4 ms·

Of course you can rationalize that 3% is a reasonable cost and approximately a wash compared to the expense of dealing with cash. But if you're a small coffe ho

Of course you can rationalize that 3% is a reasonable cost and approximately a wash compared to the expense of dealing with cash. But if you're a small coffe house, and sell a $3.00 coffee, and are paying a typical 2.9% + $0.30 per charge, that $0.30 is ten percent of your sale. That's a huge cost. Transaction fees need to come way down for plastic to beat cash on small sales.

rahimnathwani 8y ago
Or you could just pay 2.75% to Square: https://squareup.com/pricing https://squareup.com/pricing They do have plans which include a fixed per-transaction fee on top of a (lower) percentage, but for a coffee shop I'd guess it's worth paying the higher percentage instead.
gringoDan 8y ago
An even more extreme example would be a grocery store, whose overall profit margins are only 1-3%.
- reaperducer 8y ago
  Which is why it's so surprising that it took so long for Albertsons to get on the Apple Pay bandwagon, which costs less per transaction than traditional swipes or chip+PIN.
  - kevin_b_er 8y ago
    Do you have some details on the relative transaction fees of direct credit card usage vs indirect via apple pay?
- ac29 8y ago
  Where'd you get that data? I looked up Albertson's and see they have a 43% gross margin and a 23% net margin: https://www.reuters.com/finance/stocks/financial-highlights/ABSP.WA https://www.reuters.com/finance/stocks/financial-highlights/...
  - gringoDan 8y ago
    Your link is to Asseco, a company on the Poland stock exchange. Albertson's reported a negative net income in its S1 filing [0] Industry average of net income before taxes and net profit after taxes is 1-3% [1] Independent grocers report net profit of 0.98% [2] [0] https://www.nasdaq.com/markets/ipos/company/albertsons-companies-inc-970028-78908?tab=financials https://www.nasdaq.com/markets/ipos/company/albertsons-compa... [1] https://www.fmi.org/our-research/supermarket-facts/grocery-store-chains-net-profit https://www.fmi.org/our-research/supermarket-facts/grocery-s... [2] http://www.nationalgrocers.org/docs/default-source/0---default-library/2017-independent-grocers-financial-survey-highlights.pdf?sfvrsn=2 http://www.nationalgrocers.org/docs/default-source/0---defau...
    - ac29 8y ago
      You are right - not sure how that happened, but it is too late to edit/delete my comment.
leonardinius 8y ago
True. Especially if you are an owner and cashier at the said business. But no so if the cashier is your employee. Keeping track of all small deals and ensuring most of them reaches your bank account and not your employee pocket might appear even bigger problem. I know some small dining places where profits 3x skyrocketed since they introduced cards payments (in such places most of the profit comes from small things with crazy margins, such as tea or coffee)
gruez 8y ago
>paying a typical 2.9% + $0.30 per charge that's for paypal/square, which usually mean card not present, low volume and flat (fee) rate. bigger merchants usually go with a payment processor that offers interchange+, which significantly reduces the fees. a quick check of https://www.adyen.com/pricing/full-list?navItem=northamerica https://www.adyen.com/pricing/full-list?navItem=northamerica says that visa cards only pay $0.12 + interchange (1 or 2%). edit: visa interchange rates https://www.helcim.com/us/visa-interchange-rates/ https://www.helcim.com/us/visa-interchange-rates/
- CamelCaseName 8y ago
  It's more than you think. >Interchange++ consists of the following components: >Interchange fee charged by the banks who issued the card >Scheme fee charged by the card schemes >Applicable acquirer markup More than likely, you'll pay $0.12 + 1.7% interchange on average for card fees + 1.x% in Adyen's fees if you're a small business. It takes serious volume to get steep discounts, and the entire industry is full of snakes. If your business does enough volume, keep shopping around and pitting people against each other. I recently renegotiated our rate down to interchange + 2 basis points. (0.02%) along with very reasonable terminal fees, the whole process took several months. My advice? Focus on growing before optimizing these things.
eksemplar 8y ago
Banks and cc companies aren’t pushing this because of money, it’s because of data. The fees are honestly just icing on top, and often, even a legacy that you can completely avoid at some companies. The largest bank in our country let’s you link you can card (we have a national card that’s both a debit and a credit card in one without really being either), regardless of what bank you use, and they let you use it for free. You can instantly and feelers send money to anyone with the app, you can also use it like Apple/google pay completely feeless. Small business can get a free recipient thingie but larger business have to pay the bank for usage, so for them it works like a regular digital payment system. Anyway, the real currency is data. The cash register scanner tracks every individual item you buy, the time, the location and so on and because this app is universal, our largest bank knows a lot more about our habbits than google does. It’s the same for CC companies. They know what you buy at the pharmacy, they know how much alcohol you buy and so on. Sorry for the bad English, I’m not even sure what stuff like the scanner at cash registers is called in my own language so it’s hard to translate to English.
miohtama 8y ago
This is generally US issue where card system is structured to favour high worth consumers. In EU card companies cannot rip consumers or merchants. http://www.thetravelmagazine.net/no-credit-debit-card-fees-europe-2018.html http://www.thetravelmagazine.net/no-credit-debit-card-fees-e... Thus, I would dare to state transaction fees are a local political issue, not universal problem. Transaction fees can come down to near zero. More: http://europa.eu/rapid/press-release_MEMO-16-2162_en.htm http://europa.eu/rapid/press-release_MEMO-16-2162_en.htm

rahimnathwani 8y ago

Or you could just pay 2.75% to Square: https://squareup.com/pricing https://squareup.com/pricing They do have plans which include a fixed per-transaction fee on top of a (lower) percentage, but for a coffee shop I'd guess it's worth paying the higher percentage instead.

