet the guys here who say it's fine to charge a credit card fee are the first ones to b**ch when their airline charges a checked bag or preferred seat fee.
 
WindyCity said:
tell them the price given is a discount for cash or check. you can have this on the bottom of the invoice. the credit card fees can add up especially for larger jobs and why should you be out money? I think square is almost 3% (been a while since i used it) so for a $300 job it will cost you $12 which is a lot. I dont do enough volume to pay a monthly fee to get a cheaper card swipe fee so thats what i do and it has worked out well.
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I get that the fee's add up. I dont get the comment "why should you be out the money". Do you charge your customers a fee when you talk to them on the phone, or answer an email because you have a phone and internet bill?

You are paying for a service. They charge you a % to allow you to take c/c as payments. If you didnt have the ability to charge c/c do you think you would generate as much volume, because I dont?
 
kb2ehj said:
I thought legally you couldn't charge a 'fee' for accepting CC's? I'm I wrong about this?
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It isn't a matter of legality in the sense of state or federal law. That is required by the credit card companies merchant account agreement (or, more specifically, the Visa or MasterCard rules that are incorporated by reference into the merchant account agreement). Having said that, there have been a number of suits brought recently against the credit card companies by a number of merchants and I get the impression that those suits have caused some changes to the "rules". Don't quote me on this because I have not gone on the VISA or MasterCard web site to see what the current rules are. Attempting to read those rues is not an insubstantial undertaking since they cover hundreds of pages and are loose leaf like an insurance policy. It is not for the faint at heart.

<TED>
 
SameGuy said:
Regular Square is 2.75. Seriously, $8.25 on a $300 job isn't worth the time and hassle savings? Not to mention the negative marketing associated with nickle-and-diming? I'll bet the guys here who say it's fine to charge a credit card fee are the first ones to b**ch when their airline charges a checked bag or preferred seat fee.
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First off i am not "bitching" if you want to donate $8 so your customer can get reward points or airline miles then go ahead. One thing i learned in 20 years of business is to stick to your price. The last raise i recieved at work was 2% so if you decide to cut you pay by 2.75% then that is your choice. When i tell a customer a price i say that is the cash or check discount price, it is not tacky and i never recieved any negitave comments. You can run your business any way you want and when you are a professional and an honest bussiness man you will have good customers that will return and give a lot of referrals. If it takes 4 hours to detail a car for $300 and you lose $8 to a cc fee that is $2an hour. I know alot of people that would love a 2 dollar an hour raise. The cost of doing business is expensive and a lot of businesses will not give away stuff for free

BitterGreg said:
I get that the fee's add up. I dont get the comment "why should you be out the money". Do you charge your customers a fee when you talk to them on the phone, or answer an email because you have a phone and internet bill?

You are paying for a service. They charge you a % to allow you to take c/c as payments. If you didnt have the ability to charge c/c do you think you would generate as much volume, because I dont?
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I dont do volume it is me and a helper usually doing 1 or 2 cars a day. This is a part time business for me and i dont charge a credit card fee, i offer a cash discount just like i offer a discount for doing multiple cars at 1 location
 
Some interesting views and practices and I love reading everyone's input.

I agree with feeling like being nickel-and-dime'd every time I see a CC fee. It's part of doing business and I WANT my customers to have that convenience. If I were strictly taking cards, I could see myself adjusting my prices across the board. However, cash and checks are what my customers prefer to pay with, so a few here and there is no big deal. I include free mobile service as part of my prices (within reason, of course). Sometimes I've get customers 30 miles away and some I've had in my neighborhood so my cost in gas, time, etc. will fluctuate. I deal with it on my end and see it as a win-some/lose-some game so I have a slightly dynamic profit margin. The CC fees are not worth the math headache or justification/explanation to the customer. It's one less thing to think about when I'm going to sleep. Just my 2 cents though.
 
Keep in mind these processing fees are an expense that reduces your business income come tax time. For some reason I doubt you are claiming all of your cash deals come tax time. So your still coming out ahead. Not to mention if a customer is happy with the work they are generally giving a decent tip. Do you now charge them a fee on the tip?

As a consumer I don't generally deal with a business that does charge a surcharge for me to use my CC and not pay cash. I also cringe at places that offer a cash discount.
 
I'm glad this thread arised as I was coincidentally talking this over with some people about my business. A lot of good points for and against the fee. I was leaning towards telling potential customers at the time of booking that there was a convenience fee for credit cards, but I"m leaning towards no after reading this thread especially appearing cheap and thinking towards my outlook if other businesses did this I would be mad.

Honestly I need to, and others, check with my accountant as someone stated earlier in the thread a good point about possibly including it in your business expenses. If that is true, then it's a no brainer, it's "the cost of doing business" and write it off as a business expense.
 
