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Credit card fees

daisy1 said:
Has anybody “truly” looked at each individual transaction fee description on their statement??? After trying to save money and switching from Worldpay to Sams Club First Data card processing, I went thru each line of fees and after being on the phone for literally 2 hrs with First Data, I discovered that when a customer adds a tip onto their credit card and we as merchants key in that tip you get slammed for it with a fee called “transaction cleared other than priced”. I had exactly 11 tips added on in March and at an average of $2 per, I was charged $5.81, so for $22 worth of tips I only actually received $16.19. So to offset this I am no longer accepting tips thru credit cards, I am asking customers to tip in cash

Honestly I am soooo freaking sick & tired of this monopoly fee crap these credit card companies are charging us merchants
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11 credit card tips for the entire month? That tells me your credit sales are so low you are basically getting penalized for not moving enough volume and also having a horrible deal because of the volume. People always badmouth first data but thats because they also had horrible deals. First data like the rest charge exactly what mastercard and visa force them to charge based on how much volume and transactions you are doing annually and then whatever shitty deal you worked out with one of their hundreds of middlemen. If your costs are going above 3% there is something majorly wrong. I do around 30k/month and my bill falls between 800-950 depending on which portion was keyed in over the phone compared to swipe at the front counter that month. Call whatever bank you have your business account with and get processing from them. You dont have to cancel the other one just stop using it and pay the minimum monthly fee usually $20 or $30 the savings from having a better deal will offset this expense until the contract runs out.
 
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Square is quite nice, they have a lot of features. It has the same problem that an early termination fee has – it’s expensive to change card processors. With Square it’s nearly impossible, since you’d have to ditch the $1000 Square registers if you switched.

Square’s flat rate of 2.75% is really quite good if your for tickets average ~$10. However, the higher your transactions, the more money you lose. This is because card processors charge a discount rate which is a percent, plus a transaction fee which is a fixed cost. I’ll show you why, but first some background.

If you shop around you can get a rate of 0.06% + $0.05 pretty easily. That covers the processor’s markup, but you still need to pay the interchange, which is the issuing banks’ fees plus the card brand’s fees. The interchange is non-negotiable and the exact amount depends on the card, but here is a great table showing the most common fees. We’ll use 1.75% + $0.13 as an average interchange cost. Add the processor markup of 0.06% + $0.05 and we get 1.81% + $0.18 if you use a card processor instead of Square.

Any sale always costs 2.75% with Square. Let’s do the math for using a card processor: ($10 x 1.81% + $0.18) / $10 = 3.61%. So for a $10 sale, Square is quite a lot better. Here’s how it looks for the card processor as your transaction amount increases:

$10 = 3.61%
$15 = 3.01%
$20 = 2.71%
$25 = 2.53%
$30 = 2.41%
$35 = 2.32%
$40 = 2.26%
$100 = 1.99%
$200 = 1.90%

Any transaction higher than a $20 costs more with Square. Square’s rate includes your use of the POS software though. Square’s register costs just over $1000. I’ve found if you wanted to build your own, very professional register it would cost about $300 computer + $300 payment terminal + $300 printer + $500 touchscreen = ~$1400 without the POS software.
 
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I get that most of you don’t like it. I’ve got no problem with that. I too, was very hesitant. But, really, just think a little out of the box…

Pretty much a flat 2.75%, and they cover liabilities for transactions at $150 and below. Hmmmm, they cover liabilities of orders $150 and below… Think about that!!! NO CHARGEBACKS!!

It allows me to sell a $2 item, a $5 item, heck, a $0.10 item if I wanted. I love that flexibility! No more $5 minimum or $10 minimums for credit cards! No extra fees for debit cards.

Oh, do you like American Express? If so, they accept it!! Nothing extra.

I don’t understand the quote of all the equipment.,… I purchased ZERO dollars of equipment from them. We use existing IPADs and certain Smart Phones. Drivers swipe at the door!! Super portability.

PCI Compliance, et. al… I wanted to get ahead of the game with PCI compliance and soon to come, chip tech, and so forth. Processors have and are introducing new fees associated with PCI compliance. Monthly, quarterly, and annually. Within the next 12 - 24 months most everyone will have a mandatory upgrade in their processing hardware, have you budgeted for that looming expense??

