Accepting credit cards - long and includes some venting

[Moonlights]

I have been accepting credit cards for 4 years now and it's getting more and more expensive. I have my account through NOVA network and I accept only Visa and MC (No AmEx or Discover). Every month I get charged more and more. I had my statement looked at by a friend who works for a different processor and her reaction was, "yep, they are nailing you". I have 6 more months left on my contract.

Seems that the majority of transactions were so called "rewards" cards: people get miles, points, cash back. On some of those transactions I paid 4.59%. Plus 35 cent transaction fee, statement fee, phone line cost. I think I am easily paying 6-7% when you take everything into consideration.

I am trying to think of ways to remedy this. I want to make sure I am all set before November 1 when I get hit hard with Xmas gift certificates.

Definitely, I am looking at other providers and I am going to call my current when when their sales department opens in an hour. But I still feel that no matter who I go with it's still going to cost me $$$.

I also noticed that more and more clients are paying with credit cards - more than usual and I don't want that.

I even considered giving up credit cards altogether and just accepting them for online transactions.

When clients ask me how I would like to get paid I always tell them cash or check as they charge us too much for accepting credit cards. Everybody is usually understanding (except for someone got ticked last week b/c she wanted her Visa "points").

I thought of adding verbiage on my website, at my office and in my literature saying that although we do accept Visa and MC, in order to keep our rates as low as possible, we kindly ask clients to try to use cash or check. Has anyone done that? I you have, do you mind sharing your experience/wording you used?

Someone suggested adding a surcharge for using a credit card but I am afraid people will get ticked.

I don't want to give discounts for using cash or check as it defeats the purpose but I wouldn't mind given some other incentive for using cash or check like extra 5 minutes??? But what if I am done with their massage and extra 5 minutes and they say "oops, I forgot my checkbook"?

I could increase my prices and keep current prices for cash customers but our community is not ready for a price increase.


Another issue I had with my current provider: I do not have a tip line on the receipt. When we set up the account the rep promised me it would be no problem and then after the fact he told me he was not able to since I am "not supposed" to accept tips as an MT. I realize accepting or not accepting tips is a subject for a whole different discussion, but I don't think I should be told how to run my business. Every single MT I know has a tip line on their terminal. We went back and forth for a few weeks, then the company did away with having a rep in our area so now I have to deal with people on the phone.

Last but not least. I have renters and some of them pay me commission. When we agreed to a certain %% a year ago, we were not swamped with droves of people using their credit cards and I said if it 1 or 2 transactions a week or a month, it's not a big deal, I can eat it up. But now seems that every single client is using a credit card and the fees are up so I am losing money. Unfortunately, I will have to charge the renters extra or have them set up their separate accounts so they deal with their own fees.

The economy just sucks these days! And seems liek if you are a little guy/girl they really try to take you for a ride.

Any ideas will be appreciated.

 

[sludgecookies]

I only have a little bit of info to offer. When I first started renting from my current landlord (also MT and friend) she put in our contract that if I used her cc machine it's 5% for transaction. I knew upfront that using the machine would cost me money. Because of this I didn't accept credit cards at all until I got my own machine. So maybe it's time to let your therapists know due to rising costs there will be a new flat fee?

Regarding clients, could you give an incentive of some sort to pay in cash or check? I don't see any problem with putting the notice on your website requesting your preference for cash or check. I think most people are aware of the sometimes outrageous fees and are happy to comply if it's brought to their attention. If they do prefer to get their points, well, I can understand that too and so it's just something I have to accept as part of accepting cards. There's always good and bad to every decision.

I've been using propay, but recently talked to the bank where I have my busniess account. They have offered me a deal of 2.22% per transaction plus .15 for the other fees with no additional annual fees or money transfer fees. So you may want to contact your bank and see what kind of deal they can give you! I'm glad you brought up rewards cards and the extra charge, that's something I'll have to check into before I change merchant providers.

Best of luck!

 

[Ox CHERRYLiCiOUS* xO]

Thanks Vita. The girls who work with me are great and I was going to talk to them.

If you want my personal opinion about rewards cards - if the bank offers them to their customers, that's nice and dnady, but they (the bank) should be absorbing the extra cost and not pushing them on non-suspecting merchants.I don't think it's fair or legal (IMO)

I called the provider and they told me that in April MC and Visa did another rate increase and that's why my rates went up. I was right about that. They are going to do what's called "rate review" and see how they can decrease my rates, if at all.

 

[ral]

I utilize my bank - and will send you a PM on the particular numbers so you get an idea if it's cost effective. I also get my business account fees waived due to the processing.

