Good question! Also, of those of you that accept credit cards as a form of payment, I would be interested in knowing what percentage of your customer base prefers using their credit card for payment. Also, do you hit the credit card monthly or do some prefer to pay a years' maintenance in advance?
We take credit cards but I only offer this service on rare occasion. Banks rip you off if you don't do a ton of business with your visa/mc machine. You may start out at a decent rate (anything between 3-5% is pretty good) but eventually, when they see that you aren't using it a lot (like, say, a hardware store does), then they will hike your rates to where it's too prohibitive to use them. Our rate is currently 8.5% PLUS a $1 fee per transaction. So, as you can imagine, I rarely offer it.
The few times I do offer it is when we are doing a job worth several thousand dollars and I inflate the cost of the estimate to cover the fees and also offer a "cash discount" if they decide not to use a credit card.
As for monthly billing, it's not a good idea at all. You loose too much off the top.
As for yearly billing, I personally wouldn't do it. But that's because if someone pays me for a whole year (12 months) in advance, I give them 2 of those months for free. So I am already cutting profit. So I guess if someone wanted to pay for 12 months (without the 2 month discount) I'd do a credit card transaction for them.
Other questions you had; How to get it set up - your bank will do it for you if 1) you have great credit and 2) you have a great history with them. Otherwise, there are several places online that will give you a "Merchant Account" but the costs to those are even worse. They charge high rates PLUS a montly fee.
How many people prefer using CCs? I dunno. I wish I had a way to make it affordable. I would offer it to more people as a way to pay for their bill monthly. But just as a guess, I'd bet less than 25% would use a CC every month if I offered it to everyone.
As another option, you may want to look into automatic check debiting. I recently found a company in my area who offers this service. It costs me a one time $100 set up fee, then they charge me about a buck per check. I set up all my new customers on it. They sign up for the program (free to them, just some paperwork), and then every month at a specified time, this company prints out checks from them made payable to me, and sends them to me in the mail. I cash these checks as regular checks. The small fee is more than worth it considering I am guaranteed funds every month - ON TIME!
I found this company by calling all the companies listed in the Yellow Pages under the "Billing services" section. Ironically, the bigger companies didn't offer such a service. I had to call a relatively small one before I found someone. But it was worth it.
p.s. Wade, if you are reading this, I lost your email message. If you still have questions, please feel free to email again.
Jim Lewis - Lewis Landscape Services
Lots of good info posted here. I have had a few people ask about this, and if I could provide the option for no cost to me, only the paperwork, I would probally offer it. It is not worth any additional out of pocket expense to me.
I don't think that I have lost any jobs because of this, nor have I not been awarded any jobs because of it.
I would think that it would be a convience factor, if nothing else, getting paid on time, not having to worry about bounced checks, ect. For me, it is not worth the cost.
Maybe in the future, costs will fall, because it seems that everyone is accepting plastic money these days. I can't say that I blame people for using cards, I use them more now than ever, simply for the convience factor. There is also another paper trail if audit time ever comes around, could help to prove some of those expenses.
Last February, my uncollected sales from 2003 stood at 8%, so I decided to bite the bullet and get set up to accept credit cards.
It's been a very frustrating process thus far. I decided to go through payright.com. The salesman was very friendly, but as it turns out, he was lying via omission.
They were supposed to charge me 2.29% right off the top, as well as $.25 per transaction, plus $9.99 per month for access.
Well, when I got my first statement, almost all of my transactions were droppoing to what they call "non-qualified" status. That meant they would charge me an extra 2.5% or so. Because I'm doing low volume, with the other fees, their total take has been around 6%.
I called their customer service division after that first statement and never made any progress. I was hoping that things would be better for month two.
When I got my second statement, they informed me, in very small type face, that my rate had increased from 2.29% to 2.40%. Again, most of my transactions were non-qualified and their take was still around 6%.
