LiteOnPhotography Senior Member Joined: 21 Nov 2010 Posts: 66 Location: arlington Expertise: Pro Barista
Espresso: Braville Xl Grinder: bunn Drip: bodum
Posted Wed Nov 2, 2011, 6:09pm Subject: Credit Cards!
So, I wanted to let everyone know about a resource I recently found. Because I had been taking credit cards with squareup and my numbers were getting over a couple grand a month, I noticed that my fees were pretty high. I got in touch with a friend that works for Chase and they sent me to the partnerships department. Wow, what a difference. Ronald saved me about 300 bucks a month and instead of playing games, I just sent him what I did for the last few months and he came up with a program specific for me. He says he works with many beverage shops already so they had a pretty good set Schedule A for them. Anyways, here is his contact because I told him I would tell everyone. Ronald Wong - Chase Paymentech - 2148493620 Hope you guys will benefit off of this too. With all these resellers and mlm's out there, its just rediculous. Its nice to see someone that actually takes care of the beverage world.
TonyVan Senior Member Joined: 24 May 2010 Posts: 269 Location: Pacific Northwest Expertise: I love coffee
Espresso: GS/3, La Pavoni Grinder: Macap M7K, Rocky Drip: Kone
Posted Wed Nov 2, 2011, 9:10pm Subject: Re: Credit Cards!
To the extent that you can take debit cards instead of credit cards, especially for larger sales, the more transaction and interchange fees you will save. Many or most large retailers use software in their electronic payments systems (attached to their point-of-sale/cash registers) to accomplish this "credit-to-debit conversion" by prompting shoppers or otherwise steering transactions toward debit tender media. Debit fees are now capped at 22 cents plus a few basis points, with $0.24 total providing a reasonable working average. With credit card transaction costing much more, even a small local supermarket, for example, can save thousands of dollars annually using strategies such as this, or requiring cash for small purchases.
Depending upon the terms of your Merchant Agreement with your payment processor (in this case, Chase) there will be a crossover point where a credit transaction will cost more, versus less, compared to debit. In any case, the most expensive way to take payment cards is almost surely via payment services aimed at people who take very few transactions, or aren't equipped or inclined to explore less expensive options (my PayPal cost for eBay transactions for example). Next comes the deals where the processor gives the store a "free" PIN pad but the merchant pays exorbitant per-transaction processing fees. The lowest costs are normally reserved for shops or sellers who own their payments software and hardware.
As a baseline, the lowest costs today for a credit transaction are paid by chain supermarkets (grocers get the best rates) who pay about 25 cents per credit transaction plus about 1-1/2 percent of the transaction value, plus a cent (or even less) to the payment processor (such as Chase PaymenTech). So depending on your volume and choices, Your Mileage WILL Vary!
LiteOnPhotography Senior Member Joined: 21 Nov 2010 Posts: 66 Location: arlington Expertise: Pro Barista
Espresso: Braville Xl Grinder: bunn Drip: bodum
Posted Fri Nov 4, 2011, 6:11pm Subject: Re: Credit Cards!
Great info.
One thing that he pointed out also was that recently with the durbin thing going on, using a pin based debit actually costs more than swiping the debit card .
TonyVan Senior Member Joined: 24 May 2010 Posts: 269 Location: Pacific Northwest Expertise: I love coffee
Espresso: GS/3, La Pavoni Grinder: Macap M7K, Rocky Drip: Kone
Posted Fri Nov 4, 2011, 10:42pm Subject: Re: Credit Cards!
It's one of those amazing dramas, with the usual stories of strategy, gamesmanship, power and, of course, the usual plot twists - and no small helping of greed.
PIN Debit - where the shopper enters a code to authorize the debit transaction similar to ATM use - had for years been the single most secure electronic payment medium, especially given its strongly encrypted transmissions through the financial network. With the lowest fraud potential, PIN Debit also carried the lowest interchange rates and cost to the merchant, averaging about 27 cents. This made it good business for sellers to accept PIN Debit cards whenever possible.
Over time, more of the credit card risks have been pushed down toward the merchant by the card associations (Visa, MasterCard, Discover, AMEX), so freed from much of that liability, these brands invented "signature debit" and advertised it heavily to consumers. This was a stroke of genius by the card associations, since (1) the transactions were processed using the same mechanism as a credit transaction so no new networks and a minimum technology were required, (2) it escaped the PiN Debit profit limitations - Signature Debit fees were similar to the much higher credit card rates, (3) the money came right out of the shopper's account immediately so no risk of non-payment and (4) the card associations were able to capitalize on the financial responsibility bandwagon/conservative values trend of consumers not piling up future bills and the pay-as-you-go ethic that strengthened with the recession and so forth.
The predictable result for retailers was another big jump in their cost of doing business, with shoppers giving up PINs in favor of signatures. For example, even with the special low rates allowed to food retailers, their annual cost of taking cards on average exceeded their annual profits. Electronic payments fees became their third-highest operating expense, behind only labor and the four walls.
So as the Dodd-Frank legislation was forming, lobbying became hand-to-hand combat over every vote, with the giant financial lobby battling the giant retail lobby. For a few months, it looked like retail had won, with the early debit cap set at 12 cents, but Finance rallied in the working groups and the final result of the Durbin Amendment came out to about twice that cost, with the same fees now applying to both Signature and PIN Debit.
So essentially, we are right back where we were before the cynical invention of Signature Debit. Threatened with profit limitations, the financial institutions created a new payment medium as a bargaining chip which, once rolled back, left them just ascwell off as they started. In the end, all that Durbin did for retailers was to keep their costs from getting even worse.
But the price of debit isn't all that got rolled back: already, the advertising machinery is in full reverse gear, pushing shoppers to use "Visa Signature CREDIT." So much for paying as you go, America, when once sgain there's SO much more money to be skimmed off a credit card sale.
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