Credit cards

[Junior]

Volume in my new shop is pretty low so far and I needed a mobile system.  I'm using Intuit gopayments, works on mobile or tablet or USB. Fixed 1.6% over all cards,+ 0.25/swipe. Wireless chip car reader included. We do a concierge type service so mobile access was required. I couldn't find any other payment processor that could do mobile payments with a chip card reader (no PCI) without charging a ton for equipment. Its pretty new for me, only been with it a month and only did about 20k but so far so good. Deposits are fast. Also FYI, Companies like square will negotiate the rate for larger volume and long standing customers. My wife's company uses square, she is running about 1.8% total and likes the software they provide.

[thecarcarecenterinc]

I have to agree here. Before I got back into the auto repair world, I was an independent  rep for North American Bancard (I still have a few accounts). The interchange rates for each card are set every year by Visa, MasterCard, Discover, and AMEX and they are non-negotiable. Think of them as fixed costs; just like if every auto repair shop had the exact same costs on every single part. The difference is the mark-up. I think in most cases, the best program is going to be interchange plus where the mark-up is fixed regardless of the card type. Every single card has a different cost and unless the mark-up is fixed, it is easy to hide how much the profit each card makes the CC processing company. The only difference between companies (aside from customer service/support) is who is willing to take less profit to get the account. I have seen several times on here someone mention that their rep or company is a direct processor. There is no such thing. ALL CC processing companies have the same costs and there is NO direct route to Visa/MC/Disc/AMEX. It is the same for all companies. I would encourage everyone to work with someone local that they can trust and build a relationship with. 

 

On 2/13/2017 at 8:16 AM, jeffg said:

1.44% on all cards seems to good to be true. Many types of cards charge more than that. There are set interchange rates charged by the card companies (visa, mc, etc...) and for many types of cards it is higher than 1.44% (rewards cards, fleet cards, Amex, Disc), some are lower (debit cards and some others). Not sure how anyone could charge 1.44% all in for everything unless you are doing a whole lot more debit cards. We are doing over 10 million a year in credit cards and I have shopped many times over the last 30+ years and never seen anything that is one fixed flat rate. I have seen cost (interchange) plus plans and tiered rate plans (usually with 3-4 different rates on different types of cards). Would be interesting to see how this works.

 

[Grace Automotive]

I realize this is a pretty old thread, but was curious if there's any new information out there.

With all due respect to tco, I'm not really interested in any solutions that have me pass the credit card fees onto my customers even if it does give them the choice to use debit and pay nothing. 

Just had someone come in here from a company called SpotOn that wants to pitch me on their service.  They want me to gather some statements and they will compare costs for me at a follow up appointment next week.

They say they charge 1.99% + 20 cents per transaction regardless of card type.

Currently, I'm using my bank's (Chase) merchant services. (We also have our checking, Savings and Company Credit Cards through them as well)

My reader (which does chips as well as NFC) is totally free, there's no long term contract and it allows me to accept all major cards including Discover and AMEX.

The percentage I pay in fees each month of course varies depending on the mix between Debit and Credit and AMEX, Discover vs Visa/MC....but I typically pay between 2% and 2.3% each month total.

I sat down and calculated the last 4 months. What I did pay, vs what  would have paid with this new processor SpotOn...charging 1.99% + 20 cents per transaction. 

for June I paid 2.18% with Chase. I would have paid 2.38% with SpotOn.
For July I paid 2.2% with Chase. I would have paid 2.21% with SpotOn.
For August I paid 2.09% with Chase. I would have paid 2.27% with SpotOn.
For September I paid 2.3% with Chase (had a lot more Discover and Amex than usual). I would have paid 2.14% with SpotOn.

So only 1 out of the last 4 months would SpotOn have been cheaper for me. (And it was an unusual month because I rarely get that many AMEX and Discover)

Figuring for the entire 4 month period (as opposed to breaking it down on a per month basis) I paid 2.21% with Chase and would have paid 2.22% with SpotOn.

I don't think I'll be changing at this time. At least not to this vendor.

However, in the process of digging into this, and looking through this thread and others in this forum I was curious if anyone else out there has a processor that is consistently getting them sub-2% rates overall on their monthly credit card fees (including AMEX and Discover)?

Thanks in advance!
 

 

[dfrisby]

I switched to one of those providers that promises lower rates a couple years ago.  Total cost was almost double for the first three months while I was fighting with them on the phone.  Took 2 months to force them down to comparable and I check my total processing cost at least every other month.  Usually around 2.2 to 2.4%  They had hidden fees and instead of one transaction from my bank it's broke up into 3 every month. They tried to tell me that only one of those fees should be used to calculate my percentage and the other two were just service charges.  Took me awhile to explain that I learned math before common core became a thing.

 

[Hands On]

I paid 1.78% overall total in August, 36,275.42 in transactions, 648.61 in fees. Part of that is a 19 PCI non comp fee cause I am lazy, and part is a 15 monthly service fee.