I take VISA, MC, AmEx & Discover.

I believe NCMIC (a Chiropractic Malpractice Company) also does credit card work and will collect the info and post it here, when I find out if they work with MT's or not. I've been meaning to look into them for a while now anyway.

 

[Lil P:)]

Like everything, it pays to shop around. The sign of the times are not the signs you might think. CC processors make money two ways. One, by charging you a discount to have your money now and capturing sales you might lose if you only take Cash and Check. But they also make money on the "float" You process the cc today, but the money does not go into your account for 2 - 3 days. But they have it within 24 hours. But they pool it with all the other $$ they hold and put it in overnight sweep investments. Interest rates have plummeted, so they make pennies when they used to make nickels. When interest rates climb, they can lower the fees to get more clients to get more $$ to invest at higher rates.

But I digress...

Your best bet is your bank. Especially if they did your mortgage or car loan or business loan. They love getting a bigger "share of wallet". B of A has waived so many of their standard account fees because we have our business and personal CC with them, LOC and personal banking accounts. They make thousands on us a year, which makes it easy to ask them to waive monthly fees for Direct Deposit and other functions that actually save them money.

Banks have very reasonable rates, especially for swiped cards (vs phone orders). Usually less than 2%.

The other option is Quickbooks. The software is great for tracking your biz, plus their rates are very competitive. Best of all, you can download your bank data and your CC deposits automatically reconcile. We use QB and are very happy -- the reconciling function alone is reason enough not to switch to B of A. You also don't have equipment rental. You buy a USB card swiper for $50 that integrates into QB. You can buy the receipt printer too. No more $30 / month equpment rental fee and long term contracts.

 

[zenjanthropus]

It's been a loooong day so I should be going to bed and can't write too much.

First of all thank you everyone for your input, it has been helpful.

I talked to my current provider and told them the rates that are being offered to me by another company (I forwarded them their email so they could see I wasn't bluffing). Now they are saying they should be able to match/beat those rates. I asked to refund some of the fees. I also pointed out that the new bank would give me the coveted tip line and that's potentially extra $$$ in my pocket (and some rvenue for the financial). They are looking into that as well. Basically I pitted the 2 companies against each other. I felt bad at first b/c both reps are nice but hey, it's my money. I will keep you posted.

 

[Eon kid]

We are in the process of switching from IMS (international merchant services) to Wells Fargo. IMS has screwed us over many many times... I wont get into that now though...
Try your bank, see if you can get lower fees through them

You can probably weasel out of your current contract- any time there is a change to the contract, say visa goes up x%, you can call them up and say that you don't accept that change to the terms, and you want to cancel your account with them. It's a loophole.

as far as I know, where we live, every MT (since they arent your employees) has to (legally) have their own credit card account... we have 6 different accounts going through the same machine & company, and prob like 6 different bank accounts where the $ gets deposited... and they charge the fees to everyone then, so the main person we lease from doesnt get hit with all the fees, if that makes sense...

I would really think about raising your fees if you are feeling the "hit" from the credit card transactions. No one says you have to go up $5 or $10... you could just do $2 across the board! that doesnt seem like too much of a jump, so your regulars prob wouldnt be put off by it...

AND... I think i paid with my cc when i saw you! ack! sorry! Next time I'll bring ca$h!!!

 

[Grace B]

as far as I know, where we live, every MT (since they arent your employees) has to (legally) have their own credit card account... we have 6 different accounts going through the same machine & company, and prob like 6 different bank accounts where the $ gets deposited... and they charge the fees to everyone then, so the main person we lease from doesnt get hit with all the fees, if that makes sense...

Or, in your leasing agreement you can agree to pay a fee per transaction to use oneCC processing system and the lessor pays out on a weekly basis.

Both are somewhat cumbersome, but pooling often gives you lower processing rates.

 

[leo lion]

I work in a spa as an employee. However, there's been some rumbling that they may start charging us for clients who pay by and include a tip on CC. I believe it's somewhere around 4 percent.

If I was an independent contractor, rather than an employee, I could understand their need to include the fee as part of their commission. As I have paid for it as an I.C. in the past when I worked at a salon.

Is it customary to charge your employees for a spa client's use of CCs? And how would you keep all the "books" straight so that the right spa employees are being charged the right amounts?

 

[Walter]

Is it customary to charge your employees for a spa client's use of CCs? And how would you keep all the "books" straight so that the right spa employees are being charged the right amounts?

Ask 10 different spas, you will get 5 different answers.

Some pay a lower base commission, factoring in the expected % of volume on CC vs. avg. ticket price.