Everyone should check their statements to see what new PCI Fees and recurring and how much they are.

In the end, for me it means no more charges for PCI compliance, neither monthly or annually. No more worries about purchasing mandatory PCI approved equipment (and paying whatever the going rate is).

So in summary, use your existing smart phone (if its on their approved list), and test it. I did a phased trial, and have been exceptionally pleased with the decision to go 100%. No more hidden fees, NEW PCI compliance fees, chargebacks, or looming mandatory equipment purchases (including possibly new POS computers - new OSs and stuff like that). Just a straight 2.75%. After you add all the other expenses, and lack of American Express, I really, really doubt anyone here is less than 2.75%.

GotRocks, my test trial lasted 8 months before I decided to go 100%.
 
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I’m glad you are happy with Square. 🙂 They have many things going for them, eg good rates for < $20 transactions and many software features. That isn’t the whole story though, as I described in my last post.

Square used to be a flat fee of $275/month. They did this to attract new customers, then in February 2014 they changed to a flat rate of 2.75%. This change means if you charge more than $10k/month, Square now takes more money from you than when you signed up. Being locked into Square means you have to pay whatever they decide to charge and you can’t shop around for the best price, you have to use the hardware they support (not everyone likes the idea of using a consumer device for POS: it’s less professional, the devices are not rugged, and can be a theft target), and you have to use their software (which, while it does a lot, may not fit your needs exactly). Square is great for many, but simply isn’t for everyone.
pizza2007 said:
I don’t understand the quote of all the equipment.,… I purchased ZERO dollars of equipment from them. We use existing IPADs and certain Smart Phones. Drivers swipe at the door!! Super portability.
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The Square reader costs $29. An iPad costs $400. Not everyone has a pile of iPads laying around. You also need a printer. If you are wondering where I got the $1000 number, it’s for a complete Square register before tax:

Jp6aQiu.png


PCI fees work like this: the card processor charges you a “noncompliance” fee, typically ~$35/month. To get rid of this fee, you need to use a company like Trustwave to certify you. Doing that is as simple as taking an online survey. If your transactions go through the Internet, you also need to run a network scanning program they provide. Once you provide your certification to the card processor, they usually change the fee to a “compromise assistance plan” fee, typically $8/month. This is insurance in case you have a data breach. You can opt out of this insurance, in which case you pay nothing for PCI fees.

Many people don’t understand the above, so they just pay the monthly fee. I agree, everyone should check their statements and make sure they aren’t wasting money. Also, many card processors sign people up for a bad deal, where they charge what they call “PCI fees” no matter what. They just pocket that money, so you should really find a new card processor.

There are NOT any new PCI fees coming, so I’m not sure why you are spreading fear, uncertainty, and doubt. What is actually happening is a “liability shift” occurs (in the US) in October 2015. This means if you don’t have the ability to read EMV (chip and pin) cards, then you are liable for any fraudulent transactions.

If you can only read magnetic stripe cards, you should probably look into getting an EMV card reader. The Ingenico iCT250 ($325) and many others can do this. Just make sure you get a reader that your card processor (ask them and they’ll tell you) or POS software supports (depending on how you are charging cards). If you are renting a payment terminal from your card processor (which should cost ~$10/month) then they should allow you to swap your device for one that is EMV capable.

As for hidden fees, you should have an “interchange plus” deal with your card processor. If you don’t, use cardfellow.com and find a new one. Carefully read the contract from a few different processors and make sure you understand all the fees. If you are still paranoid, there are card proccessors that really are transparent about all the fees, like Helcim:
https://www.helcim.com/us/credit-debit-machines/pricing/
 
My problem with square (Circa 2011-2012) was their lack of live support, then they demanded my personal SSN on my corporate account, I do not cross my personal SSN with my FEIN under any circumstances!!!
Plus, my transaction volume was above getting their “Good rates”
I already had an iPad, ethernet printer with a cash drawer on it so I could print receipts and trigger my cash drawer through the app when I was using my Square terminal.
Then when I had 2 drawers on a single POS terminal, with 2 cashiers, it was a real pain in my arse reconciling which of the 100 or more daily CC transactions went to which cashier. So I added another terminal, and it still was not any easier to reconcile card transactions.