 

I was with a local company for years. They were bought by a larger company, which was then bought by an even larger company . The service turned to garbage, so I found another local guy who works at a local bank. I like having someone local whom I can text or call with any issues, and since you can see them face to face as often as you want, you are less likely to be lied to about rates then you are from some traveling salesman that has worked for a major processor for 5 days now.

 

As to why my rate was so low? Over half the transactions were debit, even though no one ever entered a pin into my machine. The majority of the rest of the transactions were what I call cheap cards, under 2% base. My processor charges a flat .1, so if a card is 1.5, I pay 1.6. This is the best deal you can get pretty much. It really boils down to what kind of cards you end up getting after that.

 

On a side note, It was a pretty bad august for me for CC transactions. We usually average 60k a month, had a lot of checks that month, and was down an employee, which really hurts.

[bantar]

On 10/12/2021 at 4:48 PM, Grace Automotive said:

They say they charge 1.99% + 20 cents per transaction regardless of card type.

I've analyzed this to death and the results are surprising!     I started another thread a while back with the title Dirty Tricks because I couldn't tell who was telling me the truth and who was lying.   They are all lying (thru confusion, omission and complexity though) as well as telling the truth.   There are SO MANY numbers to review.  I've tracked these numbers extensively. 

Lets start by describing the charges.  There are 3 main charges:  Interchange, CardFees and Processor Fees.  The Card Fees is a collection of charges that hit both Debit and Credit charges.  The only fees your processor can manipulate are the Processor Fees.  All else is determined by your mix of CC and Debit charges.   I don't have enough time in the day to separate the Card Fees from Processor Fees, but overall the fees are a small percentage.

Year    CC %sales    Debit %sales   Processing Fee = Interchange + Fees
2021        53.2%        42.0%           1.60%           1.16%     0.44% 
2020        52.3%        43.1%           1.59%           1.12%     0.48%
2019        59.1%        37.3%           1.77%           1.18%     0.59%

When I look at these numbers above, I see that my total processing fees are more closely tied to the mix of CC and Debit sales.   This is why having my CC terminal default to Debit is a great feature!   I read the above as I'm paying Interchange + 0.5% in fees.  I believe the card fees to be approximately 0.40 to 0.43%, which means that my  processor fees are 0.07 to 0.10%.    This is the surprising part.  The processor isn't making much.

Since you are hovering at 2.2%, then you potentially have 1.04% of fees to consider, assuming interchange of 1.16%.  There is room for improvement.    For grins, assume that card fees are 0.4%.  Your processor is making 0.64%.  Ouch!   High rates and lots of junk fees likely.

SpotOn is offering you a fixed rate, when in reality, you are better off with Interchange Plus (fees) pricing.  Spot on is saving you about 0.2% if there are no other hidden fees.  This is still too high (depending on volume).

While it may be taxing, get more quotes, including an Interchange Plus quote.   Your Processor Fees of per transaction and % of transaction are the variables that swing with sales volume. 

I'm currently paying:

• Credit Card Rate - 0.05% + Interchange (all cards including AMEX)
• Debit Card Rate - 0.00% + Interchange
• Credit Transaction fee - 0.05 cents per transaction
• Debit Transaction Fee - 0.05 cents per transaction

I did save some money with my last switch, but now, I'm not sure that I can save much more now.   And I'm happy with my processor, so I'm staying put.  

 

Edited October 14, 2021 by bantar
Clarification on card fees.

[gacurt]

This thread is somewhat disturbing. We complain about low cost / low quality parts, undercutting shops, and are trying to get away from being a commodity and become a service. I know I could pay less for processing, but I have a local rep who provides excellent service. If my goal is to provide the best service with price a distant second,, shouldn't I look at my providers in a similar way?

[Hands On]

34 minutes ago, gacurt said:

This thread is somewhat disturbing. We complain about low cost / low quality parts, undercutting shops, and are trying to get away from being a commodity and become a service. I know I could pay less for processing, but I have a local rep who provides excellent service. If my goal is to provide the best service with price a distant second,, shouldn't I look at my providers in a similar way?

I am with the current company because it was with a local rep who I can text his direct cell phone. That being said I would not pay 3 times the going rate for his services....

[bantar]

22 hours ago, gacurt said:

This thread is somewhat disturbing. We complain about low cost / low quality parts, undercutting shops, and are trying to get away from being a commodity and become a service. I know I could pay less for processing, but I have a local rep who provides excellent service. If my goal is to provide the best service with price a distant second,, shouldn't I look at my providers in a similar way?

I think this is a great thread, because this is such a complicated topic.   Pick the wrong plan and you are paying way too much.   When I switched 2 years back, I saved about 25%, which is huge.   And, I thought I was already on a good plan provided by a local rep....  On the surface it was good, but littered with junk fees.  Sadly, the CC Processing industry thrives on complication and confusion.   This is a difficult jungle to navigate.   The subject matter is not our core business, so seeking advice and sharing is really helpful.

However, you do have a good point about the need to pick a solid supplier that provides who adds value to your business.   I still think my plan has some junk fees, but I'm OK with it given how they've treated me, so...

On 10/14/2021 at 4:17 PM, bantar said:

And I'm happy with my processor, so I'm staying put.