I called their customer service and they said the reason my transactions were non-qualified was because I didn't have the CVV numbers (the three digit codes from the back of the cards). Well, this was the first I'd heard about that, so in a panick, I sent out a letter to all my customers with the next statement saying that I would not be processing their credit cards unless they called me back with the CVV numbers. Most didn't call. So, even though I took the time and expense to get set up for credit cards, I still have problems getting paid on time.
Well, I've been calling their customer service people with persistency. Usually, I call and have to wait in queue for at least 30 minutes to get through to a person, and this has to be done during business hours (when I've got work to do). I've been talking to a manager who I'm now on a first name basis with. It turns out that all of my mastercard and discover charges are qualified, but for an unknown reason, all of my visa charges are being dropped to non-qualified status. The challenge is to get the credit card processing company to talk to the software company so that we can figure out what the software isn't sending the processing company.
I'm optimistic that eventually I'll get a fair shake, but Jim's comments above about the constant rate increase really scare me. How in the heck can he be paying 8.5% when they're offering new customers 2.4%???
Before I had the nice looking logo, early this spring, I couldn't get people to hand over a credit card if they were calling from a door hanger. If they were calling from yellow pages, it wasn't a problem, but if it was a door hanger, it was like pulling teeth.
But now that I have the truck lettered, most prefer to pull out the plastic when I present their options: either pay a one month deposit or place a credit card on file.
The problem is, you can still get stiffed pretty good even with a month up front, so going forward, it's either 2.5 months worth of service, plus sales tax, as a deposit or place a credit card on file.
I accept Credit cards through my Quickbooks premier Accounting software. Couldn't be easier. I have about 5% of my clients using the service and I pay about 2.25% plus $14.95 per month. Yes you lose some money when a client charges an item , but you get paid right away. Overall I find it a plus to offer the service.
I made a post on another thread here, but DVW, do NOT ask for
a CVV number or you're looking for trouble. It is against all current
processing regulations to store a CVV number in any format, that
includes written, printed, copied, or electronic.
I know it seems odd, especially considering that you pay more in
some cases if you don't have the CVV, but it's not allowed. A CVV
is used to prove "card present", and since you aren't swiping the
cards or processing them on site the card isn't present. If a credit
issuer offers you the reduced rate based on the CVV and a client
challenges the charge, if you can't provide a signature from that
client, or show that the client entered the number themself on an
Internet gateway of some kind ( which would indicate a MO/TO ),
you can have your processing privliges revoked and, in a handful
of states, you can face criminal prosecution ( although rare ).
DFW said his uncollected accounts for 2003 were 8%. Well, here's a liitle secret about collecting on old clients who still owe you money. Now a collection agency will charge you anywhere from 40%-60% of the uncollected balance as a fee if they collect the money for you. Let's say an old client still owes you $100. Well, the collection agency will get $40-$60 of that (on avg) as their collection fee. Well, here's the secret. Nearly every courthouse in the US has a mediation division. This is a free service. You simply walk into the office, write down how much the person owes you along with their name and address. Your county courthouse will mail a letter to that person indicating that they are requested to appear on xxx date at the county courthouse for mediation. Here's what works...the letter looks very similar to a court summons for small claims law suits. It even states, John Doe vs Joe Customer in xxx county before the county judge Joe Blow. Most people see this letter from the courthouse arrive in their mail and immediately call with an apology and the check arrives the next day. I've even had people hand deliver the payment with a few hours of receiving the letter. Some of the accounts I collected on were up to 2 years past due. That's unheard of in collections. It's almost impossible to collect on accounts past 120 days even using collection agencies. Again, this is a free service offered through your county and state. If the person does contest the charge and they show up at the courthouse, you will then meet with a mediator. This means you and the customer sit down at a table and a mediator sits in the middle and hears both sides of the story. The mediator tries to help reconcile the problem. If it doesn't work, the only other option is small claims court. However, small claims is not worth the cost or hassle for small dollars. With the free mediation service, any amount is worth going through with this process. If the person gets the letter and pays, you simply call the mediation office and tell them. They will then close the mediation case.