I did like their next day deposits, but that was about it.

Support; I had a cashier who over charged a CC customer, Square did not allow me to do a partial refund. Then a week later, We had a cashier charge the wrong ticket to another customers card, and of course this wasn’t recognized until after the customer left, so my only option was a full refund on that $150.00 ticket, Why?> Because square again would not allow a partial refund, and e-mailing support and getting nothing but canned responses for 4-5 days is not good enough for me while I have a customer out there that got overcharged, I have no way to contact them to tell them they have a refund coming, and square will not fix the problem in a timely manner. It put my reputation in a precarious position, all because of zero live support!
I am paying fee’s to them, I had better get stellar support for those fees that I pay , Heck, at those rates, I had better get a pedicure with a happy ending from them each week. But I cannot even get so much as a live person on the phone with them. So they can take a flying “F” on a rolling doughnut.

I switched to Merc. I got great rates, seamless POS integration, outstanding support services, and even though I still have cashiers screwing up, I can get those screw ups fixed immediately through a quick phone call while talking to a very professional, cordial support representative who thanks us for our business. Not some non-replyable form letter emailed to me over and over for a week before getting a live person typing out another email all while a customer was overcharged and not compensated and being told that after 72 hours, they can’t help me.
 
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pizza2007 said:
After you add all the other expenses, and lack of American Express, I really, really doubt anyone here is less than 2.75%.
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I bet more than a few people here are paying less than 2.75%. I’m paying interchange + 2 cents. Depending on the card mix, we average anywhere between 1.6%-1.8% per month.
 
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NateS said:
There are NOT any new PCI fees coming, so I’m not sure why you are spreading fear, uncertainty, and doubt. What is actually happening is a “liability shift” occurs (in the US) in October 2015. This means if you don’t have the ability to read EMV (chip and pin) cards, then you are liable for any fraudulent transactions.

If you can only read magnetic stripe cards, you should probably look into getting an EMV card reader. The Ingenico iCT250 ($325) and many others can do this. Just make sure you get a reader that your card processor (ask them and they’ll tell you) or POS software supports (depending on how you are charging cards). If you are renting a payment terminal from your card processor (which should cost ~$10/month) then they should allow you to swap your device for one that is EMV capable.
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Like you weren’t liable for any fraudulent transactions before? This is all hype and fear mongering. I’m all for chip and pin - but any implementation where you still accept key entered transactions makes it almost moot.

“Liability shift” - lol. What does it really mean? That you will be liable if someone swipes a card that has a chip - and that card was stolen. Meh. Who cares. 99% of our fraudulent activity is with keyed transactions.
 
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So what is the actual dollar difference between the best deal and the worst deal for the average operator? Is it worth all the time, trouble and worry we all put into this subject?
 
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NateS, I’m sorry, but it costs absolutely ZERO to try and use Square if you already have a qualifying smart phone. They’ll send you readers for free and a free app for your phone. Note: you don’t need a printer. Are you in the restaurant business??

RG, yes I know of the low rates often advertised and repeated by many here. But in reality, I call BS on anyone saying they’re getting 1.6%. You must have a great rate with American Express, or do you not accept it? I’ve always accepted American Express. Actually, I believe most everyone is above 2.50% (some way above 3% if they accept American Express), with more fees and/or mandatory compliance upgrades coming in the very near future. To determine what your percentage is, simply total your entire merchant cost divided by your total credit card sales, and multiply by 100.

Think about it… How many people sell slices? What does it cost to process? How many people disregard their merchant agreement and set limits on transactions because of fees? How many people are 60%+ on deliveries with keyed in transactions (oh yeah, they’re getting 1.6%)?

What POS/Operating System are you currently using? When will compliance require you to upgrade your operating system and/or hardware? Very soon. When will you be required to have a ‘non’ integrated reader (separate processing hardware)? Sure, no cost for that… <---- sarcasm.