gringoDan 8y ago

An even more extreme example would be a grocery store, whose overall profit margins are only 1-3%.

reaperducer 8y ago
Which is why it's so surprising that it took so long for Albertsons to get on the Apple Pay bandwagon, which costs less per transaction than traditional swipes or chip+PIN.
- kevin_b_er 8y ago
  Do you have some details on the relative transaction fees of direct credit card usage vs indirect via apple pay?
ac29 8y ago
Where'd you get that data? I looked up Albertson's and see they have a 43% gross margin and a 23% net margin: https://www.reuters.com/finance/stocks/financial-highlights/ABSP.WA https://www.reuters.com/finance/stocks/financial-highlights/...
- gringoDan 8y ago
  Your link is to Asseco, a company on the Poland stock exchange. Albertson's reported a negative net income in its S1 filing [0] Industry average of net income before taxes and net profit after taxes is 1-3% [1] Independent grocers report net profit of 0.98% [2] [0] https://www.nasdaq.com/markets/ipos/company/albertsons-companies-inc-970028-78908?tab=financials https://www.nasdaq.com/markets/ipos/company/albertsons-compa... [1] https://www.fmi.org/our-research/supermarket-facts/grocery-store-chains-net-profit https://www.fmi.org/our-research/supermarket-facts/grocery-s... [2] http://www.nationalgrocers.org/docs/default-source/0---default-library/2017-independent-grocers-financial-survey-highlights.pdf?sfvrsn=2 http://www.nationalgrocers.org/docs/default-source/0---defau...
  - ac29 8y ago
    You are right - not sure how that happened, but it is too late to edit/delete my comment.

leonardinius 8y ago

True. Especially if you are an owner and cashier at the said business. But no so if the cashier is your employee. Keeping track of all small deals and ensuring most of them reaches your bank account and not your employee pocket might appear even bigger problem. I know some small dining places where profits 3x skyrocketed since they introduced cards payments (in such places most of the profit comes from small things with crazy margins, such as tea or coffee)

gruez 8y ago

>paying a typical 2.9% + $0.30 per charge that's for paypal/square, which usually mean card not present, low volume and flat (fee) rate. bigger merchants usually go with a payment processor that offers interchange+, which significantly reduces the fees. a quick check of https://www.adyen.com/pricing/full-list?navItem=northamerica https://www.adyen.com/pricing/full-list?navItem=northamerica says that visa cards only pay $0.12 + interchange (1 or 2%). edit: visa interchange rates https://www.helcim.com/us/visa-interchange-rates/ https://www.helcim.com/us/visa-interchange-rates/

CamelCaseName 8y ago
It's more than you think. >Interchange++ consists of the following components: >Interchange fee charged by the banks who issued the card >Scheme fee charged by the card schemes >Applicable acquirer markup More than likely, you'll pay $0.12 + 1.7% interchange on average for card fees + 1.x% in Adyen's fees if you're a small business. It takes serious volume to get steep discounts, and the entire industry is full of snakes. If your business does enough volume, keep shopping around and pitting people against each other. I recently renegotiated our rate down to interchange + 2 basis points. (0.02%) along with very reasonable terminal fees, the whole process took several months. My advice? Focus on growing before optimizing these things.

eksemplar 8y ago

Banks and cc companies aren’t pushing this because of money, it’s because of data. The fees are honestly just icing on top, and often, even a legacy that you can completely avoid at some companies. The largest bank in our country let’s you link you can card (we have a national card that’s both a debit and a credit card in one without really being either), regardless of what bank you use, and they let you use it for free. You can instantly and feelers send money to anyone with the app, you can also use it like Apple/google pay completely feeless. Small business can get a free recipient thingie but larger business have to pay the bank for usage, so for them it works like a regular digital payment system. Anyway, the real currency is data. The cash register scanner tracks every individual item you buy, the time, the location and so on and because this app is universal, our largest bank knows a lot more about our habbits than google does. It’s the same for CC companies. They know what you buy at the pharmacy, they know how much alcohol you buy and so on. Sorry for the bad English, I’m not even sure what stuff like the scanner at cash registers is called in my own language so it’s hard to translate to English.

miohtama 8y ago

This is generally US issue where card system is structured to favour high worth consumers. In EU card companies cannot rip consumers or merchants. http://www.thetravelmagazine.net/no-credit-debit-card-fees-europe-2018.html http://www.thetravelmagazine.net/no-credit-debit-card-fees-e... Thus, I would dare to state transaction fees are a local political issue, not universal problem. Transaction fees can come down to near zero. More: http://europa.eu/rapid/press-release_MEMO-16-2162_en.htm http://europa.eu/rapid/press-release_MEMO-16-2162_en.htm