Credit Processing Rates? What's good?

[GWestphal]

Square seems to have a nice little system going now for pretty basic point of sale type stuff. They nab 2.75% for each transaction. How does that compare to say Visa, American Express, Intuit's deal?

Say you sell a product and you want to make exactly some set margin. Is is legal for you to sell your item at a 5% markup to make sure you make your margin? I recall hearing that adding onto something to account for processing fees was illegal, but if some margin that would account for that was built into the price, would that be fine?

 

[ViviTheMage]

Square seems to have a nice little system going now for pretty basic point of sale type stuff. They nab 2.75% for each transaction. How does that compare to say Visa, American Express, Intuit's deal?

Say you sell a product and you want to make exactly some set margin. Is is legal for you to sell your item at a 5% markup to make sure you make your margin? I recall hearing that adding onto something to account for processing fees was illegal, but if some margin that would account for that was built into the price, would that be fine?

I don't see how that is illegal...as long as it's on the base price and not tacked on afterwards.

we get 2.25% + $0.30 for qualified VISA/MC/AMEX/DISC..surcharge for non qualified cards is 1.50% + $0.10

 

[drebo]

Some banks have it in their terms that you're not allowed to charge customers a fee for paying with credit. That does not, however, preclude you from offering a cash discount.

So, mark up your product as if you expect everyone to pay with credit and then you can offer a cash discount to good customers who pay cash.

 

[Aharami]

check out feefighters.com. not sure what rates they actually charge, but i remember it being much less than the major venues.

disclaimer - feefighters.com is a startup where an old friend of mine works

 

[highland145]

we get 2.25% + $0.30 for qualified VISA/MC/AMEX/DISC..surcharge for non qualified cards is 1.50% + $0.10

What processor do you use. Been looking for a card swipe system that I can use on a PC without getting stuck in a contract or having a card machine. Like this.

May have to look at the Intuit, too.

 

[highland145]

check out feefighters.com. not sure what rates they actually charge, but i remember it being much less than the major venues.

disclaimer - feefighters.com is a startup where an old friend of mine works

http://www.inc.com/howard-greenstein/fight-credit-card-processing-fees.html


http://credit-card-processing-review.toptenreviews.com/

 

[alkemyst]

Square seems to have a nice little system going now for pretty basic point of sale type stuff. They nab 2.75% for each transaction. How does that compare to say Visa, American Express, Intuit's deal?

Say you sell a product and you want to make exactly some set margin. Is is legal for you to sell your item at a 5% markup to make sure you make your margin? I recall hearing that adding onto something to account for processing fees was illegal, but if some margin that would account for that was built into the price, would that be fine?

What's your interest with Credit lately?

With processing credit you have to make sure your customers will have the card(s) you want to accept. Also many processor's have min. transaction amounts to you as the merchant which cannot extend to the client due to the cardholder agreements.

Most card companies will not allow a merchant to add on fees. Discounts for cash are the loop hole. However, in the end most build the cost of credit into their inventory.

You cannot say $100 + 3% paypal fees for a common example. However you can say $103 or $100 in an envelope stuffed with USD.

There are also sub-categories in this. Getting approval for credit on certain businesses/items are more difficult than others and may have different fee structures.

 

[alkemyst]

Some banks have it in their terms that you're not allowed to charge customers a fee for paying with credit. That does not, however, preclude you from offering a cash discount.

So, mark up your product as if you expect everyone to pay with credit and then you can offer a cash discount to good customers who pay cash.

Actually it's often the bad customers that pay with cash.

At least you don't have to deal with charge backs though.

 

[blinblue]

Square is an awesome service. If you do a small number of transactions or if they are inconsistent when they happen, it is great not having a contract or any other fees. Plus their 2.75% fee (with no flat charge either) is fairly competitive, when you factor in $0 monthly fee and no contract it really is a good deal if you don't do many transactions.

It is my understanding also that you can't charge a fee for processing credit, though the whole cash discount way of wording it works. What are you planning on selling?

 

[drebo]

Actually it's often the bad customers that pay with cash.

At least you don't have to deal with charge backs though.

Right, but you don't have to offer the bad customers the cash discount.

But if you have a good customer that buys a lot from you and pays with check, you can offer them a ~3% discount, which makes them feel good.

 

[manlymatt83]

Mine is 2.1%, non-qualified is 3.1%

 

[ViviTheMage]

I'll PM you

 

[GWestphal]

I just ran the rates and it appears Square is actually pretty awesome.

Best rate I could find was 0.38% + 0.19 per transaction + $16 in fees/month, which when compared with Square the break even point is ~$3,400 in sales. At 50K sales per month, the differential falls away from square but only to the tune of $210.

On a more conservative estimate (but still better than most that I've seen), 0.75%+0.19 per transaction + $16 in fee vs Square, the break even is about $22,000, and the differential at 50K is only $20.

Square really is disruptive in this sector. Then take into account you don't need to pay for a card reader or point of sale hardware or software ($$$$) and it is a very good looking setup for a small business. If we assume an iPad costs $600 and a typical POS system is $2000 (I think that's low end) and add those onto the conservative estimates, we are sitting at Square being a better deal well past 500K in sales. That seems incredible.