Some pay higher, and impose a product charge and other fees

Others impose the tip on the client, which gives them the legal right to pass along None, Any or All of the tip to the therapist, which is where they pay for CC costs.

Simple is always best, so you eliminate the bookkeeping nightmare.

If it were me, I would pay a flat $ per service - 50 min. vs. 80 min. with no product charges, cc discounts etc. That way you know what you are earning every time to have a client.

 

[ck4829]

I'm curious how this ended? Did they match rates for you and did you get your coveted tip line?

 

[mommy dreamer]

Still waiting to hear back. She said that "rate review" tales up to 8-10 business days.

 

[Gazelle]

Goodluck with this. I've been considering adding the cc option to my practice but have always been reluctant because of the processing fees and hidden stuff that gets added in.

 

[ck01]

I didn't accept CC's when I just started. I think only 1 or 2 people walked away: they were buying GC's. I would just tell them on the phone when they booked that I only take check or cash. Now I sell GC's online and PayPal or SpaBoom are too expensive. Plus a lot of my clients pay with CC's.
I have been trying not to use the terminal. I believe I had 2 sales in the past week that I ran through.

 

[loadedtomcat]

In the 16 years I've been doing MT I've had only a few folks walk away because I didn't accept CC's. Which is one of the reasons I don't take them. Yet, with the economy changing it would certainly make it easier for some folks to get massage, however there is a part of me that doesn't feel good about furthering someone's debt even though they are big folks who are making their own decisions. Sorry for the long winded response and explanation...but now you know the war that goes on in my brain about CC's. lol

 

[Mr. Peanut]

The owner of our spa recently started charging us the 3% fee if we get a tip on that charge, just to lower her expenses. In a way I was like 'Wait, that tip is MY money!' but I understand and don't really have a problem with it. She doesn't do it on every charge, just the ones where we're tipped on the cc. It rarely ends up being more than a dollar or two for the whole week. On a $10 tip, I end up with $9.70, still more than I had before. And it's helped her out a lot.

 

[Moon Light]

Now I sell GC's online and PayPal or SpaBoom are too expensive. Plus a lot of my clients pay with CC's. I have been trying not to use the terminal. I believe I had 2 sales in the past week that I ran through.

So if you're not using SpaBoom, how are you selling gift certificates online? I just signed up for SpaBoom (at the $19 sole-proprietor rate) and realized I don't have a way to process payments, so I need to figure that out quickly or cancel the service. I don't have a terminal or merchant account to run cards. PayPal's "Website Payments Pro" presently costs $30/month plus "2.2% to 2.9% + $0.30 USD" per transaction, WAY too much money just so I can run credit cards for gift certificates.

None of my customers have tried to use a credit card so far for massage payments. But I lost out on a gift certificate sale last week 'cause I didn't have an online method for purchase. I could always take a normal PayPal payment and mail out the certificate, but I'm wondering if there is a better way.

 

[mpc717vc]

I use ProPay. It is relatively cheap as I don't use CC much so it works for me. I am sure the perceneforum.xxxe per transaction is higher then most though.

 

[Top_Gear_Biggest_Fan]

Don't know if this would work for you, but with a regular paypal account (the one where you can accept cc through paypal) you can make a button which allows people to buy something with a credit card and they don't have to sign up for paypal. You can either put the button online where people can click on it (like to do one button for 60 minute massage, one for 90 minute, or any other treatment you want to sell), or you can email them the link. This does not cost you anything per month. You just pay the normal paypal fee per transaction.

 

[Mooches]

I used Pay Pal in the past as well and it worked just fine.
I am set up thru Miva Merchant now. the reason I did it is that I wanted to add specific fields when people were buying GC's online and Pay Pal was not very flexible. For example, I wanted to know the recipient's first and last name (that's how my customer database is set up) and at the time Pay Pal would allow only so many fields.
But I would still definitely recommend Pay Pal and it's cheaper than Spa Boom. I felt Spa Boom's fees were outrageous compared to other options.
And I sell both paper and electronic GC's online; you don't need to go through Spa Boom for that, you just need a good web developer to do it for you.

Another way to process credit cards...I never used it but I know I couple of people who did. It works for merchants who process only a handfule of transactions. You still need to set up woith a bank but you do NOT own a terminal. You CALL in when a customer uses a credit card. The transaction fee is a bit higher but you still come out on top b/c you don't buy or rent a terminal, you don't need a phone line and there may be no monthly fee for this service. The esthetician who was using this service only accepted credit cards on packages or transactions over a certain $$ amt.