Detailed Josh said:
Honestly I need to, and others, check with my accountant as someone stated earlier in the thread a good point about possibly including it in your business expenses. If that is true, then it's a no brainer, it's "the cost of doing business" and write it off as a business expense.
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I write it off as an expense every year, definitely considered a part of doing business and an expense to you. Plus, I've found people are at least twice as likely to leave a tip when paying with the credit card, so these extra tips actually more than make up for the processing fee (which I am still able to deduct from my expenses at the end of the year).

In my opinion, there's no way I'd nickel and dime a customer for this fee (I'm sure that if I did, it would probably hurt that tipping percentage too).
 
Here in Montreal it's illegal to charge a different amount if someone uses a credit card. So for me it has never been an issue.

Now, if are really bothered by the few bucks it costs to do the transaction, increase your prices on a prorated basis.

So let's say your average credit card transaction fee is 12$ and 35 percent of your customers use credit cards, increase your prices by 4,20$.

Keep in mind that those fees are deductable when you do your income taxes, so a good portion of that is returned to you.

Personally I just absorb it.

An other option would be to increase your price by the average CC fee and give a free service or product for that amount to people who pay cash.

I think it really looks unprofessional to charge for credit card use. If I was a Customer and a business charged me for that I would never do business with them again.
 
Just one more thing to add.

Depending what company you are doing business with, the CC charge can be low or very high.

Before I learned about Square and Paypal Mobile and all those services on Smartphones, I contacted the local mobile payment companies. Let me tell you these guys are robbing you blind compared to Square.

Just as a comparisson, for Square it costs me 2.75 percent; per transaction, no monthly fee, no hidden costs.

One of the local companies had the following charges: 300$ to open the account. Must take a 2 year contract. Monthly fee of 95$. Transaction cost was 3% plus what ever the credit card company fee was (between 1.75% and 4% if I remember). Can you imagine paying that kind of money? Yet the restaurant I work at uses 15 of their machines, and we don't add a CC transaction fee when you order something.
 
And to add one more thing: log into your Square account and grab that referral code. Every person you refer who uses your code and activates a Square account (whether or not they ever use it) gets both of you $1000 of card charges processed for free over the next 180 days. Free, no strings. That's another $27.50 in your pocket for every referral. I referred a co-worker who sells old comic books on CL and at the flea market. Two others are interested, that should have me charge-free until late fall. :)
 
Ebg18t said:
Publication 535 (2014), Business Expenses

Scroll down to credit card convenience fees.
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"Credit card convenience fees. Credit card companies charge a fee to businesses who accept their cards. This fee when paid or incurred by the business can be deducted as a business expense."

Rock on for the IRS link to the rule. This seriously seems like a no brainer for everyone if this is 100% a deductible business expense.

Also the rest of that link is an interesting read for another time as I was skimming through some of what's considered expenses and how much. Kinda confusing on the part about you can deduct 100% of meals/etc on your books, but technically can only do 50% as far as tax deductions? Oh well more to learn on the accounting side of things.
 
kb2ehj said:
I thought legally you couldn't charge a 'fee' for accepting CC's? I'm I wrong about this?
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There are 10 states where it is illegal to charge a higher price to customers that pay by credit card.

California, Connecticut, Florida, Maine, Massachusetts, New York, Texas, Oklahoma, Kansas, and Colorado.

It is legal in most of those states to give a discount though. The best way to handle this situation is to set the price high to cover the cost of payment by credit card and then offer a cash discount.

Check your state's law to be sure. These fees are called various names including “Surcharge,” “Swipe Fee,” “Credit Card Fee” “Interchange,” or a “Checkout fee.”

Debit cards are treated differently than credit cards under most state laws. Best policy is to price these fee in and offer a cash discount.
 
Detailed Josh said:
"Credit card convenience fees. Credit card companies charge a fee to businesses who accept their cards. This fee when paid or incurred by the business can be deducted as a business expense."

Rock on for the IRS link to the rule. This seriously seems like a no brainer for everyone if this is 100% a deductible business expense.

Also the rest of that link is an interesting read for another time as I was skimming through some of what's considered expenses and how much. Kinda confusing on the part about you can deduct 100% of meals/etc on your books, but technically can only do 50% as far as tax deductions? Oh well more to learn on the accounting side of things.
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Still the benefit is only your tax rate. for example if you made $100 in sales and had $50 in expenses your profit is $50. if you pay 20% tax you owe the IRS $10.

If $5 dollars of the $50 in expenses where credit card fees that you didn't have because you didn't accept cards or passed on the cost of the swipe fee to the consumer the math would be

$100 sales - $45 expense =$55 Profit

20% x $55 = $11 to the IRS.

so as you can see the $5 in credit card fees even though they are 100% deductible only benefits you by your tax rate with in this case is 20% or $1 of the $5 in fees


The 100% deductible on meals is for you and your employees only. If you take a client out to dinner then you can only deduct 50% for that expense. So a company will usually have 2 different general ledger accounts to track meals and entertainment. a 100% deductible account and a 50% deductible account that way when you entertain customers you code the expense to the 50% deductible account.
 
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