5 ms·

Wife and I own a brick and mortar service based business with recurring revenue. Credit card customers get a 3% transaction fee added while ACH we swallow the 1

by fma 5y ago

Wife and I own a brick and mortar service based business with recurring revenue. Credit card customers get a 3% transaction fee added while ACH we swallow the 1% cost. I don't believe the terms of services says we can do that. I doubt Visa will send someone to investigate. If we didn't, we would need to increase prices for everyone. (Our ACH used to be cheaper but Intuitwants to squeeze small business owners :https://quickbooks.intuit.com/learn-support/en-us/payments/ach-fees/00/822504 https://quickbooks.intuit.com/learn-support/en-us/payments/a... )

rsj_hn 5y ago
Interesting! Would it be possible for you to not accept credit card but accept ACH?
- fma 5y ago
  No, I mean we don't mind offering it if they pay the fee. Customers have different reasons for preferring credit cards. Maybe they honestly can't afford it and need to use it for the credit aspect. Some aren't comfortable with automatic withdrawal from their checking account. Some it's just a habit and don't use checking accounts. I'd say about 15% pf customers would rather take the fee. The normal cash back on a card is 1% and some even higher so to them its not that big of a deal...but to a business it ads up. Our profit margin is about 20% of sales. If we gave up 3% of sales, that is taking away 15% of our profits! To give example numbers, if we charge $100 per month we pocket $20 after expenses (rent, payroll, etc)...but If we swallow the credit card fees that's $3, and makes the profit down to $17. So after all this hard work of customer acquisition, providing services etc, such a little thing takes away 15% of our profits (and that's before it passes through to us as income tax!). ACH used to be a flat $.50 per transaction...it takes time to reconcile invoices and payments so right now just sucking it up.

5 ms·

Wife and I own a brick and mortar service based business with recurring revenue. Credit card customers get a 3% transaction fee added while ACH we swallow the 1

by fma 5y ago

rsj_hn 5y ago
Interesting! Would it be possible for you to not accept credit card but accept ACH?
- fma 5y ago
  No, I mean we don't mind offering it if they pay the fee. Customers have different reasons for preferring credit cards. Maybe they honestly can't afford it and need to use it for the credit aspect. Some aren't comfortable with automatic withdrawal from their checking account. Some it's just a habit and don't use checking accounts. I'd say about 15% pf customers would rather take the fee. The normal cash back on a card is 1% and some even higher so to them its not that big of a deal...but to a business it ads up. Our profit margin is about 20% of sales. If we gave up 3% of sales, that is taking away 15% of our profits! To give example numbers, if we charge $100 per month we pocket $20 after expenses (rent, payroll, etc)...but If we swallow the credit card fees that's $3, and makes the profit down to $17. So after all this hard work of customer acquisition, providing services etc, such a little thing takes away 15% of our profits (and that's before it passes through to us as income tax!). ACH used to be a flat $.50 per transaction...it takes time to reconcile invoices and payments so right now just sucking it up.