3 ms·

Fees are nowhere 8.5% I've never heard that and have had a merchant account since the 80's at several businesses. Not taking credit cards will cost you busines

by larrys 14y ago

Fees are nowhere 8.5% I've never heard that and have had a merchant account since the 80's at several businesses. Not taking credit cards will cost you business in a retail location.

learc83 14y ago
The actual fee charged could be close to 8.5% if you are charging mostly small transactions b/c they usually charge a percent plus a flat $0.30 fee. Say you charge the customer $5: 2% + $0.30 is $0.40--8% of the total.
jonknee 14y ago
It depends on your transaction amount, the fees can easily exceed 8.5%. When I had no change the other day and paid 45 cents at a parking station with a credit card I can guarantee the fees were more than 8.5%.
- larrys 14y ago
  We're talking about merchant fees here. Not what a credit card user pays etc.
  - jonknee 14y ago
    That's exactly what I meant, I paid $.45 but the city likely paid $.31 in fees. Braintree for example would run 2.89% + $.30. That's a very high percentage (69%).
ChuckMcM 14y ago
He's showed me bank statements, things like 'points' and 'cashback' and other 'features' of the card all seem to come back to the merchant as deductions against the amount billed vs the amount payed. He summed up the total billed (what he charged at the register) and the total deposited, and computed the difference, that difference was 8.5% rounded to the first decimal place.
- larrys 14y ago
  Sure if he's doing small transactions but in general you shouldn't be allowing people to use a credit card to make a $2 purchase, right? What is defined (in this thread) as "most cash businesses" would be to me businesses that would typically allow someone to pay with a credit card. That wouldn't be a local bodega allowing some to pay for a pack of gum with a credit card. It would be a business allowing cc use in a typical case where the per transaction charge is not significant and you don't stand to loose business because you don't accept credit cards. Examples: You run a restaurant and your average ticket is $45. If you don't accept cc's you will generally loose business. You run an ice cream stand and your average ticket is $5. Less expectation of being able to (or needing) to use a cc for a small transaction like that. Chance of loosing business: significantly less.
  - ChuckMcM 14y ago
    Entirely possible. for a long time in California it was illegal (state law) to require a minimum purchase amount in order to use credit cards I believe (but can certainly be mis-remembering) that this was only recently changed. And yes, his business does include a lot of 'small' transactions like someone coming in to get a key made etc.
ChuckMcM 14y ago
On a related note, Fumiko Hayashi [1] has done a lot of research on the fee structures (much under the question of how one would regulate them and what constitutes an out of balance fee structure) but her papers are pretty accessible. [1] http://www.kansascityfed.org/speechbio/hayashi.cfm http://www.kansascityfed.org/speechbio/hayashi.cfm

by larrys 14y ago

Fees are nowhere 8.5% I've never heard that and have had a merchant account since the 80's at several businesses. Not taking credit cards will cost you business in a retail location.

learc83 14y ago

The actual fee charged could be close to 8.5% if you are charging mostly small transactions b/c they usually charge a percent plus a flat $0.30 fee. Say you charge the customer $5: 2% + $0.30 is $0.40--8% of the total.

jonknee 14y ago

It depends on your transaction amount, the fees can easily exceed 8.5%. When I had no change the other day and paid 45 cents at a parking station with a credit card I can guarantee the fees were more than 8.5%.

larrys 14y ago
We're talking about merchant fees here. Not what a credit card user pays etc.
- jonknee 14y ago
  That's exactly what I meant, I paid $.45 but the city likely paid $.31 in fees. Braintree for example would run 2.89% + $.30. That's a very high percentage (69%).

ChuckMcM 14y ago

He's showed me bank statements, things like 'points' and 'cashback' and other 'features' of the card all seem to come back to the merchant as deductions against the amount billed vs the amount payed. He summed up the total billed (what he charged at the register) and the total deposited, and computed the difference, that difference was 8.5% rounded to the first decimal place.

larrys 14y ago
Sure if he's doing small transactions but in general you shouldn't be allowing people to use a credit card to make a $2 purchase, right? What is defined (in this thread) as "most cash businesses" would be to me businesses that would typically allow someone to pay with a credit card. That wouldn't be a local bodega allowing some to pay for a pack of gum with a credit card. It would be a business allowing cc use in a typical case where the per transaction charge is not significant and you don't stand to loose business because you don't accept credit cards. Examples: You run a restaurant and your average ticket is $45. If you don't accept cc's you will generally loose business. You run an ice cream stand and your average ticket is $5. Less expectation of being able to (or needing) to use a cc for a small transaction like that. Chance of loosing business: significantly less.
- ChuckMcM 14y ago
  Entirely possible. for a long time in California it was illegal (state law) to require a minimum purchase amount in order to use credit cards I believe (but can certainly be mis-remembering) that this was only recently changed. And yes, his business does include a lot of 'small' transactions like someone coming in to get a key made etc.

ChuckMcM 14y ago

On a related note, Fumiko Hayashi [1] has done a lot of research on the fee structures (much under the question of how one would regulate them and what constitutes an out of balance fee structure) but her papers are pretty accessible. [1] http://www.kansascityfed.org/speechbio/hayashi.cfm http://www.kansascityfed.org/speechbio/hayashi.cfm