If you’re in business, and plan on staying in business, then you should be looking forward. Waiting until you’re sick and tired of being scammed is not good planning. I’m not saying Square is the best thing going. I am saying I wouldn’t recommend Heartland to anyone. I am saying Square is working much better than I thought it would last year.

As for cost savings, I project we’ll save between $4k and $5K this year.
 
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We have used Mercury at our carryout for 3 years now and at the pizza shop/carryout for almost 2 years. My mom handles all the books (although after this discussion, I want to take a closer look at our statements) so I don’t know all the financials. But we have had great customer service through them. Add in that they work the most seamlessly with our new POS and it would take a lot to get us to change.
 
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pizza2006, obviously you are a huge Square fan. Good for you! However, half of what your saying is just FUD – fear, uncertainty, and doubt. I would prefer to stick to the facts and look at things objectively.

For Amex I’ve seen an additional 0.5% on top of the interchange plus usual processor markup. I don’t find accepting Amex compelling at all. Anyone with an Amex card also has a non-Amex card, so it has never been a problem to not accept Amex.

I don’t do deliveries, so I haven’t considered keyed transactions at all. What are people’s keyed transaction rates? I wonder if better rates could be had using an e-commerce oriented processor, like Stripe:
https://stripe.com/us/pricing
Stripe’s standard rate is 2.9% + $0.30, but this is the total fee, including interchange. If you process >$80k/month their fees go down to 2.2% + $0.30 and a 3.5% flat rate for Amex. (screw Amex! :p)
 
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pizza2007 said:
RG, yes I know of the low rates often advertised and repeated by many here. But in reality, I call BS on anyone saying they’re getting 1.6%. You must have a great rate with American Express, or do you not accept it? I’ve always accepted American Express. Actually, I believe most everyone is above 2.50% (some way above 3% if they accept American Express), with more fees and/or mandatory compliance upgrades coming in the very near future. To determine what your percentage is, simply total your entire merchant cost divided by your total credit card sales, and multiply by 100.

Think about it… How many people sell slices? What does it cost to process? How many people disregard their merchant agreement and set limits on transactions because of fees? How many people are 60%+ on deliveries with keyed in transactions (oh yeah, they’re getting 1.6%)?
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Lol.

I think you just called me a liar, eh? No worries, I don’t offend easily.

Like I said, interchange + 2 cents is what we are at. Pick the standard regulated card where interchange is .05% + 22 cents. On a $20 ticket average, our fee would be 25 cents. That itself is only 1.25%. I said we average between 1.6%-1.8% - including AMEX, which is a very smaller percentage of our credit card sales. Every once in a while we will have someone not trained properly on entering AVS information and get hit with more than normal VISA TIF fees, and that might put us at 1.9%. But I’m an AVS nazi and I nip that in the bud pretty quickly. And yes, we are between 65%-75% keyed vs. swiped. That matters less now that many cards fall under “regulated” status and have the same fee swiped or keyed.

Give me a few minutes and I’ll scan and post a statement for your pleasure… 😉
 
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Last month for this store, not the best example. 1.83% plus about $40 in fees (like VISA APF, etc) that I didn’t screenshot. (And yes, plus the small amount of AMEX) Notice that about 1/3 were key entered regulated VISA which came to just 1.06% by themselves. So, “oh yeah”, you were right - not 1.6% on keyed transactions - 1.06%. 🙂
 
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BTW - A couple of years I was thinking about trying Square because their fee was basically (for me) $275 per month, for $35,000 in processing - or 0.8%. But then they realized they would go our of business charging less than interchange rates and they removed the $275 cap.

But now, even at straight 2.75%, they lose money on every regulated transaction under $8. So I suspect you will see the 2.75% change in the near future.
 
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They make so much extra on transactions > $8, I’m not sure they need to change. Maybe they get greedy though!
 
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How often do you see AMEX in your shops, I see less than 10 AMEX cards per week, and the only time I really see them is from the Biz-Jet charter pilots using their corporate cards for their Per-Diem when away from their FBO. Not enough AMEX sales to bother me, but hey, they deposit quickly, so bonus